volume to value...volume to value: hormuth ^the practice of medicine is an art, not a trade; a...

Volume to Value: A Paradigm Shift or

Quantification of Quality

David A. Hormuth, MD, MBA, FACS

Chairman of Cardiothoracic Surgery Section

St. Vincent Medial Group

Evansville / Indianapolis Indiana

Volume to Value: Hormuth

• Define value driven healthcare and its implication to the PA.

• Discuss the appropriate value metrics to apply to the PA provider.

• Identify the current state of PA compensation and establish a value position.

• Define and outline the optimal utilization of ‘Top of License” practice to maximize PA Value.

• Discover opportunities for the PA provider to enhance growth and expansion of the organization

Learning Objectives


Disclosures:

Advanced Cardiothoracic Consultants, LLC

Indianapolis, Indiana

Principle and Co -Owner


“The practice of medicine is an art, not a trade; a

calling, not a business; a calling in which your heart

will be exercised equally with your head. The practice

of medicine is an art, based on science.”

-Sir William Osler, 1889


The constant flux in healthcare regulations and policy have

left providers feeling frustrated and disconnected from the

Art of Medicine.

The time providers used to dedicate to interacting directly

with patients now accounts for less than 13 percent of

their day, with the vast majority spent providing mandated

regulatory documentation of the visit.


More than 87 % of the time


Why should we be involved ?

• Transformational Changes

• Ownership in the process

• Part of the Solution

• Realignment of Expectations

• Strategic Planning

• Impact Patient Care/Outcomes

Economics: Hormuth

OECD (2017), "Health spending"

Economics: Hormuth

Milliman Medical Index: Components of CostJune 17, 2016 Chris Girod

Economics: Hormuth

• The professional services has shrunk slightly, to 30% of the total in 2016.

• Low increases in provider payment rates

• Fee schedule that has been negotiated between the health plan and the physician (?)

• Based on the fee schedule Medicare uses.

• Over 10 years or more, Medicare fee schedule has increased only at very low rates, at or near 0% in many years.

• Consequently, physicians often receive little or no payment rate increases for their Medicare patients, and also for their patients who have employer group insurance

, 2015Milliman Medical Index: Components of CostJune 17, 2016 Chris Girod

Economics: Hormuth

• Prescription drugs costs are still the fastest-growing slice of the healthcare cost pie, increasing to $4,270, or 17% of the total, in 2016.

• Drug spending increased by 9.1% from 2015 to 2016, down from the previous year’s increase of 13.6%.

• Although a lower rate of increase ,but still much higher than the 3.8% growth rate for all other healthcare costs.

• Much of the prescription drug cost growth is driven by specialty drugs

• Medicare defines specialty drugs as those costing more than $600 per script in 2016.

, 2015Milliman Medical Index: Components of CostJune 17, 2016 Chris Girod

Economics: Hormuth

Economics: Hormuth

How to Engage Physicians in Best Practices to Respond to Healthcare TransformationKent Bottles, MD

Economics: Hormuth

Patient Expectations: Hormuth

Then


• Value defined as the health outcomes achieved per dollar spent

• Value — neither an abstract ideal nor a code word for cost reduction — should define the framework for performance improvement in health care

• Value should always be defined around the customer

• Creation of value for patients should determine the rewards for all other actors in the system

Michael E. Porter, Ph.D.N Engl J Med 2010; 363:2477-2481


Michael E. Porter, Ph.D.

N Engl J Med 2010; 363:2477-2481


What is Value in Health Care?

Value = Efficiency

Cost reduction without regard to the outcomes achieved is dangerous and self-defeating, leading to false “savings” and potentially limiting effective care.

[ Business low hanging fruit]

Cost refers to the total costs of the full cycle of care for the patient's medical condition, not the cost of individual services.


The proper unit for measuring value should encompass all services or activities that jointly

determine success in meeting a set of patient needs



The most important users of outcome measurement are providers lead to substantial improvement.

