Health care trend: Developing ACOs
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- Eleanore Wade
- 8 years ago
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1 Health care trend:
2 Health care trend: Accountable Care Organizations (ACOs) have been a significant topic within health care. While many organizations have embarked on a quest to embrace ACOs as quickly as possible, others have been slower to adopt. Hospitals and health systems have an opportunity to become leaders in addressing this opportunity, but the question remains how many of them have the interest? Additionally, while the ACO approach to care is being discussed with increased frequency in the public realm, the concept is still relatively young, carrying with it a variety of perceived benefits and challenges. To provide a well-rounded understanding of the future of today s health care system, questions and observations were asked of leading hospital and health system executives nationwide. Insight was gleaned from these organizations to identify their views on ACOs, their priorities in the next three years, what they consider to be their primary needs, and ultimately, their views on how to reduce the rise in health care spending. Our research represents the opinions of more than 150 health care executives, primarily CEOs, presidents, vice presidents, senior vice presidents, and C-suite management in finance, operations, information technology, medical and nursing. The participants came from multi-hospital health systems with from one to 16 hospitals, freestanding hospitals and academic medical centers. The responses were fascinating, and provide insight into the current status and trajectory of the health care system. Ten findings top the list of what was learned. Key Finding #1: ACOs, at least in concept, are alive and well There is a distinct trend toward organizations becoming part of an ACO and wishing to lead the way to make it happen. In fact, three in five health care executives say their facility/system will become part of an ACO within the next five years. Multi-hospital systems are the most likely to believe such. Of those, approximately two-thirds say their own organization will be the initiators, with multi-hospital systems again being far more likely to believe their organization will be a leader. Will your organization become part of an ACO within the next five years? Freestanding Multi-Hospital Academic Overall Hospital System Medical Center Yes 60% 42% 68% 59% No 15% 26% 9% 24% Undecided 25% 33% 23% 18% 1
3 Key Finding #2: Hospital priorities are shifting Priorities have shifted to ensuring quality care versus facility renovation and logistics management, as well as a focus on lowering costs. Health care organizations say clinical quality/ outcomes is their foremost priority for the next three years, followed by clinical IT/EMR integration and meaningful use, as well as operating efficiency. Mid-level priorities for health care organizations over the next three years include physician Priorities have shifted to ensuring quality care versus facility renovation and logistics management. employment/alignment, ICD 10 preparation, value-based purchasing and revenue cycle enhancement. Facility renovation, replacement or development, bundled payment pilots and primary care medical home development are considered among the lowest priorities. Health care organizations also cite the ability to increase revenue as an existing important matter. Specifically, academic medical centers are feeling the greatest pressure to enhance returns, while multi-hospital systems are focusing on physician alignment and medical home development, representing a disparity in priorities based on organization type. Freestanding Multi-Hospital Academic Hospital System Medical Center Preventable readmissions 81% 92% 94% Physician employment/alignment 79% 89% 53% Value-based purchasing 61% 82% 94% Revenue cycle enhancement 70% 77% 88% Primary care medical home development 40% 71% 41% Facility renovation/replacement/development 30% 40% 71% Supply chain management 58% 75% 71% Bundled payment pilots 37% 57% 59% High or Very High Priority Highest Priority Clinical quality/outcomes 20% 78% 98% Clinical IT/EMR integration/ meaningful use 20% 76% 96% Operating efficiency 31% 65% 96% Patient experience/satisfaction 30% 65% 95% Preventable readmissions 20% 70% 90% 0% 20% 40% 60% 80% 100% High Very High 2
4 Employee recruitment, satisfaction and development are also cited as considerations in addition to partnering capabilities, financial and cost improvements, operating as a system, growth, data warehouse development, maintaining faith-based identity, increase in membership and changing management strategies. Key Finding #3: Hospital executives now recognize both financial position and reputation are linked to patient status 30 days post-discharge Two-thirds of health care executives believe the health status of their patients has a high impact on their bottom line. Similarly, nearly two-thirds of health care executives feel that this will significantly impact their organization s reputation. Academic medical centers, as well as organizations that own post-acute entities, are more likely to possess these viewpoints. Bottom line 34% 32% 66% Reputation and image 41% 24% 65% 0% 20% 40% 60% 80% 100% High Very High Key Finding #4: Hospital executives have clear priorities for decreasing the rise in health care expenditures while enhancing quality and outcomes Another imperative topic in the industry is the rise in health care spending. Asked to identify which methods will allow them to limit spending while enhancing their existing quality of service, most executives particularly CEOs believe active management of patients post-hospital discharge to prevent or reduce readmissions and/or emergency room usage to be top of the list. However, chronic disease management programs are considered a very significant factor. Management of patient care transitions and patient-centered medical homes also play a role, they indicate. Chronic disease management and readmission prevention are considered most critical especially to CEOs in reducing rise in health care spending. 3
