Value-Based Payment: The Rush is On!

The most opportune time to jump off a bandwagon is just before the next person jumping on tips it over. If the accelerating movement toward value-based payment (VBP) models in healthcare could be metaphorically thought of as a bandwagon, then its passenger weight increased dramatically this week with two major announcements.

First, on Monday HHS Secretary Slyvia Burwell announced that within four years half of all Medicare spending will be VPB oriented (e.g., bundled payments, ACOs, capitation models). Then yesterday several of the country’s largest healthcare systems and insurers announced the creation of a Health Care Transformation Task Force whose stated goal is to shift 75% of their business to VBP type contracts by 2020 (as in 5 years).

I have been an acknowledged student and disciple of Michael Porter’s work on value in healthcare and have written about that subject here in the past. Porter and colleague Elizabeth Teisberg wrote the seminal work, Redefining Healthcare, which buttresses much of the practical theory that has been espoused in support of VBP. In my study, however, I came to believe the underlying structural challenges of our current delivery system would take a great deal of time and effort to overcome before value could work the magic as intended. And so when I read these two announcements I had to wonder whether fools are rushing in where angels fear to tread.

In other words, it’s not the direction of the bandwagon I find concerning but the pace of acceleration. There is so much unknown and so much to be learned regarding the organizational dynamics of healthcare delivery that putting deadlines on the pace of that knowledge-building is pure folly. To illustrate, let’s just look at Porter’s strategic agenda for creating a value-based healthcare delivery system and consider each in context of what we are witnessing today.

1. Organize care into integrated patient units around patient medical conditions.
Porter has travelled the world lecturing and observing healthcare delivery systems in other countries. He provides examples of structural reorganization for patient conditions (e.g., the West German Headache Center) that have achieved substantial improvements in patient outcomes at lower cost. The concept isn’t entirely new (e.g., MD Anderson Cancer Center reorganized its outpatient care services in the early 90s under the auspices of an IPU), but still rather rare and so not very well understood.

2. Measure outcomes and cost for every patient.
Another way of saying this is be able to measure cost and quality/satisfaction at the patient level. This is without a doubt the most difficult and controversial aspect of Porter’s agenda.
In June of last year I wrote a post that addresses the inherent subjectivity of patient outcomes and its impact on the value equation. If this cannot be worked out in a manner and fashion that achieves broad understanding and acceptance across patients, providers and insurers – well, see bandwagon discussion above.

3. Reimburse through bundled prices for care cycles.
When Porter talks of bundling his focus is on tying the bundle definition to the value achieved on behalf of the patient – e.g., the patient’s experience, impact on family, lifestyle functionality, etc. What I hear about mostly are efforts to define, articulate and divide up processes and procedures related to a diagnosis and/or condition, put some probability bookends around that understanding and then compare projected average payment to cost. The ability of value to be successful as a catalyst for aligning incentives has already been lost because the focus is on process – not the patient.

4. Integrate care delivery across separate facilities
The many challenges of integrated clinical care notwithstanding, improved performance through specialization is really the key concept here. Research has shown that volume in a particular medical condition is positively correlated with patient value. This runs counter to the notion that all healthcare is local. While every day we culturally become more comfortable with this notion – e.g., international medical tourism – there are still substantial social and political obstacles to overcome.

5. Expand areas of excellence across geography
We are seeing systems like the Cleveland Clinic, Geisinger and the Mayo Clinic exporting their knowledge and expertise across geographies. But the expansion has been primarily revenue-driven (relatively more patients with the financial ability to afford services). If value is to be the driver of alignment, then eventually those organizations will also have to demonstrate how knowledge exporting not only improves outcomes at the local level but also lowers costs (much harder to achieve).

6. Build an enabling information technology platform
Hoo boy, right? The challenge here, of course as I have written before, is properly utilizing IT to facilitate and enhance the productive value of human processes. If the underlying organizational structure and processes aren’t in alignment with the goals and objectives manifested through the five agenda items above, then all we will be doing is automating a system that we said we wanted to change.

I realize some of these concepts are above my pay grade, and I continue to believe the value concept – Patient Outcomes/Cost – is the key fundamental principle of structural system reorganization. But when I step back and compare the payment and care delivery models being pursued in the name of “value” against the strategic agenda that Porter laid out I worry greatly that we are not willing or prepared to take the time or effort to understand and address fundamental areas of concern.

