Nontraditional care models dominate the discussion on healthcare delivery

In January, the U.S. Department of Health and Human Services (HHS) announced new goals to move the healthcare system toward paying providers based on the quality, rather than the quantity, of care provided to patients.

HHS plans to tie 30 percent of payments to health outcomes by the end of 2016 and 50 percent by 2018. Those alternative payments will be made through nontraditional healthcare delivery models such as accountable care organizations (ACOs) and bundled payment arrangements, representing the continuation of a widespread transition in healthcare delivery.

Four years ago, Medicare made almost no payments to providers through alternative payment models, but today they represent approximately 20 percent of Medicare payments, according to HHS. To meet the newly established goals, those outcomes-based payments must increase to 50 percent by 2016.

The U.S. healthcare system has already made progress in the transition from paying for services to paying for outcomes because of individual providers’ and facilities’ decisions to switch to newer models. For instance, initiatives such as the CMS-sponsored Partnership for Patients, ACOs and quality improvement organizations helped reduce hospital readmissions among Medicare patients by 150,000, or nearly 8 percent, between January 2012 and December 2013. In addition, quality improvements resulted in saving 50,000 lives and $12 billion in health spending from 2010 to 2013, according to HHS.

Here’s how some facilities are advancing nontraditional models and how supply chain professionals can contribute to the effort going forward.

Taking Healthcare to the Community

Population health, as conceived in the Affordable Care Act, was designed to lower costs and improve quality. Providers have embraced a variety of strategies to reach those goals.

“This transformation requires physicians to reach out to patient populations rather than waiting for them to access the practice,” says Carol Murdock, senior vice president and market leader at Lumeris, a population health management company based in St. Louis. “It requires data that notifies physicians of gaps in care, recent lab results from other ordering physicians, services obtained outside the practice or system, medication adherence issues, and access-to-care issues such as transportation, to name a few.”

Successful population health strategies involve both business and clinical transformation. Effective clinical strategies include models that help lower site-of-service costs, hospitalist models and management of accountable care teams driven by primary care physicians, Murdock says.

“Which strategies are most appropriate is highly dependent on the organization that is managing the populations,” she adds. “Independent practice associations and medical groups might manage populations differently than an academic medical center with employed primary care and specialty physicians. The strategies are heavily influenced by the contracts supporting the populations, the culture of the organization and, certainly, physician leadership.”

Trinity Health, which serves 21 states with 86 hospitals and 128 continuing care facilities, has made a commitment to taking healthcare to its communities through extensive home healthcare services. Its Trinity Home Health Services (THHS), based in Livonia, Michigan, is the nation’s largest not-for-profit provider of home healthcare services, ranked by number of visits. Recent supply chain changes have allowed THHS to improve its services as well as its bottom line.

For instance, rather than having clinicians drive to the office to pick up supplies before making patient home visits, supply chain professionals implemented a direct-to-patient delivery program that reduced mileage costs for clinicians, freed up office staff time and storage space, and allowed clinicians to visit more patients per day. In addition, THHS developed a formulary of clinically approved, best-value products that enable more consistent clinical outcomes across all sites, as well as better pricing and availability of products. The formulary program is realizing a 90 percent compliance rate and, at one site, savings have totaled $40,000.

THHS continues to identify new ways to produce better outcomes with lower costs. For instance, the organization recently reduced the number of different INR (finger stick) machines to one standard type, allowing purchasers to buy accompanying supplies at a volume discount. That step will achieve a reduction in costs as well as standardization and ongoing quality assurance, says Barbara Samson, director of clinical services at THHS.

“We have standardized our processes as much as possible to reduce waste, and we are in the midst of switching our EMR software, which we anticipate will reduce costs in the long term,” Samson says. “We are continuously looking at new products and equipment that will allow us to deliver care at a lower price and reduce our number of visits.”

After achieving some success, THHS began exploring other types of care delivery models. The organization is currently launching Transitional Care, a new program for patients being discharged from the hospital who do not qualify for regular home care but need some type of follow-up.

