For more than two decades, we’ve read and heard about the unsustainable costs associated with our complex and fragmented health care system. We’ve attempted to steer away from the fee-for-service payment model, which pays for volume instead of value. And further, we’ve tried—with limited success—to shift some risk from payers to providers and costs from employers to consumers.
We’ve reached a tipping point. Every single stakeholder—state and federal governments, private health plans, employers, and consumers—is struggling to cover its portion of the health care expenditures, which now amounts to 18 percent of the US Gross Domestic Product.
And while we thought the market could drive the transformation needed in the health care system, it didn’t happen in a timely manner; so as a result, Congress passed federal legislation to reform the system by serving as the impetus behind the change.
How do we bend the cost curve?
As Michael W. Painter, JD, MD, wrote in the HCI3 Improving Incentives Issue Brief, Bundled Payment Across the US Today, “Our task now is not to stay put or go back but rather to decide what way to proceed. In some ways we are fortunate. We have the urgency of now on our side. Our ongoing health reform debate, as well as the national attention to our ballooning federal deficit and the central role that rising health care costs plays in that deficit problem, all are prompting us to, as they say, ‘bend the health care cost curve.’ How should we do that?”
There are a number of suggested methods for bending the cost curve in the piece of referenced federal legislation—also known as the Affordable Care Act, including alternative payment and delivery models. So, as you consider whether to engage in a bundled payment program and/or possibly an accountable care organization, there are a number of questions you should consider. Some of them are listed below:
- Do you have a clear understanding of the new payment and delivery models and their potential benefits and possible unintended implications?
- Do you have the vision of where you need to go as an organization—what changes need to be made?
- Do you have the leadership in place to usher in payment reform to all levels—board, administration, medical staff, employees, etc.
- Can the leadership team drive changes—short- and long-term?
- Do you have a plan in place to educate and communicate the importance and benefits of payment reform in your organization?
- Is your facility financially stable?
- What impact will alternative payment models have on facility revenues/finances?
- What impact will introducing and implementing alternative payment models have on available capital?
- Do you have goals and metrics in place? Would you be able to realize negative implications quickly?
- Do you know the equation for financial success with new payment models?
- Could you juggle multiple payment models?
- Is your organizational culture innovative and entrepreneurial?
- Do you encourage your employees to challenge the status quo?
- Do you support risk-taking within your organization?
- Is it a learning culture?
- Is your culture collaborative? Does it support “team”?
- Do you have clear, strong alignment of goals within your organization—alignment at all levels?
- Are your affiliated physicians—whether employed or not—committed to the success of your facility and aligned as well?
- Do you have total confidence that your physicians and other providers deliver the best care in the right place at the right time all of the time?
- Do you have a network of post-acute care providers aligned?
- What is your patient mix?
- What is the current health of your patient population?
- What is the cost of care for your patient population?
- Are there opportunities to manage patients differently and more efficiently?
- What is your market share?
- Is the hospital prepared to attract and drive new patients to your facility to support new financial models?
- How would new patients impact financials?
- Do you have the human resources, skills and knowledge in place to transform your payment model and/or juggle multiple models?
- Do have the infrastructure and technology in place to facilitate payment reform? If not, do have a plan to cover the costs and implementation?
- Do you have a data strategy?
- Do you understand the insights you need to glean from the data you are generating? Can you translate those insights into action?
While we might not have an industry “how-to” manual yet on how to participate in reform, we do know that thorough and thoughtful preparation is going to be the key to mitigating risk during this period of transformation.