Becker's Hospital Review

15 CFO / FINANCE The 'relentless challenge' of value-based care By Alan Condon H ospitals across the board have adopted at least one value-based care model, covering almost half of their patient populations, as healthcare continues its push away from fee for service. But only 29% of hospital leaders report substantial cost savings from value-based care models, suggesting a need to explore other strategies to ensure fiscal stability, according to a report published June 12 by FTI Consulting's "Hospital Operations Outlook Survey." e implementation of value-based programs has been driven by a renewed focus on patient-centered care (44%) and quality improvement initiatives (40%), according to the survey, which includes responses from 186 senior hospital executives. Financial incentives (26%) and regulatory requirements (22%) also play a role but are not main drivers of adoption. Importantly, 45% of hospital executives report improvements in patient outcomes and 37% report improved patient experiences. However, instead of turning to value-based care models to meet cost savings goals, most hospitals are outsourcing various functions and operations to drive down costs. Most hospitals (76%) are already outsourcing some roles or considering it, particularly for functions like supply chain management (64%), nutrition services (55%), and clinical services (55%). More than half (55%) are outsourcing supply chain functions offshore (39%), likely in pursuit of greater efficiency and cost savings, according to the report. "Our survey reflects what we know about the commitment of healthcare leadership to patient outcomes and experience. e relentless challenge is delivering on that commitment, through mechanisms like value-based care, or whatever may come next, in a financially sustainable manner," Lisa O'Connor, senior managing director at FTI Consulting, said. Health systems across the country are expanding value-based care strategies and taking a more nuanced approach to the site of service for care, but there are concerns that the trend toward value-based purchasing and alternative payment models may hurt their revenues if they do not meet expected quality standards. Value-based purchasing programs — including programs that condition reimbursement on patient outcome measures — will likely become more common and involve a higher percentage of reimbursement amounts in the coming years. "We are unable at this time to predict how the industry trends toward value-based purchasing and alternative payment models will affect our future results of operations, but they could negatively impact our revenues, particularly if we are unable to meet the quality and cost standards established by both governmental and private payers," Dallas-based Tenet Healthcare, a for-profit system, said in a Form 10-K published Feb. 16. Editor's note: e FTI Consulting survey was conducted online between March 27 and April 4, with 186 senior executives across all types of hospitals and 14 mid-level leaders of academic hospitals. Sixty-two respondents represent academic hospitals, 102 are part of a health system and 36 are standalone facilities. n 'A huge economic issue,' per Scripps' CEO By Mackenzie Bean A surge in hospital boarding is straining the finances of San Diego-based Scripps Health, forcing the health system to make tough decisions about its care services, Newsweek reported June 18. Scripps cares for nearly 35,000 patients annually who remain admitted — even when not medically necessary — because there are no openings for them at long-term or post-acute care facilities. This tally is up 109% from three years ago and comes at an average cost of $1,912 per patient per day. Many of these patients are covered by Medi-Cal, which pays the system about $704 per patient daily. The health system spent $45.7M caring for these patients in the 12-month period ending this April, according to the report. "This boarding issue, it's a huge economic issue for us," Scripps President and CEO Chris Van Gorder told Newsweek. "It's a patient care issue, but it's also forcing us to make very difficult decisions about the services we can offer so that we can have enough beds to put the patients in." In March, Scripps shared plans to transfer its obstetrics services from Scripps Mercy Hospital Chula Vista (Calif.) to its Scripps Mercy Hospital San Diego campus. Mr. Van Gorder said the move will help free up beds at its Chula Vista campus in anticipation of intensified boarding challenges expected to come this January when California's Senate Bill 43 takes effect, expanding the criteria for involuntary 72-hour hospital holds. To help alleviate the strain on hospitals, Mr. Van Gorder has advocated for higher federal reimbursement rates and for extending regulations such as the Emergency Medical Treatment and Active Labor Act to require post- acute facilities to accept more complex, federally-insured patients. He contends that some facilities perform "wallet biopsies," prioritizing admissions for commercially insured patients over those covered by Medi-Cal or Medicare. n

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