Dr. Jason Koh, is the Board of Directors Endowed Chair of Orthopaedic Surgery at NorthShore University Health System and a Clinical Professor at University of Chicago, Pritzker School of Medicine. He has led the use of data analytics to achieve nationally recognized quality while reducing cost and significantly increasing surgical volume. He is a founder of the NorthShore Orthopaedic Institute and has established multidisciplinary programs in arthritis, sports medicine, and spine care. At Convergence, Dr. Koh will speak about NorthShore University Health System’s experience with various episodic payments and what role they are playing in the shift to value-based care (VBC).
Why is it important for the healthcare industry to take the emergence of payer-provider convergence seriously? What do you see in your work that makes this particular topic important to you?
There’s an interest among many different groups to try to contain the cost curve. The other thing is the idea of, “Let’s pay for the things that have true value.” For people within the healthcare industry, there’s going to be a lot of overarching things related to finances that will drive an increase in convergence, because we’re trying to create improved value in terms of what patients are getting. Healthcare in the United States is incredibly variable, and we’re not giving a consistent product to people in this country.
Taking payer-provider convergence seriously – if you think you’re going to be remaining in the markets in a purely fee-for-service (FFS) world, there is a danger that you’d be left behind. What I see in my work that makes it important to us is that there’s an increasing move toward VBC, there’s an increasing number of bundled payments. This is part of an understanding how we can work better to provide value that is critical to us in the future.
The cultural aspect is actually important because the industry has historically been very siloed and not used to working in coordinated fashion…It’d be like taking somebody who’s rowing in a single scull and putting him into a crew so he has to work in sync with a bunch of other people.
Convergence and value-based care are closely linked. What do you think it will take for the industry to accelerate the shift towards value-based care?
Patients have typically wanted independent choice deciding on providers for their care. Healthcare is a very personal decision; people want to be well informed and make decisions on criteria that they think are important. At the same time, healthcare is not a very transparent industry in terms of quality. So it’s very difficult to get individual quality metrics on sort of things that we feel are very important on an individual basis.
There’s a perception that healthcare is not your provider, is not just somebody delivering a commodity; it’s a personal relationship about something very intimate. One of the things I think that industry can do is help provide increased transparency around various outcomes or qualities that patients value.
For example, many times patients actually value quite a bit of the personal relationship, so companies and providers that provide information about patient feedback scores are doing well in the marketplace. Rather than just your traditional sort of marketing — “OK, this is a high-quality product” – they’re seeking authenticity, individual patient comments just like Amazon or Yelp reviews. As an organization we’re moving toward increasing transparency – for example, with Press Ganey patient satisfaction scores and comments.
For the industry to help accelerate the shift toward VBC, it has to provide something that consumers of healthcare want, which is increased transparency around the outcomes and cost and experience; as well as deliver decreases on cost.
Do you see more of a public or private payer emphasis? How much interest do you see in this as a mandatory vs. voluntary process, especially in the area of bundled or episodic payments?
Private payers are interested in seeing if this alignment will reduce cost. On the other hand, the progress of bundled payments and this kind of VBC has not been as rapid as we might have expected. Part of that is related to some of these cultural issues around patients wanting to have access to a wide variety of providers, and the importance of individual choice for many patients.
We’ve actually been participating in a number of bundled payment initiatives with private payers. I talked to colleagues around the country about this, and some of these have been contracts with employers as well as the private payers. There has been less activity there in many cases. If these bundles are going to succeed, it’s often more the result of hard steerage by the employers.
What I think has been driving more this in general has been a public payer, particularly CMS, with CJR and BCPI. Obviously, with the new administration’s plans, the relative role of public versus private payers may shift.
Do you think that the CMS announcement (PDF) scaling back bundled payment programs will have a dramatic impact on this market, or do you think that will be a minor issue and a temporary pause?
