By Tara Bannow | July 2, 2018
LAS VEGAS—The calls for health systems to ditch fee-for-service payment in favor of value-based models were downright urgent at this year’s Healthcare Financial Management Association conference in Las Vegas.
“We can’t afford not to make the change,” David Hammer, a principal in Healthcare Performance Management Consultants’ revenue cycle and managed-care practice in Fort Lauderdale, Fla., told attendees on the conference’s opening day.
It’s been a topic of discussion at the annual conference for years. But this year, conversations seemed to indicate a breaking point. Healthcare costs are unsustainable, and anyone not on the capitation train—or at least without a ticket in their hand—is part of the problem, presenters echoed.
Speakers also acknowledged the real fear C-suite leaders have about taking that leap. When margins are already squeezed, they offered, it can be hard to agree to a change that could decrease revenue further. Indeed, individual discussions with health system leaders revealed more caution than was present in thought leaders’ presentations.
“Honestly, there is too much fear,” said Christer Johnson, health analytics advisory leader with Ernst & Young. “They’re not clear on how they’re going to make money. And that’s why the bundled-payment programs are voluntary today.”
Nonetheless, the resounding theme of this year’s HFMA conference: It’s time to bite the bullet.
In his keynote speech June 25, HFMA President Joseph Fifer urged a packed audience to forge ahead into the value-based unknown, despite a recent study by the HFMA, Leavitt Partners and McManis Consulting that found such models didn’t lower the total cost of care. He attributed the finding to a lack of incentive in those programs to lower the cost of care and too little downside risk and upside opportunity.
The chief financial officers of the future have a different mindset, he said. They’re willing to implement payment models that truly share the risk and use metrics to assess the return on investment.
“If you invest, you’re part of the solution, even if your fee-for-service revenue goes down,” Fifer said. “But if you don’t invest, someone else will. And the revenue could still go down.”
A forward-thinking CFO will also formulate a value-based payment arrangement that fits within his or her specific health system and market, he said. Perhaps that’s why discussions about such programs can begin to sound nebulous, like when you’ve seen one, you’ve seen one.
Health systems at different levels of adoption
Only a very small proportion of the hip and knee replacements performed on commercially insured patients at Providence St. Joseph Health’s hospitals are paid for in bundles, or lump sums regardless of whether the total cost exceeds that amount. On the Medicare side, the Renton, Wash.-based system has seen its costs decrease significantly since it started participating in the CMS’ Comprehensive Care for Joint Replacement bundles, said Kevin Fleming, Providence St. Joseph’s vice president of orthopedics and sports medicine. Twenty of the system’s 50 hospitals are enrolled in the joint replacement program.
“Working with those government bundles really caused us to re-examine what we were doing and take a whole new approach—not being so laser-focused on what’s going on within the four walls of our own hospital and looking at what we’re doing for patients before they come to the hospital and then after discharge,” he said.
Even the system’s markets that aren’t enrolled in the CMS program have adopted some of those hospitals’ value-based strategies, such as using case managers to make sure patients get the right care once they leave the hospital, Fleming said.