[ Why we need to develop our metrics, and not rely on outside forces]

Outcomes need not be reported publicly to benefit patients and providers

Progression to public reporting will accelerate innovation by motivating providers to improve relative to their peers and permitting all stakeholders

to benefit fully from outcome information


Innovation in Healthcare: Hormuth

Why is Healthcare Innovation Necessary

Inconsistent Quality

Unacceptable Harm

Widespread Waste

Unsustainable growth in costs

Rapidly rising demand

Looming provider shortage

Value Based Delivery: Hormuth

Current Structure of Health Care Delivery

• Organization by specialty with independent private-practice physicians

• Measurement of “quality” defined as process compliance

• Cost accounting driven not by costs but by charges

• Fee-for-service payments by specialty with rampant cross-subsidies


Current Structure of Health Care Delivery

• Delivery systems with duplicative service lines and little integration

• Fragmentation of patient populations such that most providers do not have critical masses of patients with a given medical condition

• Siloed IT systems around medical specialties


“ In health care, the days of business as usual are over”

– Michael Porter

Current Challenges:

• Rising costs

• Uneven quality

What has been Tried but Failing: ( incremental fixes – minimal Impact)

• Attacking fraud

• Reducing errors

• Enforcing practice guidelines

• Making patients better “consumers”

• Implementing electronic medical records


• New Strategic core is maximizing value for patients

• Move away from a supply-driven health care system to a patient-centered system

• Move away from what physicians do and toward what patients need

• Volume and profitability of services provided to the patient outcomes achieved (P4P)

• Replace today’s fragmented system


• Transformation must come from within

• Physicians and provider organizations must put in place the set of interdependent steps needed to improve value,….. because ultimately value is determined by how medicine is practiced.

• Every stakeholder in the health care system has a role to play

• Health care organizations have never been against improving outcomes, their central focus has been on growing volumes and maintaining margins


• Providers need a strategy that transcends traditional cost reduction and responds to new payment models

• If providers can improve patient outcomes, they can sustain or grow their market share.

• Improve the efficiency of providing excellent care… contracting discussion from a position of strength.

• Providers that increase value will be the most competitive.

• Organizations that fail to improve value, no matter how prestigious and powerful they seem today, are likely to encounter growing pressure


Porter’s “The Value Agenda”

Transition: Hormuth

Operating a successful business requires

decisiveness and dispassionate decision

making; the practice of medicine is a mix of

decision making and compassion for people.

Tips to Be a Good Physician and a Good Business Person

Physicians Practice August 16, 2012

Physician as CEO: Hormuth

• The shift from volume-based to value- and quality-based care delivery models

• Only approximately 5 percent of hospitals leaders are physicians

• “Conventional knowledge suggests physicians should focus on clinical care while managers with business or administrative backgrounds command hospitals' daily operations, but this notion is likely outdated, if not fundamentally flawed”

Becker's Hospital Review Tamara Rosin

March 02,2015, 2015


The shift from volume-based to value- and quality-based care delivery models

The most effective leadership teams are comprised of a

combination of clinical, business, patient- or consumer-

focused members that can contribute a variety of

multidisciplinary skills and experiences


March 02,2015, 2015


Only approximately 5 percent of hospitals leaders are physicians

2011 study found among the 300 American hospitals top-ranked by U.S. News & World Report, overall hospital quality scores were about 25 percent higher in those with physician

CEOs compared with hospitals run by managers with nonmedical backgrounds

Journal Social Science & Medicine by Amanda Goodall, PhD


“Conventional knowledge suggests physicians should focus on clinical care while managers with business or administrative backgrounds command hospitals' daily operations, but this

notion is likely outdated, if not fundamentally flawed”

Physician leaders do possess the clinical experience and insight into the frontlines of healthcare that administrators

often lack.

Features of a physician-led hospital is the peer-to-peer trust that exists among clinical colleagues


March 02,2015, 2015


Strong knowledge of the healthcare profession, something not easily picked up by someone coming from a different

industry


Physicians and Providers remain focused on patient outcomes and providing

compassionate solutions in alignment with the patient's expectations

The patient wants value and the provider wants to provide that value

Value Position: Hormuth

Providers need to establish the metrics and assessment tools to provide value position

Internally driven ……..not externally required

We know what is important in our practice location

How do we do this ?


The Value Scorecard

• What data is required to make the change ?

• How do we become agile as an organization ?

• When do we make the changes ?

