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What Healthcare Must Plan for in Q4

Posted on September 19, 2014 I Written By

The following is a guest blog post by Ben Quirk, CEO of Quirk Healthcare Solutions.
Ben Quirk
In some ways, 2014 turned out to be not quite as cataclysmic. The early announcement of delaying the adoption of ICD-10 and the more recent announcement to allow hospitals/CAHs and Eligible Professionals participating in CMS’ Meaningful Use programs to attest using their existing Certified Electronic Health Record Technology (CEHRT) took the pressure off healthcare providers scrambling to upgrade their CEHRT to a version that was both ICD-10 and MU-compliant. However, this is only a temporary reprieve through the end of 2014 and there are other priorities that must be addressed before the year ends.

Navigating the ever-evolving healthcare environment will seem much less daunting if you focus on these four areas:

  • Meaningful Use
  • Value-Based Payment Modifiers
  • Transparency
  • Open Enrollment for ACA

Meaningful Use (MU)

If you were not able to upgrade to the 2014 Edition EHR, you will still be able to attest for MU using 2013 criteria. This provides reprieve from the 2014 criteria that requires the implementation of and patient enrollment in a patient portal.

In order to be MU-ready, your organization must proactively:

  • Determine your strategy based on the final rule. Gather data and be prepared to attest for MU by the deadline for the MU program you participate in..
  • Create an audit binder which should include screenshots of required EHR configuration during the reporting period. Should you get an audit 2 years from now, you can refer to this binder for accurate information.
  • Prepare a statement citing why you should be allowed to opt out of those MU measures that you think do not pertain to your practice. Auditors will ask for this on any audit preformed.

All organizations should be prepared to start collecting data for MU 2 by January 1, 2015. This includes having a strategy around the implementation of a patient portal and patient enrollment, sharing data amongst community and other healthcare providers, and radiology interfaces.

Value-Based Payment Modifier

The current Value Based Payment Modifier for providers who serve Medicare beneficiaries is a descendent of the Physician Quality Reporting System (PQRS). It is a way to keep the ACA cost-neutral, but there are some important things you need to know about this newer system. Value-Based Payment Modifier takes claims, Meaningful Use, and physician quality data and rates the quality of care you provide against your peers. Consequently,

  • When you report your Clinical Quality Measures or any clinical data to CMS, make sure your thresholds demonstrate that your practice is providing high quality care.
  • If your practice suffered from vendor problems with data accuracy in the past, this should be fixed.

Transparency

Transparency is something all providers should be aware of. Although available only in a few markets right now, all patients will soon be able to look up information about physicians before deciding where they would like to have their medical procedures done. For instance, if a patient decides to have an ACL repair, s/he can go online to compare exact costs and quality measures (based on the Patient Quality Reporting System) for ACL repair. Practices need to be aware that their prices and quality are being reported publicly. The implications go beyond losing reimbursement. You can actually be delisted from an insurance network. To ensure that your practice remains a viable option for patients:

  • Market your own practice and post your own prices.
  • Make sure you are reporting good quality data.
  • Use sources such as MGMA or OPTUM to see what providers in your area are charging and how you compare.
  • Determine how your reimbursement ranks vs. your competitors on the Medicare website and ensure data accuracy.

Open Enrollment for the ACA

November 15 marks the beginning of the second Open Enrollment period for the Affordable Care Act and there is no indication that this time around will be any easier than the first. Patients will be choosing plans, dealing with things very unfamiliar, and perhaps unaffordable, to them, like deductibles. This directly impacts clinics and the bottom line, especially with those patients who cannot pay their share of the costs. Last year, patients became the number one payor for many practices, even more than insurance companies, because so much revenue came from deductibles. That all resets January 1, but there are things you can do to avoid a possibly painful Q1 of 2015:

  • Check and confirm all patients’ eligibility, what plan they are on, and what their deductible is prior to their scheduled appointment, preferably through an automatic batch eligibility service. Keep this information in the practice management system.
  • Notify patients about their deductibles before they come into the clinic, and make sure to collect payments upfront, or keep a card on file.

