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population health management a "start small" strategy [Healthcare Financial Management]

By Sanford, Kathleen D
Proquest LLC

Certain dates in history mark significant discoveries that changed how we treat disease. In 1895, the X-ray was invented. In 1928, penicillin was discov- ered, giving physicians a new tool to fight infectious disease. Then in 1955, Jonas SaIk, MD, developed the polio vaccine.

Similarly, there are key dates that represent game-changing events for the busi- ness of health care as well. In 1929, the first hospital-based health insurance pro- gram was established. On July 30, 1965, Medicare and Medicaid were signed into law. And on Oct. 1, 1983, the prospective payment system was launched, introduc- ing hospitals to DRGs for the first time.

It might be easy to overlook this second set of dates, but the truth is that the history of healthcare financing has been intertwined with the history of healthcare deliv- ery for some time. In fact, that link between financing and delivery is still evident today. Just look at the escalating costs of our current healthcare system. For years, we have been an industry that is (mostly) paid to provide tests and procedures, even in cases where there may be little evidence that costly treatments are more effective than more modest interventions.

Part of the problem has to do with incentives. Because most hospital-based sys- tems are paid to care for sick people- and not paid when people are not sick- there has been no financial incentive (for most of us) to focus on keeping people healthy so they will be less likely to require more costly interventions. The tradi- tional, fee-for-service payment system has created an uncomfortable reality that pits our messages of prevention against our financial incentives. We see it every winter On the one hand, we encourage members of our communities to get flu shots, yet we are financially rewarded when they don't. I've heard more than one CFO explain that the reason a system was unable to reach its revenue targets was due in part to "a light influenza season."

But let me be clear: This is not an indictment of hospitals. We are designed- and rewarded- to care for people when they do get sick, and we have done that pretty well. However, we have not had the systems or incentives in place to help patients stay healthy.

That's about to change, thanks to major changes implemented on Oct. 1, 2012- another date that will go down in healthcare history. That's when the Centers for Medicare & Medicaid Services (CMS) launched two programs under the directive of the Affordable Care Act aimed at connecting quality to payment.

The first program, the Hospital Value-Based Purchasing (VBP) Program, focuses on improving quality inside the hospital.3 Through this initiative, Medicare is currently withholding 1 percent of its regular payments (increasing gradually to 2 percent by 2017) from about 3,000 hospitals for redistribution to organizations that achieve certain clinical measures and patient satisfaction scores. At Catholic Health Initiatives (CHI) in Denver, the clinical and finance departments are working together to analyze and project the potential impact of this program in FY13 and FY14. Measures analyzed quarterly, for example, include:

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> The percentage of myocardial infarction patients who receive fibrinolytic therapy within 30 minutes of hospital arrival

> The percentage of patients with pneumonia who have blood cultures drawn in the emergency department prior to receiving the initial antibiotic

> The number of postoperative urinary catheters removed on postoperative day one or two

The second program, the Hospital Readmissions Reduction Program, is more revolutionary: It makes hospitals accountable for what happens outside its walls.b Specifically, CMS has begun withholding up to 1 percent of payments from hospitals that readmit certain patients within 30 days of discharge. CMS's methodology for calculating a hospital's excess readmission ratio currently focuses on patients treated for heart failure, heart attack, or pneumonia. With this readmission penalty, CMS makes hospitals at least partially responsible for maintaining the health of their recently discharged inpatients, at least for a short time following hospitalization.

In the future, many hospital leaders expect CMS to introduce additional readmission penalties that include more diagnoses (such as chronic obstructive pulmonary disease, coronary artery bypass grafts, percutaneous transdermal coronary angioplasties, and other vascular procedures) with even bigger penalties for readmitting patients. These executives see such changes as the beginning of an era of greater accountability for providers. It's a change that both government and private payers are welcoming as they strive to improve quality and reduce costs.

Managing Populations

One payment and delivery model that makes health systems more accountable for the quality and cost of the care they provide is based on population health management. In fact, the 30-day readmission penalty may be considered a foray into that arena, although on a smaller scale than the type of population health management practiced by health maintenance organizations (HMOs) and public health departments. CMS's penalty counts as population health management because it involves a defined group of people (patients with certain diagnoses who have been treated in acute care facilities), a set time period (30 days post-discharge), and at least one clearly defined goal (keeping them healthy enough to stay out of the hospital). It also requires that providers assume some responsibility- along with the responsibility borne by patients themselves, of course- for maintaining the population's health.

Which populations are appropriate for health systems to manage? Target populations may be defined by payment system (insurance or government programs), diagnosis (e.g., diabetes, cancer, heart disease), community, age, gender, race, or other differential. Once hospital leaders determine which group they intend to manage, they can partner with insurance companies and other stakeholders to develop programs that improve quality and reduce healthcare costs for those populations.

