We are back with Bob Wells to discuss the challenges that still remain with payment reform and his advice for leaders who want to address it.
What challenges remain?
There are three key challenges that remain:
1. Approaches and financial models around payment reform
Various models are being tested and the results evaluated. This information will need to be synthesized and adapted as a blueprint for the broader healthcare market to adopt. In conjunction with these new models, extensive training and support is required to assist healthcare providers and caregivers transition to these new models of payment, while ensuring preservation of their financial viability without compromising patient safety.
2. Technology to process payments
The Medicare intermediaries and private payer information systems require adaptation to support the new payment models.
Healthcare provider financial systems require significant updating to support the billing, claim processing, payment and financial performance reporting of these new models.
3. Cultural Shift
For the changes of payment reform and delivery of healthcare to take hold, a cultural shift needs to take place. It will take time for historical norms and behaviors to be transformed to these new models. This cultural shift needs to permeate from the healthcare delivery system to caregivers, and eventually the broader population.
What advice can you share with leaders who want to address Payment Reform?
Engage quickly and invest in the resources to help your team understand the different payment reform options. Your team can assess your organization's capabilities and the options that make sense from a risk and reward perspective. A number of organizations are waiting to see which payment reform option will gain the most traction in the market. By waiting, your organization will be too late to transform to a new payment model, and may be at financial risk. It is hard to catch a train when it goes past you.
Inform your physicians both employed and affiliated about your organization's plans to evaluate and potentially adopt new payment models. Ask these physicians to participate in the process allowing them to be part of the solution and gain their support.
Evaluate current analytics and data. The first step for effective analysis is to understand your organization's true cost of service by medical condition (DRG/diagnosis and severity) from the point of pre-admission to post-acute services. Assess the data at the patient level to discern variation in physician practice patterns, delivery of services, patient care path (pre-acute, acute, and post-acute services), associated costs, and outcomes to identify best practices. By measuring your organization's true cost by medical condition and identifying the best practices, the savings opportunity is derived to ascertain what level of cost reduction can be generated. This will give your administration, medical team and business affiliates (e.g. post-acute services) guidance of how much a payment discount is viable to cover a delivery system's costs with the opportunity to increase profit margin per procedure.
What would you say are the most important next steps toward Payment Reform?
Start pulling the necessary data to measure every cost from pre-admission to post-discharge at the patient level by clinical condition. Evaluate the data to ensure it is accurate. It is a common problem in most organizations that this data is inaccurate. Without this information scrubbed, it puts an organization at financial risk to adopt any of the new payment models without accurately understanding the cost of services, associated outcomes, and savings opportunity.
I have seen organizations test new payment models and find out that they are putting themselves at financial risk because they did not accurately understand the true cost of services.
Stay tuned for the final installment with Bob Wells later this week!
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