I was fortunate to be present at a healthcare conference some years ago and recall a story told by Dr. Douglas Eby. Dr. Eby spoke about a patient named “Frank.” Frank was a “frequent flyer.” He was afflicted by a chronic disease with complications; his health reflected poor lifestyle choices. Frank was transported by Emergency Medical Services to the emergency department about once a month and admitted to inpatient care from the emergency department about half of the time. Frank had a bag packed and placed beside his recliner so the EMTs could pick it up on the way out. Despite a medical care expense of approximately $250,000.00 to $300,000.00 per year, Frank’s health continued to deteriorate.
Dr. Eby and his team assessed Frank’s condition and created a personalized care plan built around his specific needs. Someone visited Frank in his home to coach him and determine what was keeping him from reaching his potential as a healthy person. That caregiver listened and tried to figure out just who Frank was as a person. They talked about his life choices, his support system, his family and the things that made him happy. In short, the caregiver and Frank formed a compassionate relationship.
Within a few months, through the interventions of an integrated team of specialists and through the encouragement of someone Frank trusted and who cared about him, Frank’s health improved. He did not become a picture of health, but the number of his visits to the emergency department were cut in half, requirements for hospitalization were reduced and Frank’s health began to show an improvement that hadn’t happened for years. There was a light in Frank’s eyes that hadn’t been there before.
Is there opportunity in adversity?
Is there a reward for doing the right thing in healthcare today? How can a rural healthcare provider survive and even prosper in an environment where it seems that they are being squeezed from all sides?
Healthcare in the US today, like Frank, is not in good shape. It’s in a period of transitional uncertainty. No one seems to know what the future will look like, but most indications would point toward a negative situation for rural health.
A valuable piece of this puzzle is the advent of the Integrated Practice Unit (IPU). IPUs are the third critical leg of the stool that includes wellness districts (value-based health systems for a geographical area) and life enhancement centers (medical facilities specifically designed to meet the needs of the population) that together, support a merit-based system of healthcare. IPUs, combined with direct primary care patient-centered medical homes (PCMH), will form a mutually-supportive, integrated and sustainable population health model.
For the purpose of this article, an IPU is defined as a dedicated team of professionals focused on a chronic condition and functioning in a coordinated and integrated manner in the best interest of the patient. The concept of an IPU was born from the work of Michael E. Porter and Elizabeth O. Teisberg in their book Redefining Health Care: Creating Value-Based Competition on Results, Harvard Business School Publishing.1 The care of those patients with multiple diagnoses will be coordinated with other IPUs and draw upon the expertise of others as necessary. The composition of an IPU is not defined by a physical location, but by an integrated communications and coordinated-care network based on needs of the individual. In order to derive desirable value-based performance, primary care physicians and integrated practice units must form a mutually-supportive, collaborative relationship bound by trust and communication. IPUs must work with primary care physicians to identify potential high-risk people within the wellness district (to read more, see: viahealthcaredesign.com/2014/04/the-transformation-of-rural-health/) and provide preemptive interventions. Collectively, the IPUs and the primary care patient-centered medical homes (PCMH) treat not only the disease, but the related conditions and complications that occur along with it.
IPUs excel during periods of greater care intensity. The primary care provider, with the assistance of the patient care coordinator, delivers long-term care stability and support during periods of respite. The key to improved patient outcomes is the collaboration and coordination of the entire care team over the life span of the patient. The primary care physician, who is closest to the patient, will be the coordinator and arbitrator between multiple IPUs.
Where will the money come from to capitalize this change in care delivery?
In broad numbers, 75% of the $2.8 to $3 trillion annual healthcare expenditure is allocated to care for the chronically ill. This places the cost of care for the chronically ill at approximately $2.25 trillion per year. The accumulated cost of waste in the system, defined as unnecessary or duplicative services and overhead that is of little or no value to the patient, is estimated to be approximately 30 to 40% of this number or approximately $675 to $900 billion per year. Those wellness districts, hospitals and systems that can aggressively translate this waste into margin by pivoting to a value-based agenda will reap huge benefits.
If healthcare providers within a wellness district are prepaid with funds allocated for covered patients within that district based on the median of current costs and established outcomes, positive deviations from that median baseline will result in improved margins for those providers. Conversely, those providers whose costs and outcomes are defined as being at or above the established baseline will find themselves at risk for additional cost due to poor quality care. They will either change their processes to improve quality and reduce costs or leave the field to others who will experience greater volumes and better outcomes.