The Case at CHI

Healthcare systems will require new talent and skills to effectively manage the health of certain populations. When in-house resources aren't available, systems may choose to hire new talent with experience in capitated systems or post-acute care. Or they may acquire new business units outside of their traditional (mostly hospital) business lines. They can also dip into- or plunge into- the new era with a pilot project in population health management.

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That's what we're doing at CHI. We are piloting a model based on an accountable care organization (ACO) with a population comprising employees and their families. It's a diverse group, including employees across the United States with a wide array of healthcare needs as well as gender, age, and cultural differences.

In building this new model, we are embracing the Institute for Healthcare Improvement's "Triple Aim" of improved health, improved satisfaction and quality, and lower healthcare costs. Our multiyear, multiphase program includes a health plan, wellness programs, and incentives designed to encourage healthy behaviors. One incentive is a decrease in the employee's portion of the cost of health insurance when the employee and family members participate in wellness activities offered through CHI's "Healthy Spirit" program. These activities range from personal health assessments to individual coaching via telephone or online, to plans for managing chronic conditions. Individualized care plans assist people to quit smoking, lose weight, increase exercise, and reduce stress.

To coordinate an individual's care, we are using a medical home model, which brings together primary caregivers (the team leaders), specialists, hospitals, home health services, post-acute care facilities, health and chronic disease coaches, community services, and care managers.

Supporting this model is CHI's One Care program, a systemwide IT implementation that includes an enterprisewide master patient index (a database that assigns a unique identification number to each individual so that his or her records can be shared appropriately among various caregivers, thereby enhancing the caregivers' ability to coordinate care). We are especially interested in early intervention for people with lower back pain, diabetes, high blood pressure, high cholesterol, and obesity. From this pilot, we expect to gain valuable experience managing the health of chronic care populations, which can be applied to risk-based contracts with private and government payers in the future. According to Nada Vanous, vice president for employee benefits and wellness at CHI, the pilot for the employee health plan will allow the system to test new incentives for positive behaviors and outcomes, which may have applications fora broader population down the road.

Our employees also may benefit from the pilot's coordinated care model, which should help them avoid duplicative services and reduce their risk for medical errors. There are financial benefits as well. Through this pilot, we anticipate reducing our system's employee healthcare costs by 10 to 14 percent. Vanous bases these projections partially on costs avoided since Healthy Spirit was initiated three years ago. As employees take steps to stay healthy, they decrease the use of "sick care" services. Says Vanous: "Over the past three years, we have achieved a cost avoidance of about $115 million dollars and expect to see another $60 million for FY13. National survey data show that CHI's PEPY [per employee per year] cost is projected to be 17 percent lower than that for other hospitals."

The Clinical-Financial Connection

Not every healthcare system will choose its own employees as a pilot population, as we have done at CHI. However, organizations should still prepare for the next era of health care by developing clinical systems that provide high-quality care while conforming to the evolving payment changes. Even if a system is not prepared to accept a risk contract to manage a specific group of patients or members, it should start focusing on managing the care of its patients with heart failure, heart attack, and pneumonia for a minimum of 30 days after delivery of acute care.

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For example, system leaders might look to coordinate post-acute care by having providers schedule followup phone calls with patients. They might also add more traditional home health visits or extensivist visits, using hospitalists who manage recently discharged patients in addition to their acute care work. In addition, they might invest in providing more education to patients and their families before discharge, as well as through telehealth services. They should also concentrate on accurate and timely reconciliation of medications, to ensure that patients are taking only the appropriate medications (and dosages) at home. At CHI, we are piloting, or planning to pilot, variations of these programs in our markets, as we learn which healthcare strategies are most effective for helping different populations maintain or improve their health.

Given the potential impact of the readmission penalty, none of us can ignore the need to better manage population health. But I also think rewarding hospitals for promoting wellness and providing more coordinated care will ultimately contribute to changing our nation's health care for the better.


> Catholic Health Initiatives (CHI) is piloting population health management for a test population that comprises CHI employees and their families.

> CHI is using a medical home model to coordinate care.

> The system anticipates a reduction in its employee healthcare costs of 10 to 14 percent.

We are designed- and rewarded- to care for people when they do get sick. However, we have not had the systems or incentives in place to help patients stay healthy.

a. For details about the Hospital Value-Based Purchasing Program, go to and search on value-based purchasing.

b. For details about the Hospitals Readmissions Reduction Program, go to and search on readmissions reduction.

Kathleen D. Sanford, RN1 DBA, MBA, MA, FACHE, is senior vice president and chief nursing officer, Catholic Health Initiatives, Denver, and a member of HFM A's Colorado Chapter ([email protected]).

Copyright: (c) 2013 Healthcare Financial Management Association
Wordcount: 1904


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