PYA. PYALeadership Briefing. Beyond Tactics: Building a Value-Based Culture
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1 PYA PYALeadership Briefing Beyond Tactics: Building a Value-Based Culture May 2012
2 Beyond Tactics: Building a Value-Based Culture Perhaps because CMS launched the Hospital Compare website over five years ago with the promise that some form of pay-for-performance was coming, the announcement in April last year of the final rules for Value-Based Purchasing (VBP) bordered on being a non-event. Overshadowed by the ongoing interest and debate regarding other elements of the Affordable Care Act, VBP almost appeared at the time to be another routine CMS announcement updating Medicare reimbursement. Today, most hospitals recognize that valuebased purchasing is a game-changing shift in approach that has significant short- and longterm ramifications for large and small health systems alike. Unlike some aspects of health reform legislation, the certainty and immediacy of VBP regulations demand providers attention for several key reasons. First, the initial nine-month performance period that began on July 1, 2011, has already come to a close, and CMS has announced additional performance measures for FY By August 1, CMS will notify each hospital participating in VBP of the estimated incentive payment it will receive for each patient discharge in FY 2013; the exact incentive payment amount will be confirmed on November 1, Second, the financial stakes are high. Since most every hospital already loses money on Medicare, the loss of up to 2% in reimbursement could be devastating. Further, as pressures mount to reduce all government spending, CMS may reward the best performing institutions by not cutting payments as significantly in the future. While the initial VBP program is designed to be spending neutral, it is questionable whether this approach can hold as deficit reduction pressures build. Third, CMS has signaled that outcomes and patient perceptions of their experiences will be weighted more heavily than care process measures going forward. In a recent press release, the agency stated, CMS intends to increase our focus on outcomes measures to improve treatment outcomes and patient safety. In the FY July 1, 2011 August 1, 2012 October 1, 2012 November 1,2012 October 1, 2016 March 31, 2012 Initiol Performance Period Announcement Medicore discharges bad amount of VBP of estimated 17 clinical process reimbursed according incentive earned M11 of care measures to VBP announced to hospitals of payment 8 H-CAIWS measures 0% Rededlon 1% Reduction 2% Reduction 2 Beyond Tactics: Building a Value-Based Culture
3 2014 Hospital VBP program, there will be three 30-day mortality measures in the outcome domain. CMS has decided to weight the outcome domain at 25 percent of the total performance score to increase hospital focus on patient safety initiatives. Finally, Medicare reimbursement is just the tip of the iceberg. In many markets health systems are already seeing quality performance and patient scores incorporated into incentive satisfaction payments, accounting for a larger portion of hospitals reimbursement. Unless providers adapt to accepting and managing risk for increasing quality both real and perceived and reducing the cost of providing care, they not only may see deteriorating financial performance but also losses in market position. This PYA Leadership Briefing looks more closely at the underlying mechanics of the new Value-Based Purchasing guidelines as well as the strategic and operational path for success under VBP. The Value Equation CMS intends to increase our focus on outcomes measures to improve treatment outcomes and patient safety. In the FY 2014 Hospital VBP program, there will be three 30-day mortality measures in the outcome domain. CMS has decided to weight the outcome domain at 25 percent of the total performance score to increase hospital focus on patient safety initiatives. Centers for Medicare & Medicaid Services Fact Sheet Released Nov.1, As the name suggests, the new VBP regulations are designed to reward those health care institutions that offer superior value to Medicare patients. Remember that value is dependent on both the cost and quality of a given product or service. That s why consumers can view clothing retailers with products and services as dissimilar as Target and Nordstorm both as high value stores. Perceived quality and service may be lower at Target but so are their prices. The VBP program provides a structured mechanism to level the playing field across health care institutions that deliver varying levels of quality. Simply, institutions providing measurably higher quality can justify higher cost and reimbursement, while institutions with lower scores on quality metrics should be paid less to balance the value equation. It is important for staff and physicians at all levels of the organization to understand this dynamic and why paying attention to VBP factors is so critical. Beyond Tactics: Building a Value-Based Culture 3