Those wellness districts, hospitals and systems that can aggressively translate this waste into margin by pivoting to a value-based agenda will reap huge benefits.
Physicians and wellness districts, together with their board of trustees, must take a leadership role in making this transition. The effort to inform and explain these changes to the general public is critical to the success of these endeavors, and includes having the necessary personnel and resources available to counter naysayers and those who are ill-informed.
Can we do well by doing the right things?
Efforts to fix components of a dysfunctional system will yield only minimal positive results. The payment system must track the healthcare delivery system. “In healthcare, the overarching goal for a provider, as well as for every other stakeholder, must be improving value for the patients, where value is defined as the health outcomes achieved that matter to patients relative to the cost of achieving those outcomes. Improving value requires either improving one or more outcomes without raising costs or lowering costs without compromising outcomes, or both.”2
“In this environment, providers need a strategy that transcends traditional cost reduction and responds to new payment models. If providers can improve patient outcomes, they can sustain or grow their market share. If they can improve the efficiency of providing excellent care, they will enter any contracting discussion from a position of strength. Organizations that fail to improve value, no matter how prestigious and powerful they seem today, are likely to encounter growing pressure (due to reduced reimbursement). Similarly, health insurers that are slow to embrace and support the value agenda—by failing, for example, to favor high-value providers—will lose subscribers to those that do.”2
IPUs will compete based on a value agenda of highest quality and lowest cost. Competition will further occur between independent IPUs and those within integrated delivery systems. Those providers who do not participate in value-based programs will see their margins disappear and will either improve or leave the field to those who do. The consequence of this evolution will reduce the numbers of those providing complex care and will increase the volume for those who provide the highest quality at the lowest cost. This increased volume will further reduce costs and improve outcomes. “Providers that concentrate their volume will drive a virtuous cycle, in which teams with more experience and better data improve more rapidly—attracting still more volume. Superior IPUs will be sought out as partner of choice, enabling them to expand across their local regions and beyond.”5
While it is anticipated that payers will endeavor to reduce the cost of healthcare by following the median cost curve downward, keep in mind the old adage, you don’t have to outrun the bear, you only have to outrun your buddy.
An arrangement between a wellness district and an IPU may take the form of a bundled payment for value. “Sound bundled payment models should include: severity adjustments or eligibility only for qualifying patient; care guarantees that hold the provider responsible for avoidable complications, such as infections after surgery; stop-loss provisions that mitigate the risk of unusually high-cost events; and mandatory outcome reporting. IPUs may compete on the basis of value received as represented by positive patient outcome divided by cost, not on the basis of services performed.”3
The more sick people that can be identified and brought into the system, the greater the wellness district’s potential margin will be as lives improve.
Wellness districts can form self-insured systems, either through the population of willing persons within their service area or in combination with other districts. Through these self-insured systems, risk can be mitigated, catastrophic policies can be negotiated with integrated delivery systems and reinsurance policies can be put in place. Wellness districts need to get solid patient data and predictive analysis for their population. They must reach out to employers, businesses and educational systems within the district; discussions and negotiations between the parties can result in greater participation in wellness programs, define the role of health savings accounts and reduce premium costs. Most importantly, wellness districts must find the chronically ill and swarm to that 5 to 10 percent of the population. The more sick people that can be identified and brought into the system, the greater the wellness district’s potential margin will be as lives improve.
What about infrastructure to support the care delivery model?
For larger integrated delivery systems, incorporating IPUs into the structure of the organization requires an assessment of the role and purpose of each individual provider in support of the patient-condition-based value agenda. “To achieve true system integration, organizations must grapple with four related sets of choices: defining scope of services, concentrating volume in fewer locations, choosing the right location for each service line, and integrating care for patients across locations. For community providers, this may mean exiting or establishing partnerships in complex service lines, such as cardiac surgery or care for rare cancers. For academic medical centers, which have more heavily-resourced facilities and staff, this may mean minimizing routine service lines and creating partnerships or affiliations with lower-cost community providers in those fields.”4 A disjointed group will seldom be able to achieve the same result as a dedicated team focused on a specific patient condition.
In order to assemble the best IPU team members to address the unique needs of patients with multiple diagnosis, and the competition for the best IPUs the can provide the best outcomes at the lowest cost. This may result in team members that are dispersed over remote locations both nationally or even globally. The ability to form trusting professional relationships that focus on the patient and the best possible result from the patient’s point of view will be critical in the success of any healthcare system.