It’s clearly a significant issue when you have the largest payer saying, “We’re not going to do bundled payments at this point in time.” That’s going to slow adaption. From a cost perspective, however, progress toward episodic bundled payment for episodes of care is likely to continue. Again, it’s unclear as to the pace. I think many organizations are looking at this as, “OK, now we have a little bit of breathing room,” but much of the ground work has already been done in terms of looking at cost and outcomes at a provider level, since this was originally intended to go live couple of months ago for cardiac bundled payments.
Do you think hospitals will continue to move forward with their post-acute strategies and optimization of post-acute networks or, or opt wait and see, in terms of other procedures or surgical areas?
I think the pace of that the investment and the urgency around that may change. Implementation may get spread out over one or two years, rather than the next 6 to 12 months, and is likely to depend on the relative percentage of care that is being delivered in the bundle. In the end, we’re going to see a lot of variability here because of the way the established implementation of CJR has been performed.
But if organizations plan to survive in the next iteration of healthcare, they are already working on this.
Do you think that the roadblocks to broader acceptance of convergence are more strategic, tactical, operational, or cultural in nature? Or are any of those particular factors more pressing than others?
The two factors that are probably more important are strategic and cultural.
In many locations, CMS itself is still paying for things on a FFS basis. Jumping in to an ACO model in a largely FFS environment has been very challenging for a number of organizations. If you look at how the pioneer ACOs did, other organizations thought what happened there had some cost associated with it, so the speed of implementation is slower. Operating margins are low with hospitals and hospital systems, somewhere around 2%-3% in most cases. There’s not a lot of wiggle room. It’s a little harder to make big bets, because they could have a tremendous impact.
The cultural aspect is actually important because the industry has historically been very siloed and not used to working in coordinated fashion. On a provider level, physicians historically have been in independent practices, working on their own. It’d be like taking somebody who’s rowing in a single scull and putting him into a crew so he has to work in sync with a bunch of other people.
Again, that’s learning how to accommodate the idea that, if you’re going to follow standardized guidelines, protocols, processes, it’s a big cultural shift for physicians, for many providers, for many organizations. That’s going to be big. It’s going to be important to have really good clinical leaders who can coordinate the providers so that they can learn to think about more than just what’s happening right in front of them – taking somebody who’s been a sprinter and then making her into a relay racer who has to make sure that the baton is passed safely and accurately.
What organizations other than your own do you consider to be leaders in convergence especially in regards to bundled payments?
There’s some big names. Kaiser has a combined insurance and provider carrier. I trained at the Cleveland Clinic, which has been providing bundles for cardiac to large employers for a number of years. On the other hand, it’s unclear exactly how they have been doing financially with that or how much traction they’ve achieved in the marketplace. Geisinger Health is well known for certain cardiac care bundles, though their Total Joint Replacement bundles apparently have been a little more challenging historically to implement, and I’m not sure exactly where they stand now.
Do you think that episodic payments will drive increased coordination of care, or do you think other market drivers will accelerate the need for coordinated care?
Regardless of the program, with convergence you will hopefully have improved data sharing. One of the difficulties with healthcare is that we don’t have a lot of transparency around outcomes or cost. Working with payers who have large sources of information about how much individual patients cost, as well as variations and where the money is being spent, can provide very helpful information in terms of where are the largest opportunities.
If you partner with someone who has that kind of cost data and limited outcomes data (for example, who ends up having a readmission) with clinical information from the provider side, then you can improve value. The clinicians are going to be able to say, “Given these results, this is the operational change that makes the most sense.”
Any concluding thoughts?
Part of the reason why I focus most on tactical and operational issues is because our organization has a lot of powerful analytics already in place. We do dashboards, we provide monthly feedback to our physicians, and we have long-standing physician councils where we have worked on standardized processes between the physicians and the organization to reduce costs.
To that extent, some of the tactical and operational issues around data collection are things that we’ve been able to successfully tackle. I’m not sure how well that translates across the board. We know as a result of our processes, our infection rates are about half that of national average and our readmission rates are the best in the state and one of the top 1-2% in the nation. The implementation of those things across the board is where there is a lot of opportunity.