4 Understanding the Mechanics of Value-Based Purchasing - Winners and Losers While the new value-based purchasing methodology was designed to be revenue/cost neutral in aggregate, the funding and incentive payment design forces individual winners and losers. Approximately 50% of participating hospitals will lose money while the other half will benefit from higher reimbursement for Medicare services. To fund incentive payments, base DRG rates for hospitals reimbursed under the prospective payment system (PPS) will be reduced by 1% beginning October 1, For each of the next four years, rates will drop an additional one-quarter percent until base payments are reduced a full 2% in FY Although DRG rates are being cut, remember that the regulations today require that all reduced reimbursement estimated to be approximately $850 million in the first year of the program be redistributed to providers. CMS estimates that the mean redistributed value-based incentive payments will range from 48% to 155% of institutions reduction in base DRG reimbursement. 4 Beyond Tactics: Building a Value-Based Culture
5 ACUTE MYOCARDIAL INFARCTION Fibronolytic therapy received within 30 minutes of hospital arrival Primary PCI received within 90 minutes of hospital arrival HEART FAILURE Discharge instructions PNEUMONIA Blood cultures performed in Emergency Department prior to initial antibiotic received in hospital FY2014 HOSPITAL VBP METRICS Clinical Process of Care Measures Initial antibiotic selection for Community Acquired Pneumonia in immunocompetent patient HEATHCARE-ASSOCIATED INFECTIONS Prophylactic antibiotic received within one hour prior to surgical incision Prophylactic antibiotic selection for surgical patients Prophylactic antibiotics discontinued within 24 hours after surgery end time Cardiac surgery patients with controlled 6 a.m. post-operative serum glucose Postoperative urinary catheter removal on post operative day 1 or 2 SURGERIES Surgery patients on a beta blocker prior to arrival that received a beta blocker during the perioperative period Surgery patients with recommended venous thromboembolism prophylaxis ordered Surgery patients who received appropriate venous thromboembolism prophylaxis within 24 hours prior to surgery to 24 hours after surgery Acute Myocardial Infarction (AMI) 30-Day Mortality Rate Outcome Measures Heart Failure (HF) 30-Day Mortality Rate Pneumonia (PN) 30-Day Mortality Rate Patient Experience of Care Measures (HCAHPS) Communication with Nurses Hospital Staff Responsiveness Communication about Medicines Discharge Information Communication with Doctors Pain Management Hospital Cleanliness & Quietness Overall Hospital Rating What Matters in VBP? The metrics that matter under the new valuebased purchasing program were initially grouped in two broad categories that should be very familiar to hospitals. Clinical Processes of Care Measures were first made public on CMS s Hospital Compare website ( in 2005, and H-CAHPS measures of patient experience followed in In the initial performance period, the 12 Process of Care measures determined 70% of a hospital s incentive score, with the H-CAHPS survey results accounting for 30%. For the FY 2014 performance period that began on April 1, CMS added one hospital-associated infection within the Clinical Process of Care Measures (Postoperative urinary catheter removal on post operative Day 1 or 2) and a new category of Outcome Measures with 30-day mortality rates for three diagnoses: acute myocardial infarction, heart failure, and pneumonia. Beyond Tactics: Building a Value-Based Culture 5
6 EXAMPLE SCORING MODEL Achievement Threshold Benchmark HOSPITAL I Baseline Score ACHIEVEMENT RANGE 1.43 BASELINE 2012 PERFORMANCE PERFORMANCE Achievement Score III Improvement Score Scoring Under VBP For both Clinical Processes of Care and H-CAHPS measures, there are two ways for a hospital to earn its performance score in a range from 0 to 10 points: 1) by hitting achievement targets based on performance as compared to all hospitals across the country, or 2) by improving results compared against its own performance during the benchmark period. CMS will award the higher of the two calculated scores. Achievement Scores are awarded for each individual Care Process and H-CAHPS measure on an incremental scale from a threshold up to the benchmark for that performance component, where: 6 Beyond Tactics: Building a Value-Based Culture
7 Threshold = Median (50th percentile) of all participating hospitals performance during the baseline period (July 2009 March 2010) Benchmark = Mean of the top decile of all hospitals performance during the baseline period Improvement Scores are awarded on a similar scale, but the organization s threshold is set at its own actual performance on each dimension during the baseline period. The Improvement Score methodology makes it possible for a hospital to receive points when it is making progress on a Clinical Process or H-CAHPS measure even when its score is still below the median for all hospitals. In the scoring example, this hospital scored.43 during the baseline period on one of the VBP dimensions. Its score improved significantly during the 2012 performance period to.82, putting it above the Achievement Threshold of.65 on this measure. Its Achievement Score on this measure would be approximately 7.2 and rounded to 7. But note that its Improvement Score would be slightly higher and rounded up to 8. On this measure it would be awarded the higher Improvement Score. For Clinical Processes of Care and H-CAHPS measures, CMS will calculate both