It’s like building a pyramid. The more time you take to create a solid and expansive foundation, the higher you will ultimately be able to build. As much as I have supported the value driving structural change paradigm I would encourage all industry stakeholders and participants to be both pragmatic and cautious in advancing on VBP models. Take the time to observe, learn and adjust – and don’t let your timeline be driven by outside sources with no vested interest in your organization – or your patients!

  ~ Sparky

Standing At The Gates of Hell

Je Suis Charlie? That all depends. Am I Charlie, a faceless Parisian joining with thousands of others along the Avenue des Champs-Élysées in candlelit vigil mourning a national tragedy? Or am I Charlie, a major newspaper like the New York Times having to carefully weigh my support of free speech – however rancor and callous that may be – against my potential complicity in unwittingly embracing and spurring additional tragedy? Either way, it’s no fun being Charlie.

Unless you have been hibernating through the cold of January or living under a rock you have some knowledge of the tragic events that unfolded in Paris on January 7th. At approximately 11:30 that morning two men armed with Kalashnikov rifles and other assault weapons entered the offices of Charlie Hebdo – a French satirical weekly newspaper – and slaughtered 12 individuals, including its popular yet controversial editor, Stéphane Charbonnier. The perpetrators were subsequently killed following a massive manhunt, as was their wont, being self-proclaimed Jihadists whose attack they claimed was vengeance for Hebdo’s cartoonish portrayal of the Prophet Muhammad.

Charlie Hebdo’s historical agenda of satire reflects an equal opportunity offensive. Charbonnier said two years earlier that, “we have to carry on until Islam has been rendered as banal as Catholicism." Anyone with a working familiarity of history will recall the Catholic church’s legacy is anything but banal. But whereas Christianity has by and large been secularly assimilated into a separation of church and state, radical elements of Islam seem increasingly intent on remaining more than a few centuries behind. Thus be to tyrants and zealots and their expedient interchangeability in the name of power and control.

In the aftermath of the events in Paris columnists, pundits and editorialists have taken to whatever venue will have them to let us all know who’s at fault, what could have been done to prevent it and what we absolutely, positively must do next to prevent further aggression. They write and speak with such authority that it truly is amazing they have either been silent up to now or just recently had the epiphany that will save us from the gates of hell.

The reality is there are so many different ways to theoretically and intellectually slice the myriad social and political challenges of extremism in the name of religion that even the Whitehouse is afraid to use the term, Radical Islam.  Obama ne résiste avec Charlie? If there is a war against that extremism who or what exactly are we fighting against? A religion? An idea? Criminals? A nation-state? The aforementioned experts believe it’s somewhere between one of those and all of the above. Brilliant, right?

All I know, or what I think I know in any event – if you’ve followed my blog, you know this is a substantial subject-matter departure – is that terrorism will never go away as long as it can have the effect desired by its perpetrators.  And I know that in the long run it will never achieve its desired purpose. Never has. What I believe is that terrorism or violence of any type in the name of a religion wanes in proportion to the ability of that religion’s followers to achieve prosperity and happiness.

And so eventually, the power and control held by the few under the guise of religious fundamentalism will crumble under the weight of the many who become educated and enlightened to how they have been manipulated for centuries into oppression and  subservience. We have seen this taking shape already, and electronic communications are helping to accelerate the process. In the meantime, I am afraid, there is going to be a lot more hell to pay no matter what course of action is chosen.

  ~ Sparky

CCRCs As Healthcare Providers

HCG1Earlier this month Steve Maag, LeadingAge’s Director of Residential Communities, shared an insightful video presentation (a Quickcast) on environmental and industry trends that are anticipated to impact the future of continuing care retirement communities (CCRCs). If you are in any type of leadership position in an organization that owns and/or operates a CCRC with some level of responsibility for that organization’s future direction, then I strongly encourage you to find 15 minutes to watch this presentation.

There are three broad areas Steve addresses, including consumerism, healthcare reform and technology. This being a blog on healthcare public policy, a couple of years back I shared some of my own thoughts on the risks and perils that CCRCs face in assessing their role as a healthcare provider in the post, CCRCs: Healthcare Providers—Or Not.

Now having some additional data points I thought it might be interesting to revisit what I wrote back in August 2012. I then identified five major areas that CCRC organizations needed to be cognizant of as they assess strategic positioning as a healthcare provider in their market:

Healthcare delivery related cost pressures
New care delivery and payment models
Increasing demand for home and community-based services
The need for infrastructure investments
Potential future tax consequences for nonprofit organization

In considering the impact these areas could have on organizations unwilling or unable to effectively address that impact it was my opinion then that those organizations would be further ahead to get out of the healthcare business altogether than to wait on the sidelines. Fast forward 29 months and I will double down on that assessment.

