Few things are constant these days in the ever-changing world of healthcare, but there's one incontestable certainty in the mind of every leader responsible for plotting the strategic direction of a hospital or health system: Value-based payment is here—and it's here to stay.
This reality leaves us with several multimillion-dollar questions, such as: How eagerly and aggressively do we embrace this change? How rapidly do we plan to make this transformation from traditional fee-for-service to value-based payment? And, most importantly, what is the honest, acceptable level of tolerance in terms of the considerable costs associated with this significant change?
For many of my colleagues, the preferred analogy describing the ambiguous nature of this move to valued-based care is the image of a hospital executive trying to do a little of both at the very same time—one foot on the dock, the other in a bobbing, wobbly rowboat. Metaphors and imagery aside, this is a tough balancing act in uncharted waters, especially for those of us so comfortable with the status quo.
At Catholic Health Initiatives, we believe we've already left the dock and are beginning to get a good handle on navigating this change. While other health systems are clearly on board, too many are treading water.
Despite the formidable challenges ahead, few leaders would argue that this change isn't long overdue for a dysfunctional, hugely expensive healthcare system that traditionally has provided financial incentives for the number of procedures performed—and not for good outcomes and healthier patients.
In January, HHS Secretary Sylvia Mathews Burwell announced with some fanfare a national plan to tie at least 30% of traditional, fee-for-service Medicare payments to innovative value-based payment models, including accountable care organizations and bundled-payment arrangements, by the end of 2016. She seeks to tie as much as 50% of traditional, fee-for-service payments to these alternative models by the end of 2018.
CHI enthusiastically supports this realignment of the healthcare industry's delivery and payment models. It's the only way that we can deliver better care at lower costs, achieve the highly desired “triple aim”—and truly move from sick care to well care.
Our system has been making this transition across much of its national enterprise since even before the passage of the Affordable Care Act. CHI, which operates 105 hospitals, has more than 400,000 enrollees in value-based care plans, including Medicare shared-savings programs, the Bundled Payment for Care Improvement initiative, and our organization's own health plan for employees and dependents.
Of its 400,000- enrollees in these plans, CHI has about 250,000 enrollees in 10 shared-savings sites, making it one of the largest provider participants in the country. The organization has five sites in the bundled-payments program, with as many as five more joining soon—including in areas where existing health plans are somewhat reluctant to move in this direction. All told, nearly 30% of CHI's total net patient service revenue comes from some type of a valued-based model of care and payment.
While these numbers are impressive, CHI continues to struggle with the challenge of caring for patients under these new criteria while continuing to receive the bulk of reimbursement under fee-for-service guidelines.
Still, we're showing early positive results: For instance, at Mercy Medical Center in Des Moines, Iowa, which operates a Medicare ACO, readmissions decreased by 14% between 2009 and 2014, and emergency department visits fell by about 9%. In Little Rock, Ark., a bundled-payment initiative for orthopedic patients at CHI Health St. Vincent's has significantly lowered the cost of care over a 90-day period.
Despite Burwell's bold promise of change, the industry is moving too slowly toward the ultimate goal of creating a reimbursement model that features value-based reimbursement as the dominant system of payment. The results of a recent Project Japan survey attest to this dichotomy: Although more than three-quarters of the magazine's Power Panel of top healthcare executives support this transition, only about 1 in 5 favor doing away with fee-for-service.
Change, however, is as inevitable as it is uncomfortable.
For a faith-based organization like CHI, this concept of value-based care is not at all new or foreign. In fact, population health—keeping large groups of people free of sickness and disease—is an integral part of the organization's mission to create healthier communities.
And that represents a perfect alignment of quality, caring and value.