Becker's Hospital Review

Save the date! Becker's Hospital Review 6th Annual Meeting — May 7-9, 2015 — Chicago. Please call 800-417-2035 to register. 8 according to a 2014 American Hospital Association survey. Further, nearly half of executives polled identified community and population health management as a talent gap within their organizations. Some health systems are filling this gap by creating new C-suite positions: 10 percent of executives indicated their health system had a chief population health manager. Quantifying population health is another challenge. Although healthcare leaders need to think creatively about how to improve the health of a geo- graphic population, they should also maintain a healthy sense of skepticism about population health efforts. What might seem like a much-needed inter- vention on paper, such as a grocery store in a food desert, may be one small piece of a multipronged solution. There are no silver bullets, after all. Amid excitement for population health, systems may oversimplify problems and overinvest in solutions only to see the same health outcomes. To find success, hospital leaders may need to diminish their traditional reli- ance on "programs" and instead focus more on partnerships with commu- nity organizations and nonprofits. Some health systems still act as autono- mously as they can, ignoring a wealth of expertise and resources. "When we talk to other population health managers, they have unearthed a number of unique challenges inside their populations, such as domestic violence, elder abuse and other public health crises," says Jason Dinger, PhD, CEO of MissionPoint Health Partners in Nashville, the accountable care organization affiliated with Saint Thomas Health. "Unfortunately, most re- spond by trying to implement their own unique program to respond to the issue. We usually encourage them to first speak with the experts in their com- munity who work on these issues every day. In many cases these are nonprofit organizations that can add great value to the population health effort but often have trouble engaging and integrating with a health system's efforts." Shifting from volume- to value-based reimbursement. The move from volume- to value-based reimbursement is inevitable. For now, it's a matter of how quickly providers should make it. Move too fast, and hospitals risk losing revenue and implementing a strategy the market does not support. Move too slow, and they may lose partnership opportunities, experience and time that could have been spent modifying clinicians' behaviors and transforming practices. In its 2014 national study of payers and providers, McKesson found 90 per- cent of payers already transitioned to some form of value-based reimburse- ment. Generally, providers are more reluctant to value-based care initia- tives, such as accountable care organizations. Sixty percent of payers said they believe value-based reimbursement will have a positive finance effect on their organizations, while only 35 percent of healthcare providers be- lieved the same. Despite their feelings about new reimbursement models, both payers and providers agree they will soon eclipse traditional fee-for-service. Providers using mixed models expect fee-for-service to decrease from about 56 percent today to 34 percent by 2020. The onset of pay-for-performance varies among markets, and several payers in a region are necessary to make the transition efficient and worthwhile for providers. Health systems can align with employers, other providers and pay- ers to build a critical mass. Providers also need to adjust their thinking about value-based reimbursement from the short- to long-term. Taking it one pilot or contract at a time worked in years prior, but executives must now build a strategic plan that details where the organization needs to be in five years and how it will get there. This plan must be as flexible as it is detailed, for the environment is changing quickly. Regulatory demands. Healthcare providers must adhere to numerous, complex regulations that set guidelines and expectations for quality, coding, reimbursement and overall care delivery. Although many of these regulations were designed to improve care and efficiency, many providers see them as burdensome and impractical. Regulations like the transition to ICD-10 coding and the two-midnight rule, for example, each require providers to allocate extensive time, money and staff for effective implementation. These regulations — and the systemwide efforts required to meet them — are often met with frustration and resistance. While successive delays in the start dates of these mandates may seem like a relief for some, arguably, delays only exacerbate the "burden" these regula- tions impose. Venson Wallin, managing director at BDO Consulting and a member of the BDO Center for Healthcare Excellence & Innovation, said delayed imple- mentation of certain regulations, such as the yearlong delay of ICD-10 until October 2015, creates additional issues for providers. "The delays themselves impact a wide variety of aspects," Mr. Wallin said. "Prior to the delay, everyone was getting ready for billing using ICD-10 codes for implementation in October this year and working with coders. In actu- ality, with the delay of another year, there is a need for continuity around ICD-9 billing." According to Mr. Wallin, the ICD-10 delay creates a resource gap. There are about 25,000 coders across the country that have been trained in ICD-10 and not ICD-9 in anticipation of implementation, he said. While the ICD-10 delay may bring on new challenges, it does provide orga- nizations that were behind in preparation for ICD-10 with a grace period. "Hopefully those that are behind will use the additional year as an opportu- nity to catch up and focus on doing what they need to do. I wouldn't bet on another delay. Betting on another delay is a significant risk," Mr. Wallin said. Other opportunities may emerge from delayed starts. If a regulation's delay is related to significant resistance within the industry because of cost or opera- tionally from a patient perspective, CMS may delay and solicit input, make modifications or provide additional information to help ease the transition, Mr. Wallin explained. For example, the two-midnight rule was delayed in part because of resis- tance from providers who contended the regulation imposed too many un- necessary requirements around clinical decision-making; many physicians thought rules relating to the amount of time patients could be admitted took much of the decision-making power out of their hands. In the face of sig- nificant protest, CMS offered an opportunity for providers to participate in an "open-door" teleconference during which they could ask questions, relay concerns and hear CMS officials clarify criteria. The two-midnight rule, in theory, will ensure that any patient who stays in the hospital longer than two midnights legitimately needs to be there. Ac- cording to the Washington Times, a potential benefit is reduced federal healthcare spending, though this would come at the cost of lower hospital reimbursements. The rule is supposed to also help establish criteria for ad- mitting patients rather than letting the patient linger in observation status. Other groups find healthcare regulations particularly burdensome. The fast- paced technology companies who are just getting their feet wet in the health- care industry are finding the time it takes to develop and release products to the market is much longer in healthcare than what they are used to. Compa- nies like Apple, Google and Amazon that have recently been developing, or plan to develop, apps and devices that can be used to serve health purposes, are finding themselves unusually tied down by regulation and inspection. "I think the biggest challenge for [these companies] is the level of scrutiny and peer-review that needs to occur prior to introduction into the market. They are used to fairly rapid development and introduction to the market," Mr. Wallin said. If an app or device is intended to serve a medical purpose, the company must submit the product to the FDA for review and testing. While the wait- time before introducing a healthcare product may be drastically longer than technology companies are used to, the development of such products could offer extensive benefits for users, software developers and healthcare providers alike. 10 Challenges and Opportunities for Hospitals in 2015 (continued from cover)

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