Successful CCRC organizations of the future are making the requisite investments today to assess their healthcare market environment and determine how they can effectively and profitably integrate into that environment. To assist organizations with that process I recently updated my whitepaper: A Framework for Strategic Planning & Positioning in an Era of Healthcare Reform. Please feel free to download and use to help your organization with this critically important assessment.

  ~ Sparky

Should The Employer Mandate Survive?

Over the period January 8th through the 11th of last week the Morning Consult conducted a poll of 1,707 registered voters to understand their views regarding the Employer Mandate. The reported responses have a margin of error of +/- 2.4% (I assume that’s at 95% CI). What they found seems a bit counterintuitive at first. But it may reflect an indication of where we sit along the curve to better understanding the economics of healthcare in the United States.

Of those polled, 74% believe that a 40-hour workweek should constitute full-time employment – not 30, the definition used as part of the Affordable Care Act’s employer mandate provision. But only 58% support Congress’s effort to legislatively change that definition. Why? Dunno. And yet, 57% of respondents overall support the employer mandate provision of the Act, and 55% believe companies should provide healthcare for part-time employees.

Whether employers are required to provide health insurance for their workers at 20, 30 or 50 hours misses the broader discussion of whether the employer mandate still makes sense in light of other provisions of the Act having been enacted. And it misses the political discussion of whether it’s a reasonable and plausible giveback to a Republican Congress that’s carried around the repeal and replace bone long enough.

Even the most ardent opponents of the ACA have to admit, if they are being honest, the past few years have increased the individual and social consciousness of healthcare as a very real – and very expensive – commodity that has been more misunderstood than any other product or service in history. And despite the major early challenges of the insurance exchanges most indications now support the dawning of a new dynamic in financing healthcare delivery: the expansion of individual insurance and responsibility.

Ever since wage freezing during WW II led employers to use healthcare benefits in seeking competitive advantage recruiting workers the disconnect between what individuals pay out of pocket for healthcare – and what healthcare actually costs to produce – has been an underlying source of tremendous waste and inefficiency. Have the exchanges, coupled with the incremental increase in Medicaid expansion, made the employer mandate concept moot – or worse, an economic albatross that could stifle growth at a time when the country just might be turning a corner?

What do you think?

  ~ Sparky


Sorry Charlie: Too Many Sharks at the Trough

There is an old analogy in healthcare that refers to the largesse of national healthcare spending as the Big Tuna. Many sharks feed off that tuna – the extension of the analogy being that many individuals and organizations financially benefit from being in the healthcare industry without adding any real value to the consumers served by the industry – patients.

This is my interpretation of an article posted by Dr. Fred Pelzman on New Year’s Day, Return the clinician to the center of the health care experience, on the KevinMD healthcare system blog. Dr. Pelzman asks what I believe should be the quintessential question of the 2015 healthcare policy debate: “Are we allowing the health care system to be transformed by people who should not be transforming health care?”

Now, it should be remembered that it was a clinician – Dr. Donald Berwick – who popularized the Triple Aim concept that came out of the Institute for Healthcare Improvement prior to the Affordable Care Act being passed. Clinicians are not exempt from thinking big thoughts and hoping to altruistically apply that thinking to achieve goals and objectives that are widely held desirable by society. So I don’t know if getting them unselectively more involved is going to lessen the incredible waste that rightly drives physicians like Dr. Pelzman crazy.

But I do know – or rather I believe, anyway – there is a finite limit of tuna available to satiate the sharks before they start feeding on the patients. It’s indignantly ironic that clinicians are being pressured to improve performance in the name of value when a great deal of the non-clinical world is only being held accountable to producing value in the abstract – and most often ex post facto.

Unquestionably, there needs to be greater connectivity between the work performed by non-clinicians and the ultimate value produced for patients. This is not going to be any easier to measure than patient outcomes’ metrics currently being explored and tested on/by clinicians. So what? Get used to it.

As I have written before, I wholeheartedly agree with those who, like Dr. Pelzman, promote the central role clinicians must play in assessing, planning and implementing healthcare public policy. But if you look at the landscape you will see there are already quite a few retired clinicians in that space, and the system is still largely a mess. So there must be more to the story.

What do you think is missing?