Expert Panel Weighs In On Value-Based Reimbursement

Earlier this month, I had the privilege of moderating a panel on Value-Based Reimbursement (VBR) at the Georgia HIMSS annual conference. Panelists were:

  • Mary G. Gregg, MD, FACS, MHA – Enterprise Director, CareSource

  • Raymond Snead, Jr., D.Sc., FHFMA, FACHE – long-time CFO/CEO who recently served as Interim CEO at Grant Memorial Hospital, Petersburg, WV

  • Barry S. Herrin, FAHIMA, FHIMSS, FACHE, Esq. – Founder, Herrin Health Law, PC

GA HIMSS Oct 2018 Panel Cropped.jpg

Here are some of the highlights from our lively interchange:

  • There has been little true progress toward containing healthcare expenditures despite decades of trying various approaches including HMOs, PPOs, DRGs, ACOs, CON, and other efforts.

  • For the most part, VBR amounts to transferring risk to providers and does little to truly improve care.

  • Each party in the healthcare equation has a different definition of “value.” Patients want the most care for the least amount of money. Payers and employers want to pay providers as little as possible. Providers want to be adequately compensated for the care they deliver.

  • By and large, VBR does not allow for variability in patient differences, including the extent to which they follow good health practices and adhere to suggested care guidelines. Chronic illnesses represent a huge part of health status and medical costs. Patients can do more to improve their health and, thereby, help moderate costs through better lifestyle choices and compliance with care guidelines.

  • Technology can help identify and address health and, therefore, tamp down coats. However, some organizations merely throw new technology or an app at a problem without adequately defining it or developing a comprehensive plan to address root cause issues.

  • Hospitals must get physician involvement from the very beginning whenever proposing a change in medical practice or adopting new technology. Walking three-quarters of the way through a process and then inviting physicians into the discussion guarantees failure.

  • The days of considering data security as an afterthought are over. Ironclad practices must be baked in from Day One.

  • We need better analytics for identifying and tracking the 20% of patients who require the greatest level of care.

  • Patient mental health issues contribute greatly to total costs but are not being effectively addressed.

  • Cost coverage is being relegated to a smaller and smaller percentage of patients with insurance policies that fully cover the cost of care. As the number of plans covering costs dwindles, in order to stay in business, hospitals continue to shift more and more costs to those with more adequate plans. This effectively makes hospitals taxing agencies.

  • With increasing pressures from all sides, physicians are burning out faster than ever before.

  • Innovation is not being rewarded within the current delivery and payment system.

  • Amazon and others outside the traditional healthcare arena may be the source of truly disruptive innovation.

You can see the conversation went well beyond just VBR since all these issues covered interlock. The overall consensus was that the enormous complexities of the healthcare system make it impossible for a single approach like VBR to “tame the cost beast.”

Cherry-Picking and Cost-Shifting Are the Name of the Game

The following letter was published in the August 27, 2018 issue of Modern Healthcare magazine.

MH Sept 27 2018 cover.jpg


The statistics in the Aug. 13 Data Points regarding where emergency services providers choose to locate (“Stand-alone EDs flock to affluent ZIP codes,” Data Points, p. 31) point to a trend that some fail to grasp. I agree that in most retail situations – cars, flat screen TVs, etc. – competition encourages increased quality and tamps down prices. Your data reveals that potentially profitable service lines gravitate toward more affluent areas. This is especially true for facilities like free-standing surgery centers, and it amounts to cherry-picking. I don’t see people rushing to set up trauma centers in downtown Atlanta or Chicago to siphon off the uninsured car wreck, overdose and gunshot cases.

Everyone knows about the cost shifting to commercial payers because of less-than-cost payments from Medicaid, the uninsured and, in many cases, Medicare. But there is another type of cost shifting that takes place within the hospital. Since many of the vital services they offer cause a financial drain, they make up the difference from other areas that do yield net income. If they lose too many profitable patients, their ability to prop up the necessary but financially draining service areas declines.

One bright spot in your statistics is that two-thirds of the freestanding EDs are hospital-affiliated, meaning they are presumably helping the profitability of the hospitals that operate them.

Glenn E. Pearson, FACHE

Principal

Pearson Health Tech Insights, LLC

Marietta, Ga.

Getting Ready to Launch a New Product? Don't Make Either of These Timing Mistakes

Developers and entrepreneurs spend months or even years preparing their product for market introduction. A danger they face is misjudging when to launch. They must heed the old saying, “You only have one chance to make a first impression,” but some may obsess over this too much and, therefore, delay their product’s introduction longer than necessary. This can lead to losing the first-in-market advantage and/or missed sales. However, in an attempt to beat the rest of the market, other vendors make the mistake of launching prematurely, with sometimes-devastating results.   

Do you remember Apple’s disastrous 2012 launch of its new Maps app? It worked perfectly unless you didn’t want to have to find a train station in the middle of lake or were confused by aerial-view interstate maps that resembled overcooked spaghetti. Once a product gets cast as inferior, it can take years to recover. Some never do.

In order to avoid this mistake, some companies overcompensate and wait too long. This potentially creates two problems:

·         If your product is groundbreaking or transformational, a delay gives competitors extra daylight, and you could forfeit your “first to market” advantage.

·         Delays slow down cash flow, something which can prove fatal to a cash-starved startup.

Recommendation:  If you are introducing a groundbreaking service or product, seek the sweet spot where your minimally viable product performs all its essential functions adequately yet still gives you a head start in the market. A product that does exactly what it purports to do – even if it’s not particularly fancy – establishes your credibility and starts the cash flow so vital to continued development. If early adopters like what they see, they will likely talk your product up among their peers.