Question

Task 2

Case Study

Turning Value-Based Health Care into a Real Business Model

The shift from volume-based to value-based health care is inevitable. Although that trend is happening slowly in some communities, payers are increasingly basing reimbursements on the quality of care provided, not just the number and type of procedures. But because most providers’ business models still depend on fee-for-service revenues, reducing volume (and increasing value) cuts into short-term profits. How, then, are innovative providers redesigning care so that, despite financial pain in the short term, they achieve long-range success?

Let’s start with four examples from the front lines of care and then step back to see what deeper strategic advantages all of them have in common. At Intermountain Medical Group clinics, mental health care is integrated with primary care as a default practice, first piloted 15 years ago. All primary care patients undergo mental and behavioral health screening, and they get appropriate follow-up with counselors, often at the same location. The clinicians collaborate in the same way for all patients, whether or not Intermountain’s health plan is the insurer. As a result, patients are receiving coordinated behavioral care, and their outcomes are improving. Costs per member are now $22 higher up front but are also $115 lower overall annually, because of reductions in ER visits and other care. In the current fee-for-service environment, Intermountain obtains those long-term savings for the minority of patients for whom it is the payer, but other payers reap the rewards for most patients.

At Mayo Clinic, surgeons who perform lumpectomies or partial mastectomies for breast cancer work during the operation with the Frozen Section Pathology Lab to determine whether all the cancer has been removed. Such microscopic analysis of frozen-tissue samples can take 24 hours or more at some hospitals, but Mayo achieves it in, say, 20 minutes while the surgery is in process. Yes, 20 minutes is valuable extra time in an operating room while the surgeon and staff wait for pathology findings. But Mayo doesn’t do it just to get results to a patient 23 hours sooner. The main benefit is the on-the-spot chance to extend the surgical excision, if needed, to remove all evidence of cancer. That approach eliminates the need for repeat lumpectomy in about 96% of patients. In a study of five years of lumpectomy data, the 30-day reoperation rate was 3.6% at Mayo in Rochester, Minnesota, compared with 13.2% nationally. The result: Mayo’s costs for surgery are higher in the short term, and it earns less revenue from follow-up operations. But it reduces overall medical costs, and the patient gets peace of mind more quickly.

The American College of Radiology (ACR), in 1993, developed clinical practice guidelines for radiologic services. Some of the task force leaders came from Boston’s Brigham and Women’s Hospital, which subsequently introduced its own internal radiology prior-authorization program — for all patients, regardless of payer. The hospital’s computerized order-entry system now compares imaging requests with the patient’s medical record, allowing physicians to check for prior imaging and to see whether the new request jibes with current ACR guidelines. The system improves patient safety and outcomes, but it slows down and irritates physicians who are trying to order a test.

Revenue has also taken a hit as so-called “low-value” tests have declined (for instance, CT chest scans for pulmonary embolism fell by 20%). In addition, patients whose images were imported from other hospitals had a 17% lower rate of new diagnostic imaging, compared with patients whose prior images could not be obtained. The result: more-appropriate use of radiology tests for all patients, but crankier physicians and forgone revenue. Insurance companies were the major financial beneficiaries for almost all patients.

And Intermountain Healthcare initiated a care-process model for febrile infants in 2008, including guidelines for the use of physical exams, lab tests, antibiotics, and discharge criteria. As a consequence, more infants with urinary tract infections or viral illnesses were identified and appropriately treated, and fewer infants at low risk for serious bacterial infections received antibiotics unnecessarily. Infant outcomes improved, hospital stays shortened with no increase in readmissions, and overall costs declined. Intermountain made a major investment even though one of the results was lower patient revenue.

Question:                                                                                                                    (15 x 1 = 15 marks)

In all four examples above, the organizations’ short-term financial hits were real and painful.

Nevertheless, we don’t consider these efforts to be acts of charity but acts of strategy. What specific strategic elements were presented and what acts of strategy do they share? (Maximum 500 words)

Answer 1

In each of the examples the providers giving quality patient care. It includes better outcomes, better care, low anxiety, low time wasting, and also the risk of health is very lower. It shows the improving teamwork of the organization. They give more importance to improving value than the service fee. They have disrupted the habits of their employees and give more importance to patients health care services. Also, they use care redesign that gives the value of all patients. The following are the reasons for their strategies,

Sustainability: the forward-looking service providers give importance to compete and attract more patients by using less price and excellent quality service. They should replace the value-based model with the service fee model.

The managerial risk: the providers create pre-budget for managing the risk care. For this, they use both prevention and intervention strategies. They manage full care and evidence-based care practices

Making a good relationship: the health system requires a good relationship with physicians and other staffs. They can help to create good market value for their organization. Also commit a relationship with social service providers, government and other organizations.

Fewer alternatives: the best service providers need the best strategy for their business. That is affordable and quality health care to all the sections of the society. The outdated model creates a financial risk.