5 To what degree do you feel the following initiatives will serve to stem the rise in health care expenditures while enhancing quality/outcome? Active management of patients post-hospital discharge to prevent/reduce readmissions and/or emergency room usage Chronic disease management programs 45% 41% 86% 42% Management of patient care transitions from hospital to home and/or to other venues of care 43% Patient-centered medical home model that includes greater deployment of non-physician providers, e.g., nurse practitioner, clinical pharmacists, social workers 38% Enhanced level of medical care in PAC environment to facilitate earlier hospital discharge, thereby reducing hospital LOS 43% 32% 26% 85% 75% 64% Use of home health services 43% 16% 59% 37% 14% Enhanced level of rehab services in PAC environment to facilitate earlier hospital discharge, thereby reducing hospital LOS 51% Wellness/prevention programs 36% 29% 16% 14% 50% 45% 0% 20% 40% 60% 80% 100% High Very High 4
6 Key Finding #5: Among hospitals, the connection between enhanced post-acute medical and/or rehab care and lowering overall health care costs is not well understood Factors executives feel are only somewhat significant to lowering costs while enhancing care relate to post-acute medical and/or rehab care. These include management of patient care transitions from hospital to home and/or to other venues of care; a patient-centered medical home model that includes greater deployment of non-physician providers such as nurse practitioners, clinical pharmacists and social workers; and an enhanced level of medical care in the post-acute environment to facilitate earlier hospital discharge, thereby reducing hospital length of stay (LOS). Additionally, initiatives management considers to have the least impact on the rise in health care expenditures are also closely related to post-acute medical and/or rehab care. These include the use of home health care services; enhanced level of rehabilitation services in the post-acute environment as opposed to medical services to facilitate earlier hospital discharge, thereby reducing hospital LOS; and wellness and prevention programs. These results can be seen in the chart on page 4, and indicate that value propositions, which include both patient and hospital, need to be carefully defined by post-acute providers. However, academic medical centers place greater emphasis overall on managing care in the post-acute environment, and are most likely to see value in certain key initiatives. For example, academic medical centers believe management of patient care transitions from hospital to home and/or to other venues of care compared to multi-hospital systems and freestanding hospitals are top priorities. They see more value in the use of home health care services and an enhanced level of medical care in the postacute environment. Academic medical centers place greater emphasis on managing care in the post-acute environment. Freestanding Multi-Hospital Academic Hospital System Medical Center Management of patient care transitions from hospital to home and/or to other venues of care 65% 74% 77% Use of home health care services 35% 49% 71% Enhanced level of medical care in the post-acute environment 51% 57% 65% High or Very High Degree 5
7 Key Finding #6: Hospital ownership of post-acute care assets is ubiquitous and gaining new attention from those owners Whether or not an organization owns a post-acute entity impacts opinions regarding cost-cutting/quality-enhancing initiatives. More than half of hospitals and health care systems surveyed own home health, inpatient rehab and/or hospice entities. Owners of post-acute facilities have clear, well-defined priorities. Owners of post-acute facilities have clear, well-defined priorities, which include the desire to reposition their services, grow revenue and embark on a joint venture to accomplish it. Also, of those with post-acute facilities, three in four have plans to significantly reposition their services, and two-thirds intend to grow their services in the near-term, either organically or via acquisition. Again, multi-hospital systems are the most likely to have specific plans in relation to their post-acute entities. Freestanding Multi-Hospital Academic Hospital System Medical Center Significantly reposition any or all of the services to facilitate hospital length of stay reductions, reduce readmissions, better manage overall 49% 70% 47% patient costs and/or improve patient experience and outcomes Grow any of the services in the near-term, either organically or via acquisition 37% 65% 41% Joint venture any or all in the near-term 28% 38% 18% Multiple responses allowed Those who do not own a post-acute entity are more likely to believe that a primary care medical home model that includes greater deployment of non-physician providers, such as nurse practitioners, clinical pharmacists and social workers, would stem the rise in health care expenditures while enhancing quality/outcomes. However, those that own a post-acute entity are more likely to believe the same when it comes to enhanced levels of medical care and rehabilitation in the post-acute environment. 6
8 Key Finding #7: Of those that do not own post-acute care assets, approximately one-third plan to develop, joint venture or purchase an entity within the next three years Entities with plans to develop or embark on a joint venture and/or purchase a venue within the next three years say they will be most amenable to collaborative arrangements with existing operators. Additionally, post-acute providers need to offer hospitals/health systems a compelling reason to collaborate. If your hospital/health system does not own a post-acute entity, does your organization plan to develop, joint venture and/or purchase a post-acute venue within the next one to three years? No 64% Yes 36% Key Finding #8: When considering partnering or collaborating with an existing post-acute care provider, certain factors are considered of highest importance When considering partnering and/or collaborating with an accomplished post-acute provider to develop new and/or grow existing services, several partner characteristics are considered the most important in solidifying a decision, including the capability to assist in reducing admissions or care transitions for discharged patients, availability of proven post-acute care pathways and proven management expertise in post-acute services. Most Importance Capability to assist in reducing admissions 39% 47% 86% Capability to assist in care transitions for patients discharged from your hospital 40% 41% 81% Availablity to proven post-acute care pathways 43% 36% 79% Proven management expertise in post-acute services 41% 36% 77% 0% 20% 40% 60% 80% 100% High Very High 7
