Holding Down Costs Without Restricting Care

Cutting down doctor costs

More than 10 years ago, Advocate Health Care formed Advocate Physician Partners (APP), a care management collaboration of more than 4,000 physicians committed to improving healthcare quality, safety and outcomes for patients across Central Illinois and the Chicago area.

APP worked with its hospitals and physicians over much of that time to improve the quality of pay-for-performance contracts, says Michael Randall, FACHE, vice president, Clinical Innovation for APP. When Advocate Health Care became one of the 32 Pioneer Accountable Care Organizations (ACOs) across the country, having the provider collaboration in place was a helpful head start.

ACOs are groups of doctors, hospitals and other healthcare providers that come together voluntarily to give coordinated, high-quality care to their Medicare patients. When an ACO succeeds in delivering high-quality care and in saving money, it is able to share in the savings it affords Medicare.

For Advocate Health Care, joining the movement to become an ACO and taking advantage of its shared savings model “was the next step toward managing the overall cost and quality of the population,” Randall says.

In 2013, the Centers for Medicare and Medicaid Services (CMS) reported that all Pioneer ACOs performed well on the model’s quality care indicators, including cancer screenings, blood pressure control and cholesterol control for diabetes patients. Twenty-five of the 32 also successfully reduced hospital readmission rates.

In addition to improving the quality of care, more than a third of the Pioneer ACOs succeeded in reducing costs during the first year of implementing the model. Together, they saved their facilities more than $87 million and saved Medicare almost $33 million. Most of the Pioneer ACOs broke even during the first year; just two sustained a combined loss of $4 million.

Moving from fee-for-service to fee-for-quality payments is an important step in reforming the healthcare system and has significant implications for the supply chain. While the ACO model isn’t a fit for every healthcare organization, for many it is the right direction to go.

“As best practices evolve on the clinical side, practitioners and supply chain professionals can work together to evaluate which products and services work best for the new way of doing things.”
Albert Tomchaney, M.D., senior vice president and chief medical officer, Sisters of St. Francis Health Services

Managing a New Model Across Non-hospital Facilities

The locations where people seek healthcare, as well as their search methods, have been shifting for some time, says Michael Randall, FACHE, vice president, Clinical Innovation at Advocate Physician Partners (APP). And those trends promise to accelerate as shared savings and global capitation reimbursement increase. That means long-term care facilities and off-site surgery centers will become even more in demand as healthcare reform continues to take shape.

“By redesigning processes and focusing more resources on care coordination, some unnecessary acute care hospitalizations and ER visits can be avoided,” Randall says. “Likewise, services once performed in a hospital will move to skilled nursing facilities, physician offices or ambulatory centers if it is more cost-effective.”

Case in point: APP refers patients to more than 100 independent skilled nursing facilities. To better manage patient care and improve outcomes, the organization is partnering with a few skilled nursing facilities in each market. In addition, APP has hired physicians and advanced practice nurses to manage the care of patients in these facilities, resulting in a decrease in hospital readmissions and length of stays.

Building the Infrastructure

Adopting the ACO model requires establishing extensive infrastructure, including a robust IT platform to facilitate information sharing among practitioners and a standardized system for managing care. Like Advocate Physician Partners, Franciscan Alliance—another Pioneer ACO—already was employing some of these components.

“[Moving to an ACO model] wasn’t a giant leap, but there were still a lot of issues to solve,” says Albert Tomchaney, M.D., senior vice president and chief medical officer, Sisters of St. Francis Health Services. “It’s a work in progress, but all of the teams involved are pretty excited about it. There are always unexpected twists and turns, but we had care management activities and IT infrastructure in place that helped.”

Franciscan Alliance is a network of 13 community hospitals, over 40 ambulatory sites and more than 400 physician practice groups. The pharmacy group led the change among clinical departments, says David Blazo, corporate director of Pharmacy, explaining that they have “transformed our pharmacy operations to align distributive and clinical services to deliver system-standard best practices.”

To target the needs of ACO patients and ensure their safe use of medications, Blazo and his staff created a standard system of pharmacist-delivered patient medication reconciliation. The group achieved savings by reducing the number of patients coming back to the hospital a second time for the same condition, thereby reducing use of the emergency room. Franciscan’s collective Pharmacy system also administers a systemwide master drug formulary of products that covers both its hospitals and physician practices. This master formulary is digitized so that practitioners are safely directed to use only included medications in evidence-based order sets in Franciscan Alliance’s electronic medical record.