Nontraditional_care_models02“For these patients, we have either the hospital or insurance companies contracting with us to provide one home visit by a registered nurse for medication reconciliation or disease management teaching, and then we will do weekly phone calls for five weeks to review medications, assess health status or instruct on emergency plans,” Samson says.

THHS is also experimenting with different types of bundled payment initiatives. Many such initiatives involve package pricing for the standard care provided for certain conditions, but THHS is trying bundled payments for other services, including hospital-at-home concepts.

Trinity Home Health Services developed a formulary of clinically approved, best-value products that enable more consistent clinical outcomes across all home healthcare sites. The program is realizing a 90 percent compliance rate and at one site, savings have totaled $40,000.

“We think of our bundled payment initiatives as pilots,” Samson says. “We are proposing different ways of delivering care to see what achieves the best outcomes of better care and lower costs. Ultimately, we will deliver more efficient and coordinated care, decrease redundancies, and increase the health of our populations.”

Pursuing Newer Models

These new models of care are all focused on two outcome metrics: reducing costs and reducing rehospitalizations. “If our costs are not as low as they can be, we will not be awarded the contracts to provide these new and emerging modes of care,” Samson says.

A number of health systems are pursuing other methods of providing care in nontraditional ways to achieve better outcomes and cost efficiencies. They may be converting beds to other uses, moving to ambulatory sites, employing physicians or starting their own health plans, Murdock says. One common example is the conversion from the Medicare Shared Savings Program to a Medicare Advantage Prescription Drug (MAPD) Plan, she adds.

Murdock predicts there will be more changes to reimbursement and greater experimentation. For instance, she expects that payments will be increasingly tied to performance, as with the Medicare Star Ratings used by MAPD plans. These ratings measure how well plans perform based on a cross section of quality metrics, including customer service, member complaints, managing chronic conditions and preventive care. Murdock also forecasts that more populations will be risk-adjusted as they currently are for MAPD programs and the state health insurance exchanges.

Moving forward, David B. Nash, M.D., MBA, dean of the Jefferson School of Population Health at Thomas Jefferson University in Philadelphia, expects to see a new position in the C-suite of many organizations: chief population health officer. “We will also see hospital boards expand to take on people with expertise in population health and see more doctors trained in population health leading ACOs.”

Depending on the Supply Chain

As greater numbers of providers seek to form ACOs, they will look to supply chain professionals to help them meet quality goals. “All over the country, provider groups are merging into larger systems so they can better manage the demands of the population,” Nash says. “And they are making sure their supply chains are effective because the new payment models now affect their personal bottom lines. Smart organizations know that if they can control the supply chain, they can control the [profit] margins.”

It will continue to become more and more important to limit product choices, Nash continues. “Having 15 different drugs for the same disease just won’t work in the future. There is an ongoing need for standardization because it reduces waste and reduces expense.”

To help make more informed purchasing decisions, supply chain professionals should begin asking potential suppliers how their products fit into the new, nontraditional care models.

“Suppliers are beginning to provide better information about the cost-effectiveness of their products and how their products fit into evidence-based practice,” Nash says. “Facilities and providers have to have economic evidence. We’re heading into a total transformation of delivery systems.”

At THHS, as leaders continue to develop new programs and service lines, they also plan to partner with supply chain professionals for assistance in identifying new products, negotiating new contracts and meeting emerging healthcare needs, Samson says. She anticipates that the organization will have to deliver new products faster and at a reduced cost for its expanding new service lines.

For instance, as patients are able to come home more quickly from hospital stays, or avoid going into the hospital altogether and receiving care at home instead, THHS anticipates a need to have different types of products and supplies quickly. Because patients may be receiving intensive care at home to stay out of the hospital, they may require more procedural and acute monitoring supplies, Samson says. The ability to obtain the necessary products quickly and at a reasonable cost will be crucial for making this “hospital-at-home” program successful.

“Supply chain will be instrumental in helping us achieve our goals of better healthcare and lower costs,” Samson says.

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