The healthcare industry as we knew it for the past many years has ceased to exist. As we move into a new era of integrated delivery systems and a greater emphasis on value-based rather than volume-based reimbursements, the industry is going to remain in a state of flux before it stabilizes once again. The only way organizations are going to survive in this shifting landscape is by anticipating and planning for the next change so that they can stay ahead of the curve. The more an organization knows, the better it can be prepared to confront any potentially negative impact of the ever-evolving nature of the industry.

About Ben Quirk
Ben Quirk is CEO of Quirk Healthcare Solutions, a consulting firm specializing in EHR strategic management, workflow optimization, systems development, and training. The company’s clients have enjoyed remarkable success, including award of the Medicare Advantage 5-star rating. Quirk Healthcare presents a weekly webinar series, Insights, to inform clients and the general public about government programs and industry trends. Mr. Quirk is also Executive Director of the Quirk Healthcare Foundation, a learning institution which fosters innovation in the healthcare industry.

5 Elements of an Effective HIPAA Audit Program Infographic

Posted on September 18, 2014 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 15 blogs containing almost 6000 articles with John having written over 3000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 13 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

This week is National Health IT Week (#NHITWeek), but I think it might be better to call it National Health IT Infographic week. I’m not complaining. I love a good infographic. For example, I posted the Rise of the Digital Patient Infographic and the Healthcare IT Leadership Infographic – A 25 Year History already this week. I figured I might as well round out the week and post an infographic on EMR and HIPAA as well. Coalfire sent me the following infographic looking at HIPAA audits. I don’t think most people realize the HIPAA audits that are coming. HIPAA audits have had a slow start, but I think the momentum is growing. If you’re an organization that ever touches healthcare data, you better be ready. Enjoy the HIPAA audit infographic below.
5 Elements of an Effective HIPAA Audit Program

What If Meaningful Use Were Created by Doctors?

Posted on September 17, 2014 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 15 blogs containing almost 6000 articles with John having written over 3000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 13 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

It’s safe to say that meaningful use is growing through its challenges right now. My post yesterday about killing meaningful use and the new Flex-IT Act should be illustration enough. While it’s easy to play Monday Morning Quarterback on meaningful use, I think it’s also valuable to consider what meaningful use could have been and then use that to consider how we can still get there from where we are today.

Many of you might have read my post on The Purpose of the EHR Incentive Program Accordign to CMS. CMS clearly stats that the purpose of the EHR incentive money and meaningful use is to move providers towards advanced use of health IT to:

  • Support Reductions in Cost
  • Increase Access
  • Improve Outcomes for Patients

This has very clearly been CMS’ goal and it’s reflected in what we now know today as meaningful use. Let’s think about those from a physician perspective.

Support Reductions in Cost – So, you’re going to pay me less for doing the same work?

Increase Access – So, you’re going to send me patients who can’t pay their bill? Or does this mean I have to do more work making my records accessible?

Improve Outcomes for Patients – Every doctor can support this. However, many are skeptical (with good reason) that the various elements of meaningful use really do improve outcomes for patients.

If I were to step back and think what a doctor might consider meaningful use of an EHR system, this might be what they’d list (in no particular order):

  • More Efficient
  • Improved Care
  • Increased Revenue

More Efficient – Will the technology help me see patients more efficiently? Will it allow me to spend more time with the patient?

Improved Care – Will the technology help me be a better doctor? Will the technology help me make better use of my time with the patient?

Increased Revenue – Will the technology help me get paid more? Will the technology lower the cost of my malpractice insurance and reduce that risk? Will the technology create new revenue streams beyond just churning patient visits?

I’m sure there are other things that could be listed as well, but I think the list is directionally accurate. When you look at these two lists, there’s very clearly a major disconnect between what end users want and what meaningful use requires. With a lot of the EHR incentive money already paid out, this divide has become a major issue.

