Hospital executives are facing a relatively new challenge: managing the financial risk of bundled or capitated payment after a patient is discharged. Now that post–acute care providers are an extension of a hospital’s care delivery model, their performance has direct implications for the hospital’s reputation and bottom line. Not only must these providers meet threshold cost, quality and patient satisfaction expectations, they must also agree to performance targets and service level standards as well as forge a relationship where transparency, accountability and continuous improvement are the norm.

Managing the financial risk is not easy — until recently, acute and post–acute service providers operated as separate silos. But hospital executives, recognizing the challenge, are seeking new ways to manage these relationships and achieve optimal financial and quality outcomes.

3 best practices

A collaborative relationship between a hospital and a post–acute care provider requires a greater level of trust, cooperation and mutual accountability than has been typical. So, what best practices can you rely on to help you establish these relationships most efficiently? Below we offer our best guidance, based on our broad exposure to partnerships that work and those that don’t.

Strong external partnerships start with a strong internal partnership.

All too often, executives make important decisions about partnership objectives without the right people at the table. Organization leaders need to consider what’s needed from post-acute partners, and this often requires thinking beyond the constraints of current organization charts.

Because post-acute partnerships balance clinical, operational and financial needs, key stakeholders should include high-volume discharging physicians; population health leaders; and representatives from the finance, care management and legal departments. Before they begin discussions with prospective partners, these stakeholders need to agree on the services and performance commitments they expect partners to provide and on the responsibilities for managing the relationship. 

Strong partnerships require shared values and mutual commitment.

It’s important to draw a distinction between what a potential partner says or looks like on paper and how it’s going to perform in a collaboration. Strong quality performance metrics, a superior safety record and sound staffing ratios are all critical aspects of provider performance, but shared values and a common commitment to ongoing improvement can’t be underestimated.

Common culture, mission and patient care philosophies are the underpinnings of strong partnerships, but executives can’t readily discern such values from document reviews or brief conversations. They need to spend time with potential partners, observe their operations and processes in action, get feedback from patients and family members, and actively engage leaders and key care staff. Executives should pay particular attention to the track record of other partnerships, the quality of staff-to-staff and staff-to-patient interactions, the extent to which performance measures are shared and staff are engaged in improvement efforts, and the degree to which people are held accountable.

You can’t manage what you don’t measure.

The partners should agree on performance commitments and on a performance measurement process that enables all parties to monitor what’s working and what’s not, quickly identify issues, and establish ongoing improvement priorities. The two entities must clearly specify data sharing and reporting protocols. They should also balance metrics for key value domains including efficiency, quality, patient satisfaction and outcomes. Regularly scheduled performance reviews are essential: They bring hospitals and their post-acute partners together for open discussions about how their performance compares with others and where improvement opportunities exist.

The value of a partnership should be greater than the sum of its parts. Hospitals and post-acute providers alike benefit from the synergies of well-managed, collaborative relationships. More progressive hospitals are providing electronic health record access and educational programs to top-tier skilled nursing facility partners, helping them improve the efficiency of their processes while improving clinical staff skills.

Other organizations hold periodic performance review meetings to share best practices such as standardized care protocols for heart failure patients or identifying patients at high risk of readmission. Hospitals can gain valuable insights about the impact of late-in-the-day discharges, for example, enabling them to make changes benefiting all parties.

Strong partnerships need accountability and clearly defined processes. Maintaining a healthy, high-performing partnership requires well-defined responsibilities for communication, decision-making and resolving issues. Partners should clearly delineate performance expectations by specifying conditions for compliance and providing a remedial process for noncompliance.

These agreements should include specifics such as performance data reporting, issue escalation procedures and the “sentinel events” that trigger a root cause analysis (e.g., hospital readmissions). Well-defined and consistently applied procedures help establish the trust, transparency and collaboration so essential to seamless care delivery and performance improvement.

Results from strong partnerships

Hospital executives preparing to assume greater risk understand that better partnerships with high-performing post–acute care partners are essential. Organizations that have already embraced this concept have seen dramatic decreases in length of stay, hospital readmissions, and variation in post–acute care delivery costs and quality. These improvements have translated into reduced readmission payment penalties, increased shared savings payments, improved outcomes and greater patient satisfaction scores.

As the shift to value-based payment models continues, hospitals will be well-served by establishing high-performing, value-focused relationships with their post-acute partners.

Gordon Phillips, M.P.S., is a consultant and Michael Abrams, M.A., is the managing partner at Numerof & Associates Inc. in St. Louis.

The opinions expressed by the author do not necessarily reflect the policy of the American Hospital Association.