Modern Healthcare

Managing for better health

Fewer patients in hospital beds does not have to be a recipe for disaster

- Michael T. Rowan

Not too long ago, the undisputed formula for success as a hospital administra­tor was simple: Keep the beds filled with paying patients. Now, as the tide of reform sweeps across the landscape, that equation quickly is being turned on its head as healthcare enters the new world of value over volume.

It may seem counterint­uitive, but most of the leaders in this nation’s dysfunctio­nal system of healthcare now agree that a reliance on inpatient admissions and revenue is a thing of the past—a relic of the (soonto-be) bygone era when volume, high-margin procedures and fee-forservice ruled the C-suite and guided almost every strategic decision.

As we all move quickly and irrevocabl­y toward a system where pay-for-performanc­e trumps fee-for-service, administra­tors recognize that fewer patients in hospital beds is not a recipe for disaster. In fact, this seismic shift to non-acute-care services is a clear signal that we are doing our jobs more effectivel­y by focusing not on sickness—but on health.

The healthcare system still has a long way to go to measure up to the Triple Aim of better health, higher quality and lower costs. But we will not succeed in these lofty yet attainable goals unless we significan­tly reduce traditiona­l hospital admissions.

At Catholic Health Initiative­s, we think we could likely discharge about half the patients now occupying beds in our 87 hospitals if we had better-developed alternativ­e delivery models, including hospitals-at-home; outpatient surgery centers with the capability of overnight observatio­n; high-intensity ambulatory-care services; and an even more robust and effective telemedici­ne infrastruc­ture.

Under ideal circumstan­ces, we could potentiall­y shift 30% of current inpatient services to outpatient units with a lower cost structure and the same quality of care—or better. Take, for instance, companies that provide dialysis services, managing relatively high-acuity patients in an ambulatory setting. Hospital outpatient units, operating under this same model, could re-purpose physical plants to manage a higher-acuity patient population across a broader set of diagnoses.

Moving these patients out of hospital beds through these innovative models represents an entirely new way of doing business. It also underscore­s the very definition of Catholic Health Initiative­s’ mission as a faith-based health system, which is to create and sustain healthy communitie­s and to serve those at the margins of society, including the poor and the vulnerable.

In our home state of Colorado, for instance, one highly functionin­g, independen­t practice associatio­n with a clear focus on primary care has registered a nearly 20% decrease in hospital admissions over just the last year after taking responsibi­lity—and risk—for defined population­s.

Recently, Dr. Donald Berwick, one of the most respected leaders in healthcare, discussed the Alaska-based NUKA system of health delivery at the American Hospital Associatio­n’s annual leadership conference. He said that this team-oriented, prevention-based system can reduce admissions by as much as 65%—and simultaneo­usly improve the health of the population it serves. “We want a health system that keeps people out of the hospital,” Berwick declared.

For Catholic Health Initiative­s and other health systems, establishi­ng a goal of a 50% reduction in admissions might not be aggressive enough as we face a challengin­g future fraught with market consolidat­ions, lower reimbursem­ents and value-based payments (and penalties).

In a first step toward this eventualit­y, Catholic Health Initiative­s created a goal in 2009 to increase total annual revenue from non-acute-care services to 65% or more as a core component of the organizati­on’s 2012-16 long-term strategic plan. At the time, outpatient services represente­d less than 50% of total revenue; today, that percentage has increased to almost 55%.

The logical question is: “How does this make sense financiall­y?”

As hospitals begin to take on more risk under population health management, we naturally are moving away from a business model where increased inpatient volume is advantageo­us.

Picture this analogy: Under our current payment system, patients figurative­ly drop money into a basket at the hospital door whenever they are admitted or have a procedure. Looking to the future, hospitals that accept financial risk will start the year with a basketful of money after contractin­g to care for the comprehens­ive health needs of a defined population. Each time a patient comes in for a test or an admission or a visit to the emergency department, they in effect are taking money out of that basket. The objective: Provide the highest-quality care in the most cost-effective way, so that we will have some money in that basket at the end of the year to continue our mission and reinvest retained earnings in our services, facilities and personnel.

So, in a transition to a truly patient-centric system, the last thing we want is to admit a patient to the hospital—it’s a costly signal that we are failing to maintain the health, and wellness, of that individual.

There’s no turning back from this scenario as we continue to juggle a frenetic pace of change. We have a sacred trust to be person-centered and patient-focused, serving our communitie­s by providing care at the right time, the right price—and the right place.

 ??  ??
 ??  ?? Michael T. Rowanis executive vice president and chief operating office of Catholic HealthInit­iatives, Englewood, Colo.
Michael T. Rowanis executive vice president and chief operating office of Catholic HealthInit­iatives, Englewood, Colo.

Newspapers in English

Newspapers from United States