Killing Meaningful Use and Proposals to Change It

Posted on September 16, 2014 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 15 blogs containing almost 6000 articles with John having written over 3000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 13 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

Isn’t it nice that National Health IT Week brings people together to complain about meaningful use? Ok, that’s only partially in jest. Marc Probst, CIO of Intermountain and a member of the original meaningful use/EHR Certification committee (I lost track of the formal name), is making a strong statement as quoted by Don Fluckinger above.

Marc Probst is right that the majority of healthcare would be really happy to put a knife in meaningful use and move on from it. That’s kind of what I proposed when I suggested blowing up meaningful use. Not to mention my comments that meaningful use is on shaky ground. Comments from people like Marc Probst are proof of this fact.

In a related move, CHIME, AMDIS and 15 other healthcare organizations sent a letter to the HHS Secretary calling for immediate action to amend the 2015 meaningful use reporting period. These organizations believed that the final rule on meaningful use flexibility would change the reporting period, but it did not. It seems like they’re coming out guns blazing.

In even bigger news (albeit probably related), Congresswoman Renee Ellmers (R-NC) and Congressman Jim Matheson (D-UT) just introduced the Flexibility in Health IT Reporting (Flex-IT) act. This act would “allow providers to report their Health IT upgrades in 2015 through a 90-day reporting period as opposed to a full year.” I have yet to see any prediction on whether this act has enough support in Congress to get passed, but we could once again see congress act when CMS chose a different course of action like they did with ICD-10.

This story is definitely evolving and the pressure to change the reporting period to 90 days is on. My own personal prediction is that CMS will have to make the change. I’d love to hear your thoughts.

Happy National Health IT Week!

RACs’ Limited Restart and Partial Payment Window Opens

Posted on September 15, 2014 I Written By

The following is a guest blog post by Dawn Crump, VP of Audit Management Solutions at HealthPort.
Dawn Crump - HealthPort
The RACs are back and they’re offering acute care and critical access hospitals a sweet deal—at least for now.

The Recovery Audit Contractor (RAC) program had been on hold due to the reassigning and re-contracting of regions. In addition, there was a lawsuit pending between Centers for Medicare and Medicaid Services (CMS) and CGI over RAC reimbursement rates, models and approaches. The lawsuit was resolved in August. But CGI quickly appealed causing further delay in full resumption of the RAC program.

So while everyone awaits another court decision and green light from CMS, two important RAC announcements were made by CMS.

  • A “limited” restart of the RAC program began in August, 2014, including a restricted number of claim reviews and service targets.
  • Some claims currently pending appeals of inpatient-status claim denials by RACs may be eligible for a partial payment settlement.

Limited Restart Underway

Until the RAC program is 100 percent back in session, some reviews will be conducted. These will be mostly automated reviews, but there will be some records requests and a limited number of complex reviews in certain select areas. During the restart, RACs will not review claims to determine whether the care was delivered in the appropriate setting. CMS said it hopes that the new RAC contracts will be awarded later this year.

From the Aug. 5 edition of the American Hospital Association’s News Now: “CMS will allow current RACs to restart a limited number of claim reviews beginning this month. The agency said most reviews will be done on an automated basis. However, a limited number will be complex reviews on certain claims, including spinal fusions, outpatient therapy services, durable medical equipment, prosthetics, orthotics and supplies, and Medicare-approved cosmetic procedures.

One example of the latter is blepharoplasty, also known as an eyelid lift. The number of claims for this procedure has tripled in recent years, so I expect the RACs will make this procedure a hot target. To be covered under Medicare, vision must be impaired. What’s needed? Physician documentation of the reasons for surgery (e.g., eyelid droop interfering with vision).

Here are three specific steps to take with regard to the limited RAC restart:

  • Stay abreast of all RAC news and announcements and remain diligent in communicating with your regional peers regarding new RAC region assignments, contacts and educational opportunities.
  • Conduct an internal probe to ensure you’re following all of Medicare’s National Coverage Determinations (NCDs) and Local Coverage Determinations (LCDs).
  • Educate coders, billers and physicians around documentation, coding and billing for specific targets as mentioned above.

