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Cost Management as a Key Determinant in Value-Based CareBy Jon Melling, FHIMSS Partner, Pivot Point Consulting
Cost Control: #1 Influencer to Reach Financial Targets
Agenda:
Why cost management is kingThree areas for cost control
under value-based careShifting gears in technology and
financial processesNew opportunity checklist
HealthLeaders Media Intelligence Report: Annual Industry Outlook:
The Road to Value-Based Care, January/February 2017.
Factors Driving and Influencing Transformation
Why Cost Management is King
Greater risk under new payment models
Revenue less predictable
Falling patient numbers and revenues
Clinical performance inextricably linked to value
Contracting for Value Requires Commitment to Three Fundamental Objectives:
Managing risks and avoiding adverse events
Managing costs and making efficient use of time, materials and processes
Achieving contracted outcomes, taking into account patient severity and stage of illness
Who is responsible for each of these?
Three Areas for Cost ControlUnder Value-Based Care
1. Reduce waste in care delivery
2. Provide a more accurate view of costs at the case level
3. Maintain quality outcomes
57% of CEOs Say: Innovative approaches to expense reduction needed
Advisory Board Company, Annual Health Care CEO Survey 2017.
#1: Reduce Waste in Care Delivery
Reduce waste, not value-added careSix categories of waste account for over 20% of total healthcare
expenditures:
Overtreatment Failures of care coordination Failures in execution of
care processes Administrative complexity Pricing failures Fraud and abuse
#2: Provide an AccurateView of Costs at theCase Level
Analytics to translate raw data across care settings for improved cost tracking (Direct and Indirect Costs)
Training and EHR capture to improve clinical documentation
Data mining to identify at-risk cases early in the care process
Chargemasters, accounts receivable, and other financial systems that can simultaneously process fee-for-service and value-based claims
Technology to support care team collaboration and communication
Current ERP system review to identify opportunities to maximize resource and process efficiency
Technology Investments Ahead
#3: Maintain Quality Outcomes
Take organizational characteristics into account Geographic location (urban/rural) Ownership structure Predisposition to risk
Take population risk, severity and stage of illness into account
Establish achievable goals based on strengths and weaknesses
Ability to manage and reachquality targets
Current infrastructure
Best Practice Data Uses Under Value-Based CareUse performance data to quantify total cost of care for each
patient population
Understand direct and indirect costs to better manage cost at the case level
Assess data on health-defining attributes and social determinants of members to understand the risk each member presents
Analyze historical cost and quality data as a basis for projecting unique patient population outcomes
Sharing Knowledge Between Providers
Example #1: Timely screening and intervention of patients to drive timely care and prevent severity of illness and treatment.
Example #2: Know costs and outcomes data for patients undergoing total-knee replacement for CJR bundled payments (IP/OP/MD/Rehab)
Shifting Gears in Technology and Financial Processes
Gearing Up Technology Systems need to cope with both fee-for-service and fee-for-value models
during the transition period
Systems need to support data structures and reporting requirements to demonstrate quality
Vendors need to proactively upgrade and supplement EHRs
Requirement to hire data engineering and analytics expertise
Focus on innovative technologies that support cost reduction
Improved ERP and supply chain management
Use of productivity and performance management methods and solutions
Overcoming Limitations of EMRsLegacy EMRs Changing Needs
Stand alone/transactional Need to support patients across the care continuum; reduce patient leakage; improve patient engagement
Limited Care Network Engagement Network Based Care Collaboration
Specific to the Provider and Payer Patient Centric supporting wider engagement; Payer Agnostic
Focus on billing and documentation Customizable workflow
Difficult to deploy; costly Targeted quick deployment; value driven; need for powerful analytics tools
Gearing Up Financial Processes Develop and implement interim processes and teams to accomplish the
transition to systems aligned with a value-based model
Break down organizational silos to support multi-disciplinary care
Share knowledge to provide clear visibility into cost and population risks
Build workflows to manage patient cohorts
Put processes and systems in place that allow more accurate and detailed cost management at the case level
Assess clinical documentation to improve timeliness of charting and billing
New Opportunity Checklist
Every organization begins at a different starting place
Each value-based playbook will be different
We are all learning together
A Checklist for Value-Based Care
Start small – don’t boil the ocean and understand what changes you can make and what will be difficult to change
Conduct a financial operations assessment: Can our systems, people and processes support and sustain this shift? Look at every step: from first referral to final discharge and post-acute care Review questions internally with key stakeholders Asses direct and indirect cost implications
Proceed with second-level analysis for: Patient access/referrals Charge (activity) capture and billing Clinical documentation Denial management and prevention
Find innovative opportunities to support at-risk/rising-risk populations Assess community care communication, collaboration and partnerships to meet needs Build an optimal provider network for each population Ensure the best allocation of responsibilities to deliver care in the most cost-effective way Implement one unique program and move on to the nextMonitor cost, quality and reimbursement changes for each initiative as justification for
continued expansion
Conduct data-driven contracting with payers Get more aggressive with the contracting process Know your risk before you go at-risk Contract based on outcomes
Engage with your patients Every individual in the organization could potentially influence patient satisfaction Use centralized patient portals
What Does the Future Look Like?