While larger integrated delivery systems would appear to have a distinct advantage over independent wellness districts or group of wellness districts in the field of integrated IT systems, new technologies and the necessity of finding commonality within electronic health record systems will help level the playing field. The acceptance of cloud-based technologies that allow anytime/anyplace data sharing from a variety of disparate entities and stakeholders will connect patient care coordinators to a variety of retail and public service agencies. The advancement of patient monitoring systems and smart technologies will provide the capability to reach into the home environment and detect abnormalities and warn of impending detrimental situations that may affect or trigger adverse events. Whether the described model operates from a wellness district, a group of wellness districts, or as part of an integrated delivery system, the ability to support care integration through a robust digital communication system is paramount.
As with many successful business models, the ability to communicate information in a timely manner is critical to creating value. In the case of care integration of the chronically ill, there is no substitute for a comprehensive IT platform. A value-based IT platform must:
- Use data that is common and can be integrated with prominent, known record systems.
- Be user friendly and capable of collecting data from diverse sources.
- Be built around the patient. Patient information must be all-inclusive, but only available on a need-to-know basis to help protect privacy.
- Be capable of both simple entry by the patient or providers and robust enough to include templates for complex multiple diagnoses.
What others are doing
- “For eight years in a row, health insurance company Cigna [sic] has released results from a comparative study of its consumer-driven health plan (CDHP) members to its other members enrolled in traditional PPOs and HMOs. The actual claims data from more than 3.6 million Cigna members were used in the study, and Cigna concluded—as it has in the past—that members enrolled in CDHPs were more engaged in their own health and lowered their total medical expenses. Cigna currently counts about 2.6 million CDHP members. The insurers CDHP members were 50 percent more likely to complete a health risk assessment and 41 percent of those with chronic conditions were likely to take advantage of disease management programs if they were enrolled in a CDHP. That’s up from Cigna’s 2013 version of the survey, which found CDHP members with chronic conditions were 25 percent more likely to take advantage of those programs.”6
- “Kentucky analyzed its patient population data and found that in one year, 350,000 Medicaid recipients used ERs to the tune of $341 million. 4,400 recipients were classified as super-utilizers who visited the ER 10 or more times at a cost of $34 million. According to Dr. John Langefeld, chief medical officer for the Kentucky Department of Medicaid Services, the biggest challenge [had] been coordinating between providers who [had] historically worked in silos and had limited interaction. However, in the long run, the project has the potential to improve clinical decision making by amalgamating traditional disparate data sets and ameliorating communications between health care stakeholders. Langefeld said officials realized they need to form coordinated care teams within these communities to better understand and holistically treat super-utilizers because many had behavioral and/or substance abuse problems as well as housing, hunger or transportation issues.”7
- “A recent study of the relationship between hospital volume and operative mortality for high-risk types of cancer surgery, for example, found that as hospital volumes rose [sic] the risk of a patient’s dying as a result of the surgery fell by as much as 67%. Patients, then, are often much better off [sic] traveling longer distance to obtain care at [sic] location where there are teams with deep experience in their condition. That often means driving past the closest hospitals.”7
- “MD Anderson, for example, has four satellite sites in the greater Huston region where patients receive chemotherapy, radiation therapy, and, more recently, low-complexity surgery, under the supervision of a hub IPU. The cost of care at the regional facilities is estimated to be about one-third less than comparable care at the main facility.”5
- “Compared with regional averages, patients at Virginia Mason’s Spine Clinic miss fewer days of work (4.3 versus 9 per episode) and need fewer physical therapy visits (4.4 versus 8.8). In addition, the use of MRI scans to evaluate low back pain has decreased by 23% since the clinic’s launch, in 2005, even as outcomes have improved. Better care has actually lowered costs… Virginia Mason has also increased revenue through increased productivity, rather than depending on more fee-for-service visits to drive revenue from unneeded or duplicative tests and care. The clinic sees about 2,300 new patients per year compared with 1,404 under the old system, and it does so in the same space and with the same number of staff members.”2
As wellness districts and physician groups transition to contracted direct care models and collaborate with either independent IPUs or integrated delivery system-based IPUs, they will drive down volume in emergency departments and inpatient care departments of the hub or regional medical centers. Conversely, they will increase the volume of complex cases due to the concentration of chronically ill patients over a wider geographical area. The increased revenue from value-based IPUs and decreased revenue from fee-for-service models will accelerate the transition of hub hospitals and regional medical centers to value-based models with better patient outcomes at lower cost.
“Never change things by fighting existing reality. To change something, build a new model that makes the old model obsolete.” Albert Einstein
Edited: Oct 2015