But the limited restart wasn’t the only important news.

Partial Repayment Deal Announced

In their September 9th, 2014 inpatient hospital reviews announcement, CMS announced an administrative agreement for acute care and critical access hospitals.  To reduce the backlog of cases in appeal status and overall administrative costs, these hospitals now have the option to withdraw their pending appeals in “exchange for timely partial payment (68% of the allowable amount)”, according to the CMS administrative agreement.

Of course there are parameters to understand and details to sort out regarding the settlement opportunity. Here is what we know so far:

  • Only acute care and critical access hospital claims are eligible.
  • Claims must already be in the appeals process for inpatient-status claims with an admission date prior to October 1, 2013.
  • Services might have been found reasonable and necessary by the Medicare contractor, but treatment as an inpatient was not.
  • Hospitals may choose to settle some claims and continue to appeal others.
  • Hospitals should send their request for settlement to CMS by October 31, 2014.

Many more details are available on the CMS.gov website.

Settle….Or Not?

Eligible hospitals must determine if requesting a settlement offer makes sense for cases in appeal that meet the specified parameters. For some cases, it will make sense to take the 68 percent settlement and cut your losses. For other denials, waiting out the appeal process may be a better choice.

Each denial will be different and each case unique. Time, money and resources must be balanced against the potential revenue retained or returned potential. Audit management directors, in conjunction with their revenue cycle and finance teams, must analyze RAC data for each eligible case.  It’s a complicated equation. And with a deadline of October 31, 2014, there is no time to lose.

About Dawn Crump

Dawn Crump, MA, SSBB, CHC, has been in the healthcare compliance industry for more than 18 years and joined HealthPort in 2013 as Vice President of Audit Management Solutions. Prior to joining HealthPort, Ms. Crump was the Network Director of Compliance for SSM. She is a former board director of the Greater St. Louis Healthcare Finance Management Association chapter and currently serves as the networking chair.

Modeling Health Data Architecture After DNS

Posted on September 12, 2014 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 15 blogs containing almost 6000 articles with John having written over 3000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 13 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

I was absolutely intrigued by the idea of structuring the healthcare data architecture after DNS. As a techguy, I’m quite familiar with the structure of DNS and it has a lot of advantages (Check out the Wikipedia for DNS if you’re not familiar with it).

There are a lot of really great advantages to a system like DNS. How beautiful would it be for your data to be sent to your home base versus our current system which requires the patient to go out and try and collect the data from all of their health care providers. Plus, the data they get from each provider is never in the same format (unless you consider paper a format).

One challenge with the idea of structuring the healthcare data architecture like DNS is getting everyone a DNS entry. How do you handle the use case where a patient doesn’t have a “home” on the internet for their healthcare data? Will the first provider that you see, sign you up for a home on the internet? What if you forget your previous healthcare data home and the next provider provides you a new home. I guess the solution is to have really amazing merging and transfer tools between the various healthcare data homes.

I imagine that some people involved in Direct Project might suggest that a direct address could serve as the “home” for a patient’s health data. While Direct has mostly been focused on doctors sharing patient data with other doctors and healthcare providers, patients can have a direct address as well. Could that direct address by your home on the internet?

This will certainly take some more thought and consideration, but I’m fascinated by the distributed DNS system. I think we healthcare data interoperability can learn something from how DNS works.

How Does a Practice Deal with All These High Deductible Plans?

Posted on September 11, 2014 I Written By

The following is a guest post by Vishal Gandhi, CEO of ClinicSpectrum as part of the Cost Effective Healthcare Workflow Series of blog posts. Follow and engage with them on Twitter @ClinicSpectrum and @csvishal2222.
Vishal Gandhi
One of the biggest trends we’re seeing in healthcare today is a shift towards high deductible plans. This shift first started as more and more employers stopped offering insurance or cut the type of health insurance they offered. This started the trend towards individuals purchasing high deductible insurance plans.

