Adjusting to Value-Based Care

MIAMI BEACH—Adjusting to the new nationwide emphasis on value-based medicine, especially in large academic medical centers, is proving to be a lengthy—and painful—ordeal, but physician leaders offered guidance at the Triological Society Combined Sections Meeting, citing experiences at their own centers as examples.

They described a dramatic flattening and simplifying of their systems to promote the alignment of incentives, a deep dive into the financial minutiae of head and neck cancer in search of more cost-effective care, and new ways to improve value in pediatric otolaryngology.

Department Mergers

Douglas Girod, MD, executive vice president at the University of Kansas Medical Center in Kansas City, offered a reminder that the driver of the emphasis on value is the Affordable Care Act of 2010, which includes five major aims: expansion of coverage through Medicaid and exchanges; insurance market reform with required coverage; payment and delivery reform; quality and safety improvement; and better control of costs.

In a nutshell, Dr. Girod said, “You need to increase the patient experience, you need to improve the quality, and you need to lower the cost.”

Increasing the focus on wellness, consistently providing cost-effective care, and rewarding safety, quality, and innovation means aligning incentives, which will take a very collaborative approach to do, since this focus covers such a broad spectrum, he added.

At academic medical centers, it is particularly difficult due to the tradition of a “federated” structure and “limited central governance,” he said. But these institutions need to be integrated organizationally, clinically, financially, and with regard to information and engagement in community health, Dr. Girod said. “Trying to create integration through this environment is not a simple assignment,” he added.

At the University of Kansas, a $2 billion per year, 1,800-employee academic medical center, the previous model was that each of the 18 departments was its own 501c3 corporation with its own board of directors, with physicians employed by the departments. The hospital had its own board of directors. There were 19 different benefit plans in the mix, Dr. Girod said. “There were literally hundreds of contacts flowing between all of these different entities,” he said.

Now, after a four-year restructuring process, all of the departments have been collapsed into a single practice plan that is merged with the hospital on a financial basis. Dr. Girod said it is still a physician-run practice, with physician leaders placed throughout the system to help guide the continued evolution. “We’ve gotten it done on paper,” he said. “We’ve got to do it in practice.”

Streamlined Care

Myles Pensak, MD, CEO of the faculty practice group University of Cincinnati Physicians, described the efforts to improve value-based medicine at his center. There, the physician practice plan is completely independent, with physicians leased to the University of Cincinnati’s health system. Over the last several years, 17 departments, which were

previously separate financial entities, were “melded together” into a single faculty practice plan with a single tax ID number, which he said was one of the most arduous tasks in the process due to the loss of control involved.

The board is now made up of the department chairs, with Dr. Pensak, as CEO, reporting to them. “The power is in the board,” he said.

He emphasized the importance of streamlined care, with surgical patients seeing all the specialists they need in one day, and having reliable numbers available to make good decisions. “One of the things that tends to happen in a lot of physician organizations … is the assumption that because we are smart we can solve the issues and/or problems because it’s all about how we take care of patients,” he said. “The reality is you need to have the analytics. We are really not very good at digging out the business details and recognizing trends.”

With predictions that 90% of physician income 10 years from now will come in the form of pay for performance, it is hard to overstate the importance of working with analysts, Dr. Pensak added. At his center, an analyst will be embedded in each department starting in July. “The analysts who are working with you are the people who are going to have to set the tone for where you’re going.”

Activity-Based Costing

Dr. Randal Weber, chief of head and neck Surgery at MD Anderson Cancer Center, pointed out that one important key to time-driven activity-based costing (TDABC) is to spot trends and develop bundled payment models, based on the complexity of care and number of co-morbidities a patient has. TDABC uses time-based algorithms to simplify the traditional but more time-consuming “activity-based costing” system of calculating costs for specific activities, such as answering a phone call.

MD Anderson researchers found that the diagnostic phases are fairly inexpensive, with treatment accounting for most of the costs. Care bundles are now being rolled out; surgery alone in the lowest-cost bundle, for example, and surgery with reconstruction plus radiation and chemoradiation therapy in the most expensive bundle. Cases involving fewer than two co-morbidities are priced lower than those with two or more, based on MD Anderson findings that two or more co-morbidities typically start to significantly drive up costs. Outcomes, from survival to return to normal activities to readmissions, are also tracked.

The new system is approximately halfway through its introduction, said Randal Weber, MD. “Financially it’s performing well,” he added. “I think we look at our risk and we put in appropriate stop losses to protect the margin, but we still have a way to go to get to the end of this journey.”

We need to show the public and our patients that we’re operating on them the right way, for the right reasons, using the best available evidence. —Emily Boss, MD, MPH

Accountability

Emily Boss, MD, MPH, director of pediatric surgical quality and safety at Johns Hopkins Bloomberg Children’s Center in Baltimore, said that the nation is more suspicious than ever that physicians might be making decisions based on finances and not on evidence-based medicine, and that physicians have to step up to show they are accountable.

“You might read The Laryngoscope, but most of the country is reading Reader’s Digest or Time magazine—people are paying attention to what we’re doing,” she said. “We need to show the public and our patients that we’re operating on them the right way, for the right reasons, using the best available evidence.”

Changes toward policy in value-based medicine is happening more slowly in pediatrics than in the rest of medicine, but they are coming, she said. One key example, she added, is the imminent application of pediatric HCAHPS patient-experience scores to value-based payment formulas for hospitals.

But some smaller, value-oriented changes are already underway. In response to a 2014 study finding a high rate of morbidity in tracheostomy cases, data on eight specific variables related to tracheostomy will now be collected at 81 institutions participating in the pediatric National Surgical Quality Improvement Program (JAMA Otolaryngol Head Neck Surg. 2014;140:1019-10126). The data will reflect variables such as post-operative chest X-rays and how placement of the tracheotomy is determined. The information could help lead to better utilization of procedures and tests.

Dr. Boss also pointed to the growing attention to the wildly varying rates of tonsillectomy among different regions of the United States—disparities that are not explained away by insurance status or race (J Pediatr. 2012;160:814-819.) She said there is little evidence suggesting that tonsillectomy is superior to watchful waiting for some children, and that physicians should learn the preferences and values of their patients when determining whether elective surgery is appropriate. “Value in pediatrics is an evolving concept,” she said. “But it is real and present and we need to be sitting at the table as we’re defining value for our specialty.”

Thomas Collins is a freelance medical writer based in Florida.