the Achievement and Improvement Score and give the hospital the higher of the two scores, rounded to the nearest whole number. For the patient experience component of valuebased purchasing, CMS also intends to reward hospitals for achieving consistency across the eight H-CAHPS dimensions. The Consistency Score, which will comprise 20% of the total H-CAHPS score, will be awarded in a range of 0 to 20 points. If all eight of a hospital s dimension scores are at or above the 50th percentile achievement threshold, then the hospital will earn all 20 consistency points. If the lowest score a hospital receives on an HCAHPS dimension drops below the floor of hospital performance on that dimension during the baseline period (the 0th percentile), then that hospital earns zero consistency points. Otherwise, consistency points will be awarded according to where the hospital falls in the range between the performance period score floor and the achievement threshold. Payments Under VBP Actual incentive payments will be calculated at the end of each CMS fiscal year using a hospital s individual scores as compared to performance scores of all other participating hospitals. Again, CMS estimates that the mean redistributed value-based incentive payments in the first year of the program will range from 48% to 155% of institutions reduction in base DRG reimbursement. Beyond Tactics: Building a Value-Based Culture 7
8 The Clock is Ticking While it may seem as if the value-based purchasing guidelines were just announced, the initial nine-month performance period already came to a close on March 31, Now, hospitals should be actively implementing strategies for the first full 12-month performance period, critically evaluating plans implemented in 2011 and planning for performance going forward that is more heavily weighted on outcomes and patient safety measures. Have staff from the frontline to senior leadership embraced VBP priorities? Have all key constituencies including physicians been involved in planning and implementation? Have behaviors begun to change, leading to scores closer to the benchmark for each care process and patient experience metric? Most importantly, senior leaders must recognize that moving VBP performance in a meaningful, sustainable way is challenging, long-term work because it involves changing the culture of the organization. Strategies for developing a culture that is more focused on outcomes and creating higher value for patients is the topic of the second half of this Leadership Briefing. 8 Beyond Tactics: Building a Value-Based Culture
9 Strategies for Success in Building and Sustaining a Value-Based Culture Jump-starting efforts and achieving sustainable results in value-based purchasing require an integrated, organization-wide plan that insures a hospital focuses on doing the following six things well: 1. Establishing and communicating organization-wide and departmental goals related to each component of the Clinical Process of Care and H-CAHPS dimensions. 2. Developing a clear, consistent dashboard for sharing results on a regular basis among all key constituencies. 3. Cascading goals to the frontline and involving staff in developing approaches to achieve superior results, including the adjustment of strategies mid-year if actual performance falls below target. 4. Providing focused professional development/training for staff that builds the core competencies and critical thinking skills essential for success in clinical processes of care and patient experience. 5. Fostering a culture of always that supports continuous improvement in patient quality/safety and consistency in the patient experience. 6. Celebrating successes and providing positive feedback to individuals and teams for demonstrating practices and behaviors that deliver superior care. In many organizations, these strategies can and should align with and reinforce previously identified efforts to improve performance, such as patient-centered care philosophies, achievement of Magnet goals for nursing care, and/or implementation of specific models such as Transforming Care at the Bedside (TCAB). A Balance of Cultural Strategy and Tactical Implementation When organizations begin to concentrate on changing behaviors that lead to improved performance on value-based measures, it is common to immediately jump to a narrow, very tactical view of each discrete clinical process or H-CAHPS dimension, asking individual managers to develop strategies to hit specific targets. While tactical plans are necessary, they are not sufficient to build the organizational culture that embraces continuous improvement and the supportive teamwork that is essential to sustain exceptional performance. In particular, most of the H-CAHPS measures are difficult, if not impossible, to successfully inculcate in the organization with simple scripting or other isolated edicts. Other than the environmental factors of quietness and cleanliness, H-CAHPS dimensions require competencies and practices across the care team that support better communication and relationships among all key constituencies including patients and families. A recent study by Northwestern University funded by the National Institutes of Health reinforces this balanced approach. As explained in a June 22, 2011, press release from the school, the study looked at the use of checklists in the intensive care unit at Northwestern Memorial Hospital when used in conjunction with copilots to encourage and facilitate their use. The Beyond Tactics: Building a Value-Based Culture 9
