Driven by reforms in the Affordable Care Act (ACA), value-based transformation works to change health care from a system based on fee for service to a system based on fee for value. For health care providers this means concentrating less on the volume of services provided to patients, and concentrating more on the actual outcome of the patients. Value-based transformation has seen great interest from both patients and providers, as it typically results in better quality of care at lower costs. Currently, about 20 percent of health care payment systems are based on value-based strategies; however, the government would like that to increase to about 50 percent by 2018.
The quality of a hospital is measured not only by the care the patient receives while admitted to the hospital, but also by the post-acute care the patient receives once they leave the hospital. To ensure their patients are getting the best possible care once discharged, many hospitals are developing networks of selected home health agencies (HHAs) and skilled nursing facilities (SNFs). Using preferred networks allows the hospital to have more control over the care the patient receives, thereby ensuring that quality care is provided, patients are satisfied, and costs are competitive. Preferred networks are also beneficial for the patients, who generally have shorter lengths of stay and are less likely to be readmitted as a result of care received in the network.
The increased focus on improvement in the quality and delivery of health care, balanced with the goal of reduction in health care spending, requires providers—now more than ever—to develop and execute operational strategies that result in the optimization of operational and financial performance. This optimization is not only crucial to the providers, but for the partners and payors for whom value is also created. Strategies to create and maintain value include revenue drivers such as volume growth, rate optimization, service line expansion, and clinical program development and expansion, as well as ancillary payor and external provider partnerships. In addition to these revenue drivers, operational efficiencies for health care cost reduction may include developing new staffing models that are based on the alignment of staffing to acuity, evaluating ancillary service expenses, and creating partnerships with material suppliers.
Skilled nursing facilities (SNFs) rely extensively on short-term acute care hospitals (STACHs) and long-term acute care hospitals (LTACHs) for the vast majority of new referrals and admissions. As such, the health of the relationship between hospital and SNF greatly influences both occupancy and patient payor mix in the SNF. Health care reform has brought new payment models and changes to the traditional fee-for-service approach whereby hospitals are incentivized or penalized based on the patient’s outcome, not just while under the hospital’s oversight, but also as the patient transitions through post-acute services. The proper partnerships between hospitals and post-acute providers are essential to ensure the continued viability at both care levels. SNFs that do not participate in partnerships will ultimately lose significant volume and revenue, while those in partnerships will garner greater volume with better payor sources.
Value-based purchasing and payment transformation continue to grow new models of care delivery. Moving these new models of care to true care transformation requires the next level of integration and coordination of care delivery. By identifying and tracking patients through the health system, stratifying risk and creating linkages to health care and social support systems, coordinating care with all involved providers, and engaging patients and families at all levels, healthcare will move beyond redesign to true transformation.
The Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act of 2014) seeks to improve the quality of care by providing consumers with more accurate information on the cost and outcomes of long-term care hospitals (LTACHs), skilled nursing facilities (SNFs), home health agencies (HHAs), and inpatient rehabilitation facilities (IRFs). The IMPACT Act of 2014 will standardize the way these post-acute care centers report on their quality, as well as the way they conduct assessments. This will allow both patients and providers to more easily understand and exchange this data being reported by these facilities. The Impact Act of 2014 will be fully implemented by 2022, with penalties being given to organizations who do not comply by that time.
Some of the biggest consumers of health care in this country are the Baby Boomers. Industry leaders must consider that this generation shops for health care in a way that is much different from generations past. In order to adapt to the Baby Boomer’s consumerist habits, health care must change from a provider-driven approach to a consumer-driven approach. This means changing the way that care is delivered to the patients, and thereby changing the patient experience. They can no longer simply be considered just patients, they must be considered guests or clients purchasing a product. Patients must have a choice in where and when they receive care, as well as the way in which that care is delivered. Consumerism has generated considerable interest from health care providers as a way to stand out in the health care market.
Approximately 9 million low-income elderly in the United States are considered to be dual eligibles, meaning they are eligible for both Medicare and Medicaid programs. Medicare covers their acute care costs, while Medicaid covers their long-term care costs. The combination of these two programs can often lead to fragmented care for elderly individuals. The Financial Alignment Initiative came out of the Affordable Care Act, providing state demonstrations that attempt to combine Medicare funding from the federal government and Medicaid money from the state into a single stream. Integrating the two programs allows for qualifying individuals to receive better quality care and easier access to that care.
Post-acute medicine is an emerging trend that allows patients to receive care in non-traditional settings, rather than in a doctor’s office or hospital. With post-acute medicine, providers are going where the patient needs them, which often means making house calls to the patient’s home or other place of residence. For many, this will be a game-changing method of care, which will result in much better outcomes for the patient. For hospitals and health providers, post-acute medicine is a key strategy of value-based health care where success is measured by the outcomes achieved.
The Program of All-inclusive Care for the Elderly (PACE) is a comprehensive community-based, social and medical model of care for frail elderly. A fully capitated health plan and delivery model, PACE allows participants to receive necessary care in their community, rather than in a nursing home setting. Utilizing a fully-integrated interdisciplinary team, it is often considered the gold standard of care for medically complex and dually eligible seniors. PACE continues to grow in 2015 with the program opening to for-profit sponsorship and the passing of the PACE Innovation Act, allowing demonstration models for serving additional populations, setting the stage for further expansion and health-system integration.
We all keep hearing our health care system is changing from the traditional fee-for-service model to an outcome- or performance-based model. Those in the industry recognize the ultimate benefits this approach will have on improving care and reducing costs, but also recognize the journey to successfully navigate to that point will indeed be painful! To help ease the pain and speed the process, every health care provider should be taking a careful look at their existing senior care programs and services, as well as others they should be offering. Why is this important? Our health care system has historically operated in many silos with little overall care coordination, and patients were discharged with little or no follow-up. With accountable care organizations (ACOs), bundled payments, and the move toward outcome-based reimbursement, providers that focus on care coordination and following patients across the continuum are the providers that will be successful. For this reason, every health care provider should look aggressively at their current array of senior-related services to identify what new programs, services, and technologies are needed to provide quality care coordination across the continuum for the seniors they serve. Strategically repositioning themselves in this way will help guarantee future success within this changing health care environment.