Man­ag­ing for bet­ter health

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

Modern Healthcare - - OPIN­IONS/COM­MEN­TARY - 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. Rowan

is ex­ec­u­tive vice pres­i­dent and chief op­er­at­ing of­fice of Catholic Health

Ini­tia­tives, En­gle­wood, Colo.

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