While the shift to high deductible insurance plans started well before the Affordable Care Act (ACA), the government mandated health insurance and associated health insurance exchanges (HIX) have thrown gas on the already flaming fire. What most patients didn’t realize when they signed up for insurance on the government’s HIX is that a large majority of the plans were high deductible insurance plans. This has led to a huge influx in high deductible plans entering medical offices.

What does this increase in high deductible plans mean?
This change is one of the most significant changes in healthcare reimbursement we’ve seen. High deductible plans mean a major shift in who will be paying the bill. Instead of collecting most of your money from insurance companies, your clinic will need to become expert at collecting money from patients as well. Yes, that’s right. You’re still going to have to collect from the insurance companies like before, but you’re going to have to build additional expertise around collecting payments from patients too.

While it’s true that clinics have been collecting payments from patients forever, that doesn’t mean that clinics have been doing a good job of actually collecting the money. In fact, I find practice after practice who hasn’t stayed on top of their patient collections. In the end, they often send their patient collections to a collections agency which frustrates the patients and tarnishes their name or they just write off the patient pay portion completely.

Suggestions to Improve Patient Collections
The first step to improving patient collections is to really understand the details of your patient’s insurance plan. This starts with doing an insurance eligibility check and verifying your patient’s plan details. We wrote about ways to streamline your insurance eligibility checks previously. Doing it right takes time, but with the right workflow automation solutions you can make sure that those working in your practice have the right insurance information. Once they have the right payment information, you’re much more likely to collect the payment from the patient while they’re standing in front of you at the office.

While collecting the patient payment from the patient while their in your office is ideal, there are dozens of reasons why this won’t happen. Some don’t have the money on them. Some walk out before you can collect. Etc etc etc. How then do you engage the patient in the payment process once they’ve left your office? In the past, the best solution was to send out bill after bill through the US postal service or possibly call the patient directly. This is an extremely time consuming and costly process that can take 60 to 90 days to obtain results.Plus, it costs several hours of man power and postage.

In the electronic world we live in, the first thing you can do to improve your patient collection process is to implement an online patient payment portal. This online payment process increases patient collections dramatically. The next generation patient is so unfamiliar with writing checks and sending snail mail, that those payments often get delayed. However, by offering the online patient payment option, you remove this barrier to payment.

The other way to improve patient collections is to use an automated messaging and collection process. This approach uses a collection of text, secure text, email, secure email and even smart phone notifications and automated calls in order to ensure the patient knows about their bill and has the opportunity to pay the bill. Plus, these customized decision rules provide a much more seamless and consistent approach to patient collections.

Conclusion
This movement to the empowered patient with a high deductible insurance plan is not likely to go away. Employers are happily getting out of the health insurance business and many want patients to have more responsibility over the healthcare they receive. Being sure that you have a well thought out patient collection workflow is going to be critical to the ongoing success of any medical practice.

The Cost Effective Healthcare Workflow Series of blog posts is sponsored by ClinicSpectrum, a leading provider of workflow automation solutions for healthcare. Their Invoice Spectrum and Auto Collect Spectrum products are a great way to handle the increase in high deductible plans that are entering medical offices.

The Just Enough Culture of HIPAA Compliance

Posted on September 10, 2014 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 15 blogs containing almost 6000 articles with John having written over 3000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 13 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

Today I was lucky to finally have a long lunch with Mike Semel from Semel Consulting. Ironically, Mike has a home in Las Vegas, but with all of his travel, we’d never had a chance to meet until today. However, we’ve exchanged a lot of emails over the years as he regularly responds to my blog posts. As Mike told me, “It feels like I’ve known you for a long time.” That’s the power of social media in action.