10 A Tale of Two Hospitals and Two Plans The following scenario, which highlights real-life best practices in developing effective performance improvement strategies, is drawn from the author s experiences working with dozens of hospitals and health systems over the past decade. Recognizing that improving clinical processes and the patient experience would be vital to their future growth and market position, two hospitals set out to determine the best course to improve performance related to the new Value-Based Purchasing guidelines in their institutions. With a strong analytic bias in prioritizing its clinical improvement work, the first hospital assigned the development of a comprehensive plan to the director of quality improvement. He began to rigorously dissect all available quality and patient satisfaction data to isolate the most significant trends and identify the key drivers the hospital would pursue to make progress. After two months of focused work, he delivered an impressive, comprehensive document to the Leadership Team that recommended 10 major programs that needed to be implemented to improve clinical processes and the patient experience, outlining in detail the changes middle managers needed to implement among their front-line staff. The second hospital took a different approach. Two members of the Leadership Team stepped up to take responsibility for leading the VBP improvement efforts, relying on support from their small Quality Department to supply data. Drawing from national studies and their own quality and satisfaction data, they identified a handful of critical changes they knew needed to occur to achieve their goals. They paid particular attention to how strategies would reinforce the mission and values of their organization and align with existing initiatives underway to improve operations and quality. Using this three-page document, they began to assemble small groups of managers, front-line staff and physicians to talk about what needed to be changed and how new ideas would be implemented. After one year, the two hospitals had very different results. The first hospital that started with a much more robust document with specific strategies developed in isolation by the director of quality improvement was still struggling with moving clinical process and patient satisfaction numbers. Most of their time was spent scolding middle managers for missing targets and doing a poor job implementing the initiatives they thought were essential to achieving goals. The second hospital was celebrating incremental success during the year in moving clinical quality and patient satisfaction numbers. Their time was devoted to adjusting the strategies developed in cooperation with front-line staff and physicians, cultivating new ideas that would continue make care safer, patients happier and the experience of providing care better. As a related benefit, they found their employee satisfaction numbers increasing as well. 10 Beyond Tactics: Building a Value-Based Culture
11 mortality rate plummeted 50 percent when the attending physician in the ICU had a checklist and a trusted person prompting him/her to address issues if they were overlooked. Arguably the most interesting finding in the study: simply using a checklist alone did not produce an improvement in mortality. According to Curtis Weiss, M.D., lead investigator of the study and a fellow in pulmonary and critical care medicine at Northwestern s Feinberg School of Medicine, We showed the checklist itself is just a piece of paper. It s how doctors interact with it and best implement it that makes it most effective. That s how we came up with the prompting. We showed the checklist itself is just a piece of paper. It s how doctors interact with it and best implement it that makes it most effective. That s how we came up with the prompting. Curtis Weiss, M.D., Lead Investigator Northwestern University Feinberg School of Medicine This study reinforces that a tactical tool like a checklist is only helpful when it is used in ways that promote teamwork, better communication among clinical professionals, and continual reminders that facilitate decision making, rather than just being a piece of paper that gets shoved in someone s face like busy work, Dr. Weiss commented. Collaborative Planning is Different from Writing a Plan Organizations that develop the most successful, compelling plans to enhance quality and the patient experience or any other area for that matter understand that success is defined by the effectiveness of implementation, not by the insightfulness of individual strategies. These institutions appreciate that the process leading to the completion of a comprehensive plan is the first and most important opportunity to gain essential support and buy-in to performance improvement work throughout the organization. Great planning organizations look downstream and ask important questions about the challenges of implementation first rather than waiting to deal with them after strategies are vetted and approved at the Board or executive level: Who in the organization must enthusiastically embrace our new approaches for them to be successful? Who are our skeptics and how can we engage them during the planning process? Where have past initiatives in clinical quality or patient satisfaction improvement fallen short and what can we learn from these experiences? How do we effectively engage various constituencies and levels of the organization constructively in planning senior leadership, middle managers, front-line staff, and physicians? Beyond Tactics: Building a Value-Based Culture 11