One of the first steps in overhauling Franciscan’s collective Pharmacy system was to establish a collaborative decision-making process to allow more voices to contribute and be part of daily problem-solving.

“We viewed each topic—from master drug formulary to IV smart pumps and medication reconciliation—as an opportunity to standardize the system on sets of best practices,” Blazo says. Rather than allowing professionals to feel threatened by change or as though their ideas are not important for finding solutions, Franciscan’s pharmacy group has learned to “create a safe place for change to be adopted, ” Blazo says.

Outside the pharmacy area, Franciscan Alliance made similar changes system-wide, such as standardizing treatments and utilizing electronic medical records to help practitioners provide better collaborative care. As a result, the healthcare system achieved 6 percent shared cost savings in its first year as an ACO.

“I believe we’ll continue to enhance patient value by improving outcomes without raising costs, or lowering costs without compromising outcomes—or both,” Blazo says. “Franciscan clinical pharmacists are systematically targeting interventions to ensure patient compliance on medication use and adherence to therapies.”

doctors talkingStrengthening Collaboration

One of the primary challenges to succeeding as an ACO is achieving seamless teamwork among various providers caring for the same patients. But a robust technology system with updated electronic medical records can make that challenge doable, Tomchaney says. “Franciscan is on a single platform, which is helpful in allowing providers to see everything that happens across the continuum of care.”

In addition to providing common access to medical records, technology also can be used to facilitate communication and education to both patients and providers.

For instance, Franciscan’s IT system pushes out guideline-based reminders so providers work better together and patients take a more active role in their care. As patients who haven’t had their flu shot come in for an appointment, providers receive reminders that a flu shot is needed, Tomchaney explains.

Similar reminders also alert patients and providers about more serious issues. Across the system, IT works like glue holding together the patient, clinical staff, administrative staff and other healthcare providers through components like decision support that allow them to work together as a team, Tomchaney says.

At Advocate Health Care, leaders from across the system have adopted the AdvocateCare Index, a set of population-based utilization metrics as a performance goal, Randall says. The Index, which looks at factors such as the number of admits per 1,000 people, leads to increased awareness of the responsibility for coordinating patient care after discharge and with providers outside of the Advocate system.

“Our disease registry system enables our primary care physicians, specialists and other members of the care team to identify gaps in care, conduct patient outreach and improve performance on quality metrics,” Randall says. “Success in population health is dependent on aligning stakeholders across the continuum of care to better coordinate services so that we reduce unnecessary utilization and improve quality.”

Realizing Implications for Supply Chain

Moving to a fee-for-quality payment model isn’t just about improving care; it also has significant implications for supply chain personnel. As facilities implement the ACO model, “everything we’re doing is evidence-based,” Tomchaney says.

“When we improve patient outcomes, we can sustain or grow market share. If we can improve the efficiency of providing best-practice care, then we can enter any competitive contracting discussion from a strong position.” David Blazo, corporate director of Pharmacy, Franciscan Alliance

At Franciscan, a committee looks at equipment, supplies and formulary to determine which products work best for the money, Tomchaney says. As best practices evolve on the clinical side, practitioners and supply chain professionals can partner to evaluate which products and services work best for the new way of doing things. As a result of lessons learned during Franciscan’s first year as an ACO, “now we have a more standard set of products that we know work and give us the best bang for our buck,” Tomchaney says.

Just as departments across hospitals are rethinking their traditional methods of operations, supply chain professionals must consider what changes should be made to their business models. The ACO approach to healthcare delivery will demand that providers adopt a strategy that transcends traditional cost reduction and responds to new payment models.

“When we improve patient outcomes, we can sustain or grow market share,” Blazo says. “If we can improve the efficiency of providing best-practice care, then we can enter any competitive contracting discussion from a strong position.”

As has been proven in numerous other industries, multiple methodologies lead to waste and variation in outcomes. Selecting the best products and adopting standardized approaches based on a consistent set of evidence-based guidelines results in safer, higher-quality and more cost-effective care, Randall says.

And as ACOs become more common, adapting to their requirements will become easier. Almost two years into the ACO experiment, a number of commercial payers “are now moving in the same direction,” Tomchaney says. That brings consistency to the model, which will relieve the challenges associated with the attempt to meet the conditions of both models—fee-for-service and fee-for-quality—at the same time.