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Henry Mayo Health System Realized $3 Million in Savings by Forming a Hospital Quality Efficiency Program and Clinically Integrated Network

In 2016, Henry Mayo Health System in Santa Clarita, California scored in the 27th percentile for physician satisfaction and engagement. Today, the health system has not only tripled that score but also realized more than $3 million in savings after transitioning into a clinical integrated network (CIN).

This journey to success began in 2017 as Henry Mayo faced a fragmented and polarized physician community.

Patients were being referred to competitors due to mistrust. To reverse this trend, the health system realized that their physicians needed to be committed and financially aligned while working to improve overall quality and coordination of care. To that end, Henry Mayo worked with Premier to engage physicians as partners through the creation of a CIN.

“The first step in creating our clinically integrated network was truly understanding the needs of the physicians and medical groups in the community," said Kingman Ho, M.D., Senior Vice President, Chief Medical Officer and Care Innovation Officer at Henry Mayo Newhall Hospital. "Ultimately, it came down to physician leadership. It had to be a physician-driven and -led entity. This was a truly critical piece to our success."

Henry Mayo set five goals for its CIN:

  1. Improve safety, quality and cost.
  2. Develop a physician-led entity.
  3. Improve care delivery.
  4. Incentivize to produce and provide value-based care.
  5. Adopt a long-term sustainable model.

As the health system finalized the formation of its CIN, its leaders immediately launched efforts to develop a Hospital Quality Efficiency Program (HQEP) contract.

“With HQEP, the thought is that by generating a shared savings and increasing our cost efficiencies, this will provide capital for us to reinvest into infrastructure. It is necessary to create a platform that we can interconnect with the various different physicians and medical entities in the community. We conceivably can then create an entity that better serves and is more competitive for other payers in the market, as well as create other beneficial products for the community,” said Dr. Ho.

Within three months, the newly formed CIN was able to contract more than 230 participating physicians.

As the HQEP was created, leaders tapped into Premier’s data to determine opportunities and establish incentives.

“Having data is absolutely key and figuring out how to leverage that data in a beneficial way is so critical. In terms of our quality outcomes, we had lots of information, so we needed to have precise definitions of what the data was. Having direct mapping through Premier’s product to truly understand apples to apples was critical. We spent a fair amount of time validating automations so that we could confidently and reliably say that we had true validity in the data," said Dr. Ho.

Through this process, the team identified about $10.6 million in potential opportunity in three service lines – medicine, surgery and women’s health. Within the first year of implementation, they realized $3 million in savings through reducing length of stay. In addition, the team saw that 30-day readmission rates in several key disease states also improved.

With a planned lifespan of three to five years, leaders expect the HQEP to continue fueling change and improvements within the local healthcare community.

“When advising our members, we help them begin with the end in mind by developing a contracting strategy that prioritizes the sequence and timing of value-based incentives. CINs are increasingly prioritizing HQEPs as one of their first incentives over expanding shared risk agreements with payers. That is precisely what Henry Mayo did. The HQEP served as a tangible and compelling carrot that could be held out to community physicians during the recruitment process," said Tony Malcoun, J.D., MBA, Vice President of Strategy, Innovation and Population Health at Premier.

To hear more about how Henry Mayo achieved success with its HQEP and CIN watch this on-demand webinar and download Ready, Risk, Reward: Aligning for Success with the Second Generation of Clinically Integrated Networks for additional success strategies.

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