12 What are our overall goals and how will we measure success? With these questions in mind, following are primary considerations for hospitals to take into account when structuring planning processes and shaping strategies for success in Value- Based Purchasing. Structuring the Planning Process Clarifying the key roles and responsibilities of individuals at all levels of the organization is a critical first step in effective planning for improvement. This starts with the Board of Directors. Ensuring that clinical process improvement and patient experience work are among the institution s top priorities must be the responsibility of the governing board in cooperation with the CEO. Members of the senior leadership team are the most visible day-to-day advocates for VBP work within the organization. In most hospitals, the senior patient care executive should play a major role in the work because issues at the bedside are primary drivers of success. Physician leadership also is essential to drive strategies that lead to more integrated, safe, coordinated care. As planning cascades through the institution, many physicians can participate in development of specific strategies in their areas of influence and interest. With key leaders and their roles identified, the following structure helps facilitate specific strategy development at both an organizationwide and unit level. VBP Strategic Planning Team This group of leaders has responsibility for guiding the development of the overall VBP plan and ensuring broad participation in strategy development and implementation throughout the organization. Funding decisions related to value-based purchasing work also are the ultimate responsibility of this group. Membership on this team, which will be in place only through the completion of the Value-Based Purchasing Plan, may include: President & CEO 1-2 additional members of the senior leadership team, including the top patient care executive 1-2 physician leaders Senior planning and/or quality staff members who will be responsible for the tactical management of the planning process 12 Beyond Tactics: Building a Value-Based Culture
13 VBP Performance Improvement Team This larger group (15-20 members) increases participation from constituencies throughout the organization and should be established as an ongoing team within the health system. Members of this group help cooperatively develop closer-to-the-ground strategies and monitor the ongoing success of all major initiatives. This team advocates for the important work of Departmental Improvement Teams, providing organizational resources and expertise to facilitate their work as needed. Members of this team may include: Senior executives, especially individuals who have direct responsibility for patient care areas. Physicians who have a special interest and expertise in clinical quality and patient experience work. Ideally, participation from both primary care and specialty physician ranks is needed. Several front-line staff members who have taken a special interest in quality and patient experience work and are role models in the organization for providing exceptional care. Support staff from the Quality Management and/or Planning departments who provide data support and analysis to the committee. Departmental Improvement Teams Like traditional process improvement teams, these ad hoc groups throughout the organization involve front-line staff in developing tactical plans to achieve the strategic goals identified in the organization s overall plan and/or by the VBP Performance Improvement Team. These teams should include physician participation where appropriate. Key members of middle management (directors and managers) who have roles that are crucial to the successful development and implementation of strategies. Beyond Tactics: Building a Value-Based Culture 13
14 Conclusion A planning process that is collaborative, inclusive and respectful of front-line managers and staff is the important first step in achieving the right balance between culture and tactics in the journey to continuous improvement in quality, patient safety, and experience. Modeling the behaviors and competencies that are essential to achieving and sustaining desired results in Value-Based Purchasing is one of the most important things leaders of healthcare organizations can do to ensure success and move toward more patient-centered, value-based models of care. These model behaviors start with collaboration, teamwork, effective communication, and relationshipbuilding across constituencies at all levels of the organization. For more information: David McMillan, CPA dmcmillan@pyapc.com (800) Beyond Tactics: Building a Value-Based Culture
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