August 2012 - Clinical Business Strategies

David Hermann, VP, Supply Chain Consulting, MedAssets, has over 16 years experience in hospital operations and finance, including supply chain operations, supply chain strategy, PPI cost containment, inventory management, project management, warehouse redesign, business intelligence, e-commerce, value analysis programs, and co-development of a regional purchasing alliance. Hermann holds an MBA, a certificate in Lean Healthcare Supply Chain and is a member of the Association of Healthcare Resource and Materials Managers (AHRMM), Healthcare Financial Management Association (HFMA) and the Data Management Association (DAMA).

Colleen Vetere, VP, Clinical Resource Management, MedAssets, has almost 30 years experience in healthcare with a focus on healthcare operations, clinical and operational performance improvement, and supply chain improvements, specifically targeting total joint replacement and spinal fusion implants.

Nicholas J. Sears, M.D., Chief Medical Officer, joined MedAssets through Aspen Healthcare Metrics as Senior Vice President of Clinical Services in 2004. Sears is a Board Certified Cardiovascular Surgeon with more than 20 years of experience as a cardiothoracic surgeon and physician executive.

While healthcare reform in a non-political definition has been evolving for quite some time, its current configuration poses significant challenges – and opportunities – for healthcare providers.

An entirely new language has evolved, which includes provisions such as Accountable Care Organizations, Value-Based Purchasing, Bundled Payments, Population Health Management, Meaningful Use; and Outcomes Measurement, to name a few. Understanding these concepts and the strategies needed to successfully operate under their auspices will be critical for all healthcare executives moving forward.

Accountable Care Organizations (ACOs), currently applicable only to the Medicare population, entail the voluntary alignment of groups of hospitals, physicians and other healthcare providers (such as rehabilitation centers, skilled nursing facilities, home health agencies, etc.) to oversee and provide highly coordinated care to their Medicare patients.1 Inherent in these arrangements is the intent to implement this model and abide by the Medicare regulations associated with it, and to include public reporting of care delivery and resultant outcomes.

Bundled payments, arguably a "back-to-the-future" concept, is today’s iteration of capitating the full Medicare payment for a select group of diagnoses or procedures, to include pre-admission, hospitalization and post-discharge care among and between all involved providers of record.

Value-Based Purchasing (previously referred to as pay for performance or P4P) is closely aligned with meaningful use and outcomes measurement. All entail tying Medicare payments and potential incentives to reported metrics (measures). Meaningful use goes one step further in that this program provides Medicare incentive payments to providers who demonstrate successful use of electronic health records (EHRs) via the resultant data available to guide care.

Finally, Population Health Management builds upon the foundations set forth in these earlier concepts. Its concept is to shift the focus from the high expense resulting from treating the chronic sick and injured to keeping specific patient populations as healthy as possible and out of the hospital to lower the overall cost of care. The Care Continuum Alliance has defined Population Health Management from the provider perspective as follows: "The population health improvement model highlights three components: The central care delivery and leadership roles of the primary care physician; the critical importance of patient activation, involvement and personal responsibility; and the patient focus and capacity expansion of care coordination provided through wellness, disease and chronic care management programs.2

The existing healthcare industry evolved in an environment where a service activity was reimbursed. As a result, the system participants were rewarded as they increased the treatments, tests and interventions regardless of care quality and patient outcome.

Population Health Management represents a healthcare delivery model that is completely different from anything we have experienced: The underlying center shifts from "sick care" to "preventive care," from a reactively transactional treatment of diagnoses to a proactive, collective continuous management of health. It’s imperative for healthcare systems to respond to shifting payor program requirements and address the anticipated precipitous influx of newly covered lives under expanded coverage programs (Medicaid; health exchanges; etc.). Providers will need to forge stronger alignment with formerly fragmented, if not competitive, physician groups.

The model actually mimics the supply chain process where coordination along the whole chain is tight with data and information flowing across all stakeholders of the care continuum as the patient moves through the local care community. Leaders will need to take action and make sure the need for reform is well understood, creating buy-in across the board from community members to clinicians to staff members. Working together, hospital executives and board members can build a strong network of aligned physicians and other clinical providers to carry out the population health program.

Once physicians and clinicians are aligned with the processes, workflow and technology must be addressed to assure that efficient care processes take full advantage of the information that will be made available. Interoperability of information technology will be a key component in the success of adopting population health management. Systems need to enable care providers to coordinate care, which in turn, triggers the sharing of data among various providers, payors, administrators and patients – similar to the coordination of the healthcare supply chain.

Supply chain should leverage certain existing practices, as well as develop new approaches, in order to support this new healthcare delivery model.

Historically, supply chain leaders have focused their attention on only those variables that drive costs; in the new world, the focus will be on automation, clinical effectiveness, service line and patient outcome analytics, patient engagement and partner organizations that help reinforce that patients actively comply with care plans to promote wellness and quality outcomes. There will be an increased requirement for supply chain managers to provide actionable intelligence on the effect of utilization and product choice on patient outcomes, then for clinical value analysis (CVA) managers to help drive sourcing decisions to those products that the data indicate are best suited to maximize the outcomes for the population.

It will also be critical for supply chain and clinical value analysis managers to partner with organizations that specialize in patient engagement, the crucial component to help assure patients are compliant with their post-acute care plans. This allegiance becomes important because beginning October 2012 the non-compliant patients’ additional ER visits, physician visits and acute care are at risk for non-reimbursement from federal payors if readmission occurs within 30 days.

As healthcare providers continue their evolution under healthcare reform, supply chain leaders will undoubtedly continue their journey from the proverbial basement to the boardroom. Securing the best price for any given supply will no longer be sufficient. Instead, the successful use of data to drive collaborative decisions with clinicians around appropriate products and services, delivered to the appropriate patient at the appropriate time, will be the new order. In much the same way as pharmacists have moved from the "basement pharmacy" to the bedside to deliver collaborative care, might it be too far-fetched to see supply chain value analysis representatives working collaboratively at the bedside with clinicians to assure the best outcomes? One can never tell. hpn