‘The mindset is that healthcare is changing. We’re trying to take steps that put us in the right place’

Modern Healthcare finance reporter Tara Bannow talked with Kevin Fleming, Providence St. Joseph Health’s vice president of orthopedics and sports medicine, at the Healthcare Financial Management Association’s annual conference in Las Vegas in June. They discussed the conference’s main theme, value-based care, and the creation of the Renton, Wash.-based not-for-profit health system’s Orthopedics and Sports Medicine Institute, as well as how his clinical team manages physician choice around expensive hip and knee implants. The following is an edited transcript.

MH: Talk a little about the creation of the institute and its goals.

Fleming: The work began in 2013. I joined the organization in 2014. They started with some of the key service lines: cardiovascular, neurosciences, cancer, musculoskeletal and orthopedic services. Next came women and children’s, and digestive health.

Our highest inpatient service is joint replacement. We have worked with our physicians as we move toward the ambulatory environment. Sports medicine is a part of it, both surgical sports medicine but also primary-care sports medicine.

Rheumatology—which aligns very closely with orthopedics in a lot of programs around the country—when connected well can lead to some synergy.

What we try to do is have our clinicians work together across geography to elevate what they can collectively decide is the best practice. I think everybody is looking to provide the highest-value care possible, optimizing clinical outcomes and keeping costs—both to the health system and to payers—as low as possible.

When you have a broad geography like we do, 50 hospitals and multiple communities, things are being done differently. There’s variation. So we’ve tried to bring people together to find those approaches, tactics, care pathways, ways to connect with patients that are delivering the best outcome.

Whether it’s working on a pathway for patients in an ambulatory environment or working with the best way to align the school districts and athletic trainer programs, we are threading that needle by letting our physicians lead us and guide us, but we, as a health system, are empowering them with information.

MH: How do you manage physician preference items and variation?

Fleming: What we’ve tried to do is work with our physicians when those contracts come up for renewal, giving them data and letting them see the comparisons. There are big companies and smaller companies, and everybody in the vendor space feels like their products are the best. And there are surgeons who use them and get great outcomes.

What we’ve tried to do is be very transparent with information, let them see not only what outcomes are with the products they’re using, but outcomes with the products that their peers are using that may be different. And then walking hand-in-hand with that information, approaching the vendor community in a way where we want to be able to give our physicians choices.

At the same time, we need to be sustainable because of our not-for-profit mission that’s focused on the poor and vulnerable in our communities.

MH: Does it ever come down to having tough conversations if there’s a physician who really likes the most expensive implant, but you don’t believe it has the research or quality data to back it up?

Fleming: Sometimes. When there’s an opportunity for a tough conversation, we always try and lead with patient data and oftentimes lead with peers they know, and they respect their work.

If I come from the system office to say, “Gosh, your costs are really high. Here’s some other folks whose costs aren’t as high,” but it’s very different when a peer comes and says, “I’m taking care of similar patients. Here’s some of my approaches and here’s the outcomes I’m getting. Let’s

talk about where some of the differences are. Have you heard about this that I’m trying?”

And when you can lead with that clinical-focused, outcome-based conversation around cost, that’s something that, one, I think we should be leading with, but two, it’s something that seems to be much less threatening to physicians.

MH: Value-based care is obviously the buzz phrase right now. How is that playing out at the institute?

Fleming: I would call ourselves very lucky that we were, as an organization, heavily impacted by the mandatory CMS bundle— (the Comprehensive Care for Joint Replacement initiative) CJR—when that was announced back in 2015. As an organization, we have 20 hospitals that are a part of that mandatory bundle. We worked together to figure out what data tools we needed, what information we needed to provide our physicians, what were some things we thought we were doing right but had to kind of rethink.

Working with those government bundles caused us to re-examine what we were doing and taking a whole new approach, not just being so laser-focused on what happens within our walls, but looking at what we’re doing for patients before they come to the hospital and then after discharge.

That focus spread not just in the CJR markets where we’re working, but to our other ministries around the country or on the West Coast that are working with us collaboratively. And as luck would have it, with the announcement of BPCI (Bundled Payments for Care Improvement) Advanced earlier this year, some of those communities have said, “We were kind of disappointed that we haven’t been able to take part in CJR, so this is our opportunity to take that step into an alternative payment model, kind of that value-based transition in a step that we feel like we can learn based on the foundation that you guys have had.”

In addition to taking those steps with bundle-type arrangements, we’ve been lucky enough to have a couple of private payer orthopedic bundles as well. And while we’re managing the cost for the payer, whether it’s the CMS or a private insurer, we’ve also been taking the opportunity to make sure that our internal costs to provide an optimal clinical outcome are sustainable as well.

MH: What are some examples of value-based strategies that other communities adopted because they worked really well?

Fleming: One example is outreach to post-acute care providers beyond just making referrals and having case managers to make sure patients get to the appropriate setting. If there’s a need for a skillednursing facility or home health, it’s about taking the next step to reach out to those providers, talk about the types of patients we had, talk about the pathways that we’re going to put in place.

You see some people embrace that, while sometimes there’s a little resistance in the community, but that kind of exposes us to the best partners.

MH: Why would you have resistance to that?

Fleming: It’s just new. I don’t think there’s any resistance on our part, but when you go into a large community, maybe one of our big metro areas where there’s lots of choices, some of those providers haven’t been very willing to engage. That’s the resistance I was talking about.

The mindset is that healthcare is changing, and I like to believe Providence St. Joseph gets that. We’re trying to take steps that put us in the right place. And we’re trying to encourage the people we work with to do the same.

MH: Do you think value-based models are providing enough of an incentive to lower the cost of care?

Fleming: I can speak to orthopedics. We’ve seen our costs, particularly in our Medicare bundles, go steadily down.

The other thing I’ll say is that when we first started and we compared our 20 hospitals and their historical episodic spend, there was a lot of variation. We’ve seen that greatly tighten as well.

“I think everybody is looking to provide the highest-value care possible, optimizing clinical outcomes and keeping costs—both to the health system and payers— as low as possible.”

MH: You mentioned the bundled-payment contracts with private payers. Do any of those have downside risk at this point?

Fleming: Yes. The government bundles are more retrospective. A couple of the bundles that we’ve done in the private space are prospective; so when you do that and you’re telling an insurance company or an intermediary— someone who contracts with employers and then they’re kind of that middle person—that you’ll provide a certain service for a set price, that’s what’s going to be paid.

So the risk is on the hospital to be able to provide that service at that rate and minimize readmissions.

MH: Do you think you’ve had patients whose costs have exceeded the bundle, the prospective bundled rate that you receive? Or do you not really look at it that way?

Fleming: Our product volumes are a little lower, so the cohort is much smaller. I think the recipe for success—whether it is retrospective or prospective—is rather similar. The key is that in the cohort of patients, when you look at them in aggregate, there’s going to be patients where for whatever reason, unexpected things happen.

Try as you might, the readmission occurs or whatever the case may be. But the goal is to try and prevent those things as much as you can and have as many patients as possible where you are successful.