Transitioning from volume-based to value-based payment for care won’t happen on a specific date. Hospitals have long been paid on a volume-based payment model, and will continue to operate in that model while the new value-based payment model comes into play. Lisa Goldstein noted in a recent iProtean course that “the biggest challenge facing health systems is this transformational journey from volume to value, because it will be a journey; it’s not a marathon; it’s not a sprint; it’s a journey of health systems and hospitals operating in two worlds at the same time.” (Transforming Your Organization into an Integrated Delivery System, iProtean, January 2013)
An approach to addressing the challenges of the new value-based model of care will require hospitals and other providers to shift the delivery of care away from the volume-based model as thoughtfully and as rapidly as possible, said Kenneth Kaufman and Mark Grube in a recent paper, “Driving the Transition to Value-based Care.”
Healthcare boards and management teams have a fiduciary responsibility to ensure effective and efficient care in their communities, while preserving the clinical and financial integrity of their organizations, Kaufman and Grube noted. “From a mission perspective, value-based care delivery is simply the right thing to do for the patient.” Many progressive hospitals/systems have been pursuing transformational models, even before legislation required it.” (“Driving the Transition to Value-based Care,” KaufmanHall Point of View, December 2012)
The Kaufman Hall paper suggests four prerequisites for hospitals/systems to effectively transition to the value-based model:
A “value mindset.” To both improve outcomes and reduce costs—necessary components of a value-based model—requires a different mindset, culture, incentive system, and management and reporting structures, the authors said. As others have noted, value-based care will reduce admissions, revenues and margins (see iProtean blog, January 29, 2013). “Governance and management structures should support the delivery of value, moving away from a site-centric approach to more system-centric models,” . . . reshaping operating and reporting lines and management incentive programs, fostering collaboration between hospitals and physicians for managing the care of patients, and offering incentives to treat patients in lower-cost settings.
Removal of every bit of unnecessary work from the organization . . . not only reducing labor and supply chain costs, but also engaging physicians and staff in “tough conversations” about what constitutes efficient and necessary care. This requires analyses such as:
- Identifying and redesigning inefficient care processes
- Improving patient flow through streamlined and consolidated operations
- Institutionalizing maximum efficiency
- Rethinking end-of-life care
A unified, organization wide “persistence of attitude,” . . . especially as evidenced in the way physicians take care of patients in the hospital and in their offices. Physicians have the most significant impact on organizational costs, quality and overall results. The authors note that physicians’ goals and objectives must be aligned with those of the hospital. The hospital must ensure physicians “have the data and resources needed to redesign care and service systems for care effectiveness and efficiency.”
Transforming to a “healthcare model.” Hospitals have been in the business of treating sickness—the traditional disease management model. To move to a value-based model, the emphasis must shift to health maintenance and management, “a true healthcare model,” the authors said. The focus must shift to health screenings to identify problems early on and proactive management of acute-care patients, those at risk for readmissions, and those with chronic health conditions. One of the aims of health reform emphasizes population health management; this is enabled when hospitals are aligned or partner with payers to assume risk. (See iProtean courses Transforming to an Integrated Delivery System and the upcoming Financing Considerations for Integrated Delivery Systems.)
iProtean subscribers: for more information on this topic, please view the new advanced iProtean courses Value-based Purchasing & Accountable Care Organizations, Transforming Your Organization into an Integrated Delivery System and Financing Considerations for Integrated Delivery Systems. Experts Marian Jennings, Lisa Goldstein, Nate Kaufman, Dan Grauman and Monte Dube examine the challenges of moving to a value-based system of care and suggest effective ways to navigate this transition. Next week’s blog will summarize Mr. Kaufman’s and Mr. Grube’s thoughts on the approach to entering into value-based contracts.
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