Specialists and health systems have played a symbiotic role in the U.S. healthcare system for years, but in the months leading up to the onset of COVID-19, that symbiosis was starting to fracture due to shifting market dynamics, greater payer focus on non-hospital based care and disruptors.
Specialists have long depended on health systems for patient referrals and for the physical space to perform surgeries and procedures. And, health systems have relied on specialists for high-margin services in a world in which revenue has traditionally been driven by volume.
COVID-19 highlighted these fracturing dynamics and accelerated them, leaving specialists and hospitals to individually navigate dramatically reduced revenue and the rapid shift toward virtual and outpatient care delivery. However, with a strong partnership in place, health systems and specialists can reengineer care and improve financial sustainability through a team-based, coordinated and aligned model of care delivery.
Health systems need to capitalize on the moment and revisit their strategy to align with specialists.
Here are five reasons leading health systems are proactively working with specialists to strengthen their integration with each other.
1. Coordinated care leads to better quality outcomes.
Physicians and advanced practice providers who participate in alternative payment models (APMs) have achieved higher quality of care outcomes and better marks for primary care-specialist coordination than providers that practice solely in fee-for-service (FFS) payment models. However, in 2019 only approximately 36 percent of U.S. healthcare payments were through APMs, leaving a majority of physicians and providers without a mechanism or structure to coordinate patient care.
During a June webinar, Premier surveyed members participating in our Population Health Management Collaborative (PHMC) and Bundled Payment Collaborative (BPC) to ascertain how many have implemented care transformation tactics among their hospitals and specialists. The majority (79 percent) indicated they have only partially implemented such tactics, despite routinely being at the forefront of implementing value-based care models. Members reported that team-based coordinated care, patient access and patient flow, and dashboards and metrics are top challenges and priorities for them to improve as they work toward stronger hospital-specialist alignment.
2. Care is moving rapidly to the outpatient setting, shifting relationships and referral dynamics.
Prior to COVID-19, Medicare and major commercial payers set a course toward site-neutral payment and policies intended to shift surgeries and procedures to outpatient settings. Their tactics include paying hospital outpatient provider departments the same as physician office rates (a 40 percent reduction, with an estimated cost of $760 million to hospitals overall), removing key surgeries from the Inpatient Only list, requiring prior authorization for hospital-based surgeries (but not for outpatient procedures) and accelerating implementation of outpatient-focused bundled payment models.
COVID-19 added a new element to these dynamics. As patients show a reluctance to go to hospitals due to COVID-19 safety concerns, ambulatory surgery centers (ASCs) are positioned to capture a significant portion of the elective surgery backlog many hospitals are counting on for a return to financial stability. PHMC and BPC members reported that strategic planning is a critical concern, with “keepage” tactics as their top priority. Health systems need to actively review their strategic plans to consider how to foster more loyalty with specialists; gauge the likelihood of specialists seeking employment or affiliations elsewhere; and align or partner more closely with ASCs in their communities to maintain connections with patients and physicians that choose the ASC setting and ensure high quality and experience of care for patients throughout the care continuum.
3. With reductions in payments inevitable, hospitals and specialists that work together can better manage costs and margin.
During the initial COVID-19 surge, physicians and hospitals experienced extreme financial distress, and the growth in federal deficits related to COVID-19 will likely mean payment cuts for years to come – cuts that are most likely to affect physicians and hospitals dependent on the FFS payment system.
More than ever, providers will need to be strategic about reducing expenses, managing productivity and capacity, and monitoring margin to identify financial inefficiencies. PHMC and BPC members indicated they have only partially implemented capacity and productivity management capabilities to manage internal costs and margins (75 percent of webinar survey respondents).
Because COVID-19 has disrupted the care delivery model, providers have a rare opportunity to improve patient care, streamline processes and reduce care variation through practice, telehealth, operating room and procedure workflows redesign. To further ensure financial solvency and optimal care delivery, specialists and hospitals should also consider rapid-cycle margin improvement, standardization of supplies and improved documentation and coding to ensure appropriate payment and inform care delivery.
