The conventional wisdom during recent years has been health care system consolidation which includes both physician employment and hospital mergers. There are numerous potential advantages which include group purchasing, improved contracting, and standardization of services. In theory, this should result in lower costs to patients but rarely if ever does.
Instead, community hospitals should be conducting intensive population health readiness assessments. Population health is an approach to improve the health outcomes of a specific group of people. Groups of people targeted for population health management interventions can be parsed out by insurance status, condition, utilization or other characteristics and demographics. Examples of groups that population health interventions might target include, but are not limited to:
- Employees and family members of a hospital system who are high utilizers of healthcare services.
- Enrolled members of a Clinically Integrated Network, ACO or insurance plan.
- A panel of patients from a physician practice, such as children with asthma, adults with COPD, or patients with high utilization of the ED.
- A segment of patients across the community, such as adults with mental health or addiction issues, low birthweight babies, those at-risk for readmission or geographic areas with high rates of uninsured.
Trends all point toward a growing population health approach to health care. The nuts and bolts of reimbursement and pay structures are transitioning away from encounter-based care to better management of cohorts of patients that results in higher quality of care and better outcomes. For example, Medicare payments are shifting away from fee-for-service with 30 percent of the payments being tied to the quality of care by 2016 and 50 percent by 2018. More and more private payers are also moving toward value-based payments, with some of the top payers and purchasers requiring 75 percent of payments be tied to quality and outcomes. Adopting a shared definition of population health, including quality and outcomes, and proceeding with a clear roadmap to better population health management is in strategic alignment, not only with healthcare trends and financial realities but also with community hospital mission and vision as the health care system of choice for their regions.
Community hospitals need to consider 5 key questions.
1) Which population groups are the priority? Select the top populations to target for population health interventions. Selection should be data-driven, starting with the “low-hanging fruit” where the most gain in quality and cost outcomes can be captured.
2) What population health interventions hold the most promise for quality and cost outcomes? Select medical management interventions and strategies – specific to the priority population – that hold the most promise for improved quality and cost outcomes. These can include such components as evidence-based protocols, quality improvement methods, adoption of Patient-Centered Medical Homes and others.
3) What is the workforce, partnership and coordination infrastructure necessary to carry out the population health intervention? Build out components of the infrastructure such as staffing, partnerships and care coordination to effectively implement the population health intervention across care programs and sites.
4) What is the Health IT and Exchange capacity necessary to implement the population health intervention? Strengthen Health IT and Exchange Infrastructure to be able to collect, analyze and report on population health outcomes as well as share the right information with the right person at the right time, whether it’s a patient, physician, clinical staff, next provider-of-care or other authorized individual. This does not require ripping and replacing core systems and can be achieved incrementally without expensive population health IT platforms.
5) What is the necessary financial infrastructure for population health overall and specific to a particular intervention? Create and expand the financial infrastructure, including exploring new payment reform opportunities with payers, quality-based payments and the realignment of incentives. What is the potential ROI for a population health intervention and how can initial, captured savings be re-invested in population health management infrastructure for long-term gain?
In my home state of North Carolina, a near merger of Atrium and UNC Health Care was suspended due to growing questions of long-term benefit and cost of care to the community.
Across the country, hospital consolidation has proceeded to the point where 90 percent of markets are now considered highly concentrated. The physician market is not much better – 65 percent of markets for specialist physicians and 39 percent of markets for primary care physicians are highly concentrated. Consolidation has increased health care costs through the blunt exercise of market power. Over the past two decades, more than 50 percent of the real increase in health care costs has come from price increases and increases in service intensity – just the pattern that one would expect to see from an exercise of market power in price negotiations and a shift in the site of care from free-standing physician practices to hospital-based practices.
Instead of merging healthcare systems across medical trading areas, I propose that community hospitals embark on the population health by enhancing cost-effective access to care for uninsured patients, improve their own employee health outcomes, and align with physician lead ACO (accountable care organizations). This series will explore how this might work in communities with 300,000 to 500,000 residents.
Future articles will explore how focusing on 5 key areas, allow hospitals to create community-wide opportunities for employers and patients.