What can hospitals do as the industry evolves from fee-for-service to a shared accountability model that penalizes providers for inefficiencies and poor outcomes?

When Medicare launches its value-based purchasing (VBP) program, tying payment to quality outcomes on Oct. 1, 2012, the U.S. health system will reach an historic fork in the road that will force providers to radically change the way they practice medicine and operate. Under the current fee-for-service “more-is-better” formula, the more patients treated and the more procedures performed, the more revenue a hospital or physician receives.

Not surprisingly, until now, organizations have had little incentive to go all out in eradicating the waste caused by variations in the care being ordered or how the care ordered is delivered (workflow). But that will change as hospitals and health systems position themselves for VBP, avoiding penalties for readmissions and hospital-acquired conditions and to address new care and financial models such as ACOs, PCMHs and shared-risk arrangements linking reimbursement to quality metrics and outcomes. This will drive the transition to a quality and outcomes approach that demands hospitals provide clinically effective, efficient patient care.

There are three major areas of waste that must be addressed systematically and continuously to succeed in the new value-based environment. These include:

  • Ordering. Among physicians, there is wide variation in the tests that are ordered to diagnose or treat the same condition, and evidence shows that some widely ordered, expensive tests have limited or no value. Under VBP and new outcomes-driven models, inappropriate tests become an unwelcome expense rather than a source of revenue. Therefore, hospitals should develop an approach based on clinical effectiveness guidelines to reduce unnecessary tests. The approach starts by using the evidence-based guidelines from the scientific literature and expert opinion to categorize tests for each disease/condition into those that are essential for a diagnosis, those that can contribute to a diagnosis and those that are wasteful and should not be ordered.
  • Workflow. To identify workflow process improvements, hospitals need to map out all the standard steps for specific procedures/processes. Using traditional process improvement tools such as value stream maps, coupling the maps with time stamps from the EMR to identify time spent on each of the steps of the map and finding root causes for the variation can help healthcare organizations identify and eliminate variation within each step and wasted time (delays) between the steps. Using this approach, a hospital significantly reduced turnover time for its inpatient ORs. Examining the value stream map revealed a consistent 10-minute lag from when a patient was wheeled out of the OR until the cleaning crew arrived. A root cause analysis determined that this was caused by a delay in notifying the cleaning crew that the OR was empty. Changes in the workflow process eliminated the wasted time, and the resulting cycle time improvements enable the hospital to add an additional surgical case each day. A hospital with five ORs would have the capacity for 25 more cases each week.
  • Defects. This category of waste focuses on patient safety and how to reduce/eliminate defects in care that cause avoidable complications. The areas where defects occur most often are: the preparation and administration of medications, fluids, transfusions, and other substances; glucose management; healthcare-associated infections; pulmonary embolism; pressure ulcers; and falls. Many of these are currently on CMS’ list of “never events” for which Medicare and Medicaid stopped paying beginning in 2007 if they occurred during the patient’s stay; i.e., were not present when the patient was admitted.

An EMR is an essential component for identifying and eliminating the three types of waste, but it’s just the start. Reducing waste requires a structured, data-driven framework that contains clinical content based on clinical effectiveness guidelines, workflow process improvement tools for all care units and injury risk-assessment and prevention protocols to identify and prevent potential patient safety problems.

An enterprise data warehouse (EDW) with robust analytics capabilities and easy-to-use functionality can untether HIT experts from many routine reporting and maintenance tasks. The EDW should automate integration of data from clinical, financial, operational, unit/departmental, patient satisfaction and other data sources to support data-driven process improvement that reduces costs by improving clinical care.

Implementing multi-disciplinary teams consisting of physicians, nurses, operations, HIT and finance to spearhead and participate in clinically driven quality improvement and waste reduction initiatives can help ensure that improvement initiatives are deployed evenly and consistently across the enterprise.

With a robust IT analytics infrastructure, providers can aggregate and mine previously siloed information, enabling them, for example, to analyze an individual physician’s performance compared to clinical effectiveness guidelines. This is crucial because most doctors believe they practice evidence-based medicine, which research has shown is not always the case. Still, physicians remain unconvinced and are resistant to change until presented with credible evidence.

The bottom line is that running a dynamic, high-volume, low-margin organization like a hospital or health system has always been challenging, but it will become even more so as the industry evolves from fee-for-service to a shared accountability model that penalizes providers for inefficiencies and poor outcomes. The organizations that survive to maintain or increase market share will be those that adopt an IT-enabled, data-driven approach to identify and extract waste by reducing variation in care, streamlining workflow and disseminating information to help clinicians provide higher-quality, more cost-effective patient care. Those that don’t face a bleak future.

About the author

David Burton, M.D., is CEO of Healthcare Quality Catalyst in Salt Lake City, which provides health systems, hospitals and clinics with data warehousing solutions that transform clinical and financial outcomes. Learn more at www.hqcatalyst.com.

Wringing out clinical waste across the enterprise is key to accountable care...
By: HMT Mag
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