4. Aligning incentives today will enable specialists and hospitals to succeed in models of the future.
During a recent discussion forum, PHMC members noted that COVID-19 is the catalyst that will change healthcare delivery, and models that align incentives are necessary to achieve that vision. The simple fact that hospitals and specialists are paid under separate funding streams, unless they are in capitated arrangements, results in little incentive for providers to collaborate on care delivery, referrals or margin management.
There are multiple alignment mechanisms for specialists and hospitals to consider, including: medical directorships, co-management agreements and Hospital Quality Efficiency Programs, which do not require participation in an APM; bundled payment, ACO gainsharing/funds flow and shadow bundles that are embedded in ACOs; and more advanced compensation redesign, capitation arrangements and joint ventures.
Specialists and health systems will need foundational alignment mechanisms to galvanize specialist-hospital partnerships. These partnerships are essential if organizations are to successfully transform care delivery, strengthen relationships and manage costs.
5. Addressing total cost of care is a joint venture.
While the evidence shows that ACOs have increased coordination between primary care and specialists, many APMs are fundamentally set up to favor primary care, including the Medicare Share Savings Program, the Comprehensive Primary Care Plus model and the Primary Care First model. Bundled payment models are one of the sole exceptions.
Consequently, health systems that wish to align with specialists have few options, and specialists have less incentive to reduce total cost of care – even though specialists are shown to drive a majority of healthcare expenditures and utilization.
We believe that a new generation of Clinically Integrated Networks is needed to succeed in value-based payment and risk arrangements by encouraging participants to own and aggregate the operational and clinical capabilities, and align with high-performing primary care physicians, specialists and post-acute care providers.
Payers have recently declared their commitment to move faster to value-based care and payment, including Centers for Medicare & Medicaid Services (CMS) Innovation Center Director, Brad Smith, “value-based care has lasted through multiple administrations and a pandemic; it is here to stay and is the future.” In order to be successful in these models, specialists and health systems need to work together to implement cost-reduction solutions for complex conditions.
Behind the Scenes of a Coordinated, Team-Based, Aligned Integrated Specialty Care Model
Providers who had been making progress toward more coordinated and value-driven care were likely halted by COVID-19 as elective cases were put on pause; patients delayed care; and synchronization efforts between primary care, specialists and hospitals were slowed by office closures and the rapid uptake of virtual care.
That’s why Premier has launched an integrated specialty care model designed to help specialists and health systems reengineer care and improve financial sustainability through team-based, coordinated, aligned specialty care. While other specialty care models focus on the clinical aspects of coordination – care delivery, care transformation, care model redesign – our experience shows many of them have difficulty scaling beyond pilot programs because they do not include foundational financial, governance and operational supports needed to align incentives and foster collaboration.
That’s why Premier’s model includes the following key elements, which address the five trends discussed above:
- Care transformation tactics focused on team-based, coordinated, high-value care that delivers improved clinical quality outcomes (readmissions, SSI).
- Service line strategic planning so that hospitals and specialists can get ahead of market dynamics (COVID-19 recovery, ASC growth, disruptors).
- Capacity and productivity management, built around the certitude that targeted volume, revenue, payment/reimbursement and efficiency strategies will improve the bottom line.
- Specialist-hospital funding mechanisms, as programs that align incentives generate increased funding for both specialists and hospitals.
- Integration with value-based care and payment programs to help specialists and hospitals prepare for, or optimize, participation in value-based care and risk-based payment models.
We focus on these five elements in Premier’s Integrated Specialty Care Network by sharing insights from Premier experts and peer collaborative members, providing actionable tools, and helping organizations assess gaps and develop a realistic and outcomes-focused implementation plan.
Life as we know it has changed worldwide due to the pandemic. The repercussions will be felt for years. Providers that effectively align and transform care will be better positioned to excel at providing high-quality, cost-effective care that enables success across the healthcare system – and advances patient outcomes – for years to come.
Watch our Integrated Specialty Care Network kickoff webinar or contact us.