At lunch we covered a lot of ground. Mostly related to HIPAA security and compliance. As I try to process everything we discussed, the thing that stands out most to me is the just enough culture of HIPAA compliance that exists in healthcare. I’ve seen this over and over again and many of the stories Mike shared with me confirm this as well. Many healthcare organizations are doing just enough to get by when it comes to HIPAA compliance.

You might frame this as the “ignorance is bliss” mentality. In fact, I’m not sure if it’s even fair to say that healthcare organizations are doing just enough to comply with HIPAA. Most healthcare organizations are doing just enough to make their conscience feel good about their HIPAA compliance. People like to talk about Steve Jobs “reality distortion field” where he would distort reality in order to accomplish something. I think many in healthcare try and distort the realities of HIPAA compliance so they can sleep good at night and not worry about the consequences that could come upon them.

Ever since HIPAA ombnibus, business associates have to be HIPAA compliant as well. Unfortunately, many of these business associates have their own “reality distortion field” where they tell themselves that their organization doesn’t have to be HIPAA compliant. I don’t see this ending well for many business associates who have a breach.

The solution is not that difficult, but does take some effort and commitment on the part of the organization. The key question shouldn’t be if you’re HIPAA compliant or not. Instead you should focus on creating a culture of security and privacy. Once you do that, the compliance part is so much easier. Those organizations that continue this “just enough” culture of HIPAA compliance are walking a very thin rope. Don’t be surprised when it snaps.

Proving HIPAA Compliance

Posted on September 9, 2014 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 15 blogs containing almost 6000 articles with John having written over 3000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 13 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

Given the name of this blog, I get a lot of people asking me about HIPAA compliance. Many of them that are new to the industry are looking for some sort of regulating or certifying body that they can go to in order to be HIPAA compliant.

Unfortunately, there is no body that can audit you and basically certify that you’re HIPAA compliant. HIPAA is basically a self certification, so you can just claim “compliance.” However, if a real audit happens, you better make sure your ducks are all in a row and that you are actually complying. While there is no body that certifies HIPAA compliance, there are pretty specific guidelines on what you need to do to be HIPAA compliant.

When companies and organizations ask me what they need to do to be HIPAA compliant, I usually suggest they start with these HIPAA trainings from one of my partner companies, 4MedApproved: http://bit.ly/191zR9N (20% discount if you use the code healthcare20 since I’m a partner). The HIPAA compliance officer training will teach you what you need to do and it includes HIPAA documentation templates you can use along with business associate agreement forms. Then, the HIPAA workforce trainings are good to train the rest of your staff. With this training and documentation, you’ll feel much more comfortable saying you’re HIPAA compliant and having something to show for it. You’ll also learn what other places you might be lacking when it comes to HIPAA compliance.

I had someone on a LinkedIn discussion about a breach suggest that organization should regularly train their staff on HIPAA. Turns out that doing so isn’t just a good idea, but is also a HIPAA requirement. Having some sort of proven HIPAA training that you’ve completed is one step in the right direction of proving your HIPAA compliance.

The other major step an organization should take is doing a full HIPAA risk assessment. Many organizations are doing this since they’ve had to in order to get meaningful use money. However, even those organization who aren’t asking for the EHR incentive handout are still required to do a HIPAA risk assessment.

What are you doing in your organization or company to prove HIPAA compliance?

Aligning Incentives Across Disparate P&Ls

Posted on September 8, 2014 I Written By

Kyle is Founder and CEO of Pristine, a company in Austin, TX that develops telehealth communication tools optimized for Google Glass in healthcare environments. Prior to founding Pristine, Kyle spent years developing, selling, and implementing electronic medical records (EMRs) into hospitals. He also writes for EMR and HIPAA, TechZulu, and Svbtle about the intersections of healthcare, technology, and business. All of his writing is reproduced at kylesamani.com

My company sells solutions that typically span multiple avenues of care. We’ve encountered a unique problem: incentives to improve care coordination rarely align when disparate P&Ls accrue to different players across the continuum of care. In other words, split P&Ls pose a destructive risk to care coordination and ultimately outcomes.