9 Factors of mild importance include the interoperability potential with clinical IT systems and innovative pricing options, including risk-sharing. The aspects executives rank least critical include capital availability and willingness to incorporate their organizations employed physicians into partner venues. Those who own post-acute entities place higher importance on the capability to assist in reducing admissions. Key Finding #9: CEOs are most attuned to considering innovative pricing options and risk sharing with an accomplished post-acute care provider Although organizationally and culturally hospitals and health systems have not yet made the leap to risk sharing for post-acute services, CEOs are most likely to embrace the concept. 80% 60% 40% 20% 0% 72% CEO 57% Other Position High or Very High Importance Key Finding #10: Academic medical centers have a heightened interest in pursuing post-acute care initiatives Partnership priorities vary by organization type. For example, patient status 30-days post-discharge is of greatest importance among academic medical centers. As well, academic medical center executives are the most likely to say they plan to develop, joint venture and/or purchase a post-acute venue within the next three years. These entities rank the following factors more highly than freestanding hospitals and multi-hospital systems when considering partnering and/or collaborating with accomplished postacute providers. 8
10 Freestanding Multi-Hospital Academic Hospital System Medical Center Capacity to assist in reducing readmissions 72% 90% 94% Capacity to assist in care transitions for patients discharged from your hospital 72% 84% 88% Availability of proven post-acute care pathways 72% 82% 82% Proven management expertise in post-acute services 74% 77% 82% Interoperability potential with your clinical IT systems 77% 68% 71% Innovative pricing options, including risk sharing 63% 61% 65% Willingness to incorporate your employed physicians into partner venues 51% 46% 59% Capital availability 51% 44% 65% High or Very High Importance Implications for hospitals and health systems These findings signify considerable requirements for hospitals and health systems. First and foremost, the pre-/post-acute care continuum of care management becomes essential. It is important to identify organizational gaps in competencies within this continuum and determine how they will be addressed. Additionally, while patient care transitions are important, what happens afterwards is also imperative. Hospitals will seek involvement in post-discharge patient care, either directly or indirectly. Involvement of patients and families and/or significant others in the care process will need to begin upon admission. For hospitals and health systems, organizations assuming risk will need to have associated competencies in place; fee-for-service oriented providers will not be sustainable long-term. Postacute providers clinical capabilities will become paramount and a competitive differentiator will be demonstrated success in managing patients with multiple chronic illnesses. To this end, the availability and associated value of enhanced post-acute care is an emerging dynamic. Overall, investment in priorities will impact the ability to allocate necessary capital. Decisions around whether to invest, reposition and/or shed post-acute care assets will become more complicated, and collaboration options will gain validity. Because of this, decision-making could be advanced through an up-front effort in identifying preferred partner attributes. 9
11 Implications for post-acute providers These findings also have noteworthy ramifications for postacute providers. Most significantly, providers will need to know the organizational competencies that can be used to address hospital/health system gaps, as well as to understand their relative position and potential differentiation from competitors. Post-acute providers should be ready with a robust communication approach that highlights individual organizational value. With care venues becoming more highly defined by cost, outcomes and value, a patientempowered environment emerges. The post-acute provider s ability to deliver programs and processes that result in preventing unnecessary readmissions will be fundamental, highlighting a vetted track record of preventing readmits. Similarly, it will be essential to know and clearly articulate programs and services that have been successfully implemented to specifically lower overall patient care costs while improving outcomes. Patient satisfaction surveys need to be routine; comparatives to competitors, as well as area hospitals, will be demanded. As priorities for hospitals change, so will the decision makers. Post-acute providers need to recognize and effectively access new connections. Efficient providers that can deliver desired outcomes will be well positioned to complement, collaborate with and/or acquire hospital/health system owned postacute care assets. Admission to discharge is no longer separable from a continuum of patient care, and as hospitals and health systems seek strategic partners to fill the gaps in the care continuum, their present decisions will significantly impact the future of the health care system, specifically in the development of ACOs. With care venues becoming more highly defined by cost, outcomes and value, a patient empowered environment emerges. With industry-wide interest and a notable desire to be a leader in this new progress, it is to be expected that these organizations have well-understood priorities and considerations for the next several years in addition to enhancing their quality of service, limiting health care expenditures, increasing revenue and providing care in a post-acute environment. The challenges and opportunities perceived by hospitals and health systems should provide insight to health care executives nationwide. 10
12 Craig Abbott Chief Executive Officer Craig Abbott provides leadership and direction setting for Health Dimensions Group. Prior to his appointment as CEO, Craig was the chief operating officer. As a management executive, Craig s areas of expertise include executive leadership and operational management; financial oversight, management and fiscal improvement; staff management, development and team building; quality improvement and regulatory compliance; program development and cultural enhancement; strategic planning and implementation; and facility transition and turnaround expertise. About Health Dimensions Group Health Dimensions Group is a Minneapolis-based, fully integrated senior living health care management and health care consulting firm. For more than 20 years, we have partnered with hospitals, health systems, and long-term care and senior living providers nationwide to help them meet the ever-changing needs in their markets and plan for the future, while maintaining a healthy bottom line. 11
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