• How will we be able to predict sustainability ?

• Will we need more information ?

• Are the metrics moving targets ?

Value Scorecard: Hormuth

“Ok this is good, but why measure healthcare and more importantly what measures are important?”

“Outsiders are already measuring “stuff” isn’t that good enough?”

“Will this have any tangible impact?”


“Ok this is good, but why measure healthcare and more importantly what measures are important?”

Practice Specific

“Outsiders are already measuring “stuff” isn’t that good enough?”

Do they understand your unique practice

“Will this have any tangible impact?”

YES


The Development of the Value Scorecard

Balanced Scorecard (Kaplan and Norton, 1992)

Value Scorecard : Hormuth

The Development of the Value Scorecard

Strategic Positioning (Modification of BCG Matrix)

Compensation assessment: Hormuth

“Ok this is a “cool” chart, but how do we

identify individual challenges and how do we

implement and execute effective change ?”

INDIVIDUAL ASSESSMENT

Provider Compensation: Hormuth

Productivity Assessment

J Adv Pract Oncol. 2014 Mar-Apr; 5(2): 128–133.Calculating Your Worth: Understanding Productivity and ValueTodd Pickard, MMSc, PA-C


Benefits and Pitfalls of Productivity Measures



Why Productivity Measurements Matter!

• Compare clinicians to their peers

• Determine if the PA’s work is a "cost center" or "revenue center"

• Identify when additional clinical staff is needed

• Determinations of compensation and bonus structures

• Promote transparency, accountability, and efficient management

when used properly

Compensation Assessment: Hormuth

Volume to Value

$$$ to Intangibles

Compensation assessment: Hormuth

PA Value: Hormuth


Value Compensation Transition

2014: Mayo Clinic Health System implemented a new, value-focused physician compensation plan as part of a larger initiative aimed at systemwide clinical integration.

The plan uses three value-based metrics, focusing on outcomes, safety, and patient experience, initially would determine 5 percent of a physician’s compensation.

Notable improvements achieved in the first year of the plan’s implementation were strong indicators of the potential effectiveness of such a plan


Pure productivity-based compensation models were not aligned with the change necessary to prepare for value-based payment

Centralized physician performance management system to standardize the process to calculate relative value units (RVUs) and measure/track performance data (95 %)

Value Component to Compensation: (5%)

• 1 percent for outcomes measures by specialty

• 2 percent for safety with e-prescriptions and medication reconciliation

• 2 percent for patient experience score

Physicians received monthly reports on their productivity and value-based performance


Plan Limitation

• Lack of outcomes (versus process) metrics

• Data integrity

• Change fatigue

Summary: Hormuth

What data is required to make the change ?

• Did we collect the correct information ?

• Am I able to influence the change ?

• Which patient results/outcomes are directly attributed to my personal care and which is a “group” function?

• How do I review the information and develop and individual plan for improvement?

Summary: Hormuth

How do we become agile as an organization ?

1. What is the time frame for process review and change?

2. Do I have support for the proposed changes ?

3. How do I navigate roadblocks ?

4. Are there collaborative processes that will be stronger than just individual processes?

Summary: Hormuth

When do we make the changes ?

• Be analytical, not totally reactive

• Implementation within 3 months or less

• Don’t rush to make all the changes at once

• Flexibility is key to long term success, but be firm on establishing the target

Summary: Hormuth

How will we be able to predict sustainability ?

• The challenge, again a developed plan will be required with benchmarks

• Consistent results over a few months, not enough to assure sustainable process

• Once it is “fixed” don’t ignore the process and review at least every 3 months.

Summary: Hormuth

Will we need more information ?

• DATA is KING

• Always look for other areas to improve once the “low hanging fruit” is harvested

• The next area of improvement and analysis will be easier to identify and collect, but may be more difficult to change

• Look for predictive metrics

Summary: Hormuth

Are the metrics moving targets ?

• Yes, but once you start, there will be additional data accessible for you to analyze

• Be thoughtful and not just random

• Look for information that will make you and your practice valuable.

• Knowledge about your process with be your key to future negotiation and value

volume to value...volume to value: hormuth ^the practice of medicine is an art, not a trade; a...

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