04/12/2016 C H A L L E N G E S F A C I N G U N I T E D S T A T E S H E A L T H C A R E S Y S T E M

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1 M I C H A E L J. S E E L, M. D. I M P L E M E N T I N G C H A L L E N G E S F A C I N G U N I T E D S T A T E S H E A L T H C A R E S Y S T E M Emphasis on Health care, not Health Fragmented Delivery and Payment Systems Medical Errors/Defensive Medicine Moral Hazard C H A L L E N G E S F A C I N G U N I T E D S T A T E S H E A L T H C A R E S Y S T E M Lack of Competition Based on Value Patient choice and competition for patients are powerful forces to encourage continuous improvement in value Currently, competition is not aligned with value since the financial success of system participants is not tied to patient success 1

2 V A L U E B A S E D H E A L T H C A R E Value can be defined as patient centered health outcomes per health dollar expended Outcome = Quality (Clinical outcome, safety) + Service (satisfaction, convenience, communication) R O L E O F P A Y M E N T S Y S T E M I N I M P R O V I N G V A L U E Non value added care Unnecessary care Inappropriate variation in care Avoidable complications/readmissions Excess cost due to variation in price E M P O W E R I N G P A T I E N T S T O B E B E T T E R C O N S U M E R S Patients chose Physician Manner and Physician Quality as the two most important factors that influenced selection of provider Patients, on average, strongly agreed with statements that their choice of surgeon would impact their outcome and that there are big differences in the quality of care among different surgeons 2

3 E M P O W E R I N G P A T I E N T S T O B E B E T T E R C O N S U M E R S Give the consumers money. Give them information so they re smart shoppers. Enable transparency and get out of the way. Regina Herzlinger, PhD What is the concept of bundled payments and why should I care? Shift from Volume Based Payment (Fee for Service) Model to Value Based Payment Model Reduce or Eliminate Unnecessary Care Shift Risk to Providers Definition - A single package price that provides a positive margin for a comprehensive and specific set of healthcare services delivered to a patient by multiple providers over a full cycle of care. A full cycle of care is defined as 30 days preoperatively to 90 days post discharge from the hospital anchor event (surgery) 3

4 Assumption - The overarching goal of this initiative is to create a new paradigm for healthcare delivery focused on providing quality care for these services at a reasonable price point and NOT on generating greater revenue, RVU, or transactional volume Why Total Joint Arthroplasty? OA - Most expensive for Medicare Employer Based Contracting FFS, RVU, DRG system Improved efficiency/decreased time = lower reimb No consideration of outcome Either we find ways to stretch healthcare dollars by improving value or it will be imposed on us 4

5 Value Based Payment Incentivize Providers Factors in control Surgical episode of care Factors out of control Insurance, Socioeconomics, etc. Strategy for Successful Program Risk Tolerance Data Systems and Sharing Trust Alignment Leadership Clinical and Administrative Champions Define episode of care for which you accept risk Further preoperative Preoperative OR Close Postop Further Postop 5

6 Define Performance Metrics Define Gain Sharing Understand Care from Patients Perspective Shadowing Measure Actual Cost of Care Delivery Measure from Ground Up Change Present Cost Accounting Do not attribute costs - Measure them!! Use Data to Identify Opportunities Redesign Care to Improve Quality, Reduce Cost Price/Market Episode of Care Program Evaluate Results and Iterate 6

7 Potential purchasers of Healthcare services Large self-funded employers Payor community Accountable Care Organizations Center for Medicare an Medicaid Services (CMS) Some self pay patients Episode of care will extend well beyond hospitalization Involvement of caregivers not traditionally aligned with your hospital or practice is likely Post acute providers Home care, extended care facilities, outpatient rehabilitation centers Two primary challenges Identifying individuals with the necessary leadership and skill set is critical Access to clean, credible data to guide discussions With good people, good data and a common vision, develop trust and successful outcome 7

8 Critical Data Cost Understand the actual direct costs of providing services If a post acute warranty for complications is negotiated in the bundle, the added costs of the covered complications and readmissions must also be determined Critical Data Quality and Performance Measures 30, 60, and 90 day readmission rates Both all cause and surgery related Length of Stay Discharge Disposition Home vs. Extended Care Facility Critical Data Functional Outcomes Generic and Disease specific Patient Reported Outcomes tools (PROs) are rapidly becoming increasingly important metrics in determining the value of a specific bundle 8

9 Summary The process of implementing a bundled payment program requires considerable time - at least one year Steadfast physician and hospital leadership is paramount Patience and discipline essential Significant costs to cover legal fees and administrative expenses will be incurred Conclusions Entities that have implemented bundled payments and other value based models have unquestionably demonstrated sustainable value creation Those interested in this project must first have a thorough understanding of the key elements Even if bundled payment contract never signed, the spillover effect of extensive care redesign will be immeasurable and priceless Thank you very much!! 9