How does this play out in the real world?

Ambulances

Most health systems do not own or operate their own ambulances (Atlantic Health System and NS-LIJ being notable exceptions). Instead, ambulances are typically run by local governments or private companies. Why is this a problem? Many of the most critically ill patients arrive to hospitals via ambulance. Many of these patients are are in time-critical conditions. Ambulances should have the best tools to help save those patients and improve outcomes and suffering. All of the care that ambulances provide should be coordinated with the receiving hospital.

However, ambulances, especially publicly-operated ambulances, run on extremely tight margins; they can’t afford to invest in many new technologies. Hospitals won’t invest in tools for ambulances – even for at-risk patients – since hospitals won’t actually control the deployment of the technology to ensure they impact outcomes for at-risk patients.

But what if hospitals owned the ambulances that fed the hospitals? In this model, as hospitals move towards risk-based care-delivery models, incentives will be aligned to deploy mobile technologies into ambulances to improve time-to-care, diagnostics, and even triage patients to avoid hospitalizations entirely. Specifically, what if every ambulance was equipped with a mobile X ray, CT, EKG, ultrasound, and a suite of standard diagnostic tools (blood pressure, thermometer, stethoscope, etc? Upon arriving at a non-emergent patient’s home, the paramedics could locally diagnose and triage the patient with a virtual physician’s input and avoid non-essential ER admissions.

But that can only happen if incentives – specifically P&Ls – are aligned across the continuum of care.

Outsourced physician Management Services (e.g., EmCare)

Many hospitals contract with physician groups to staff service lines in the hospital. Although these groups provide real value – e.g., more flexible hours and operational processes – than employed physicians these groups also break up how P&Ls are accrued.

For example, many anesthesiologists align as a group to contract with hospitals. Within their practice, these MDs may find a new automated anesthesia monitor that enables more effective management of residents and CRNAs across multiple ORs. In turn, anesthesiologists should be able to extend the MD:mid-level ratio, drive improvement in patient safety, and make more money. But, concerns about damage, theft, and losing the hospital contract render these same anesthesiologists unlikely to ever buy the equipment themselves. Hospitals will also be reluctant to invest since they won’t accrue the financial benefits of improved labor productivity since the financial benefits accrue to the anesthesiologist group, not the hospital.

But Modularization Works In Other Industries

Indeed, most value-chain centric industries are highly modular. Each layer of the value chain can independently optimize itself and control how it interacts with the layers of the value chain above and below it. A few examples:

In the movie value chain, movie production studios don’t own and operate theaters; theaters are independent

In the retail value chain, retailers usually don’t act as distributors, and distributors don’t usually act as producers

With the exception of Apple (who by no means control the entire value chain), most of the computing value chain is modular; retailers like Best Buy have no hand in chipset design, chipset manufacturing, OEM design, OEM manufacturing, operating systems, Internet infrastructure, internet service providers, or cloud services.

Modularization In Healthcare Delivery: Can it work?

Healthcare delivery is not a linear value chain. Each player in the healthcare delivery system doesn’t build incremental, linear value on top of its suppliers. Rather, healthcare delivery involves the coordination of a breadth of disparate resources to A) diagnose, B) treat, and, C) manage chronic conditions / maintain wellness (these are the three different businesses that Clayton Christensen astutely observes in his excellent book, The Innovator’s Prescription).

Healthcare could perhaps be modularized if a certain set of providers acted to diagnose a patient, then handed off the patient to another set of providers for treatment, who in turn would transfer the patient to another set of providers whose job it was to manage ongoing chronic care. However, this arrangement is only tenable if: 1) the boundaries between these three different businesses are clear and distinct, and 2) the providers in each have a high degree of confidence in the “output” from their “suppliers” (e.g., an accurate diagnosis).

What are your thoughts? Have you seen other scenarios where disparate P&Ls lead to mis-aligned incentives? Have you seen risk-based payment models that successfully bridge disparate P&Ls?