Hospitals and physicians can strive for common goals while remaining separate entities.
|Louis Pavia, Jr.|
The era of physician-hospital integration is here, again. The American Recovery and Reinvestment Act (ARRA, the $787 billion stimulus plan), the proposed federal budget, impending health care reform initiatives and market forces are necessitating that physicians and hospitals work together more effectively. There have been previous waves of attempts at integration with varying degrees of success. Why should things be different this time?
Consensus is emerging that integrated delivery systems (IDSes) that provide strong support to clinicians and team-based care management for patients offer great promise for improving quality and lowering costs. A number of integrated delivery systems such as Mayo Clinic, Billings Clinic, Geisinger Health System, Marshfield Clinic and Intermountain Health Care deliver high value health care that is less costly and more efficient and that produces better health outcomes. (See Fisher et al., "Slowing the Growth of Health Care Costs—Lessons from Regional Variation," The New England Journal of Medicine, February 2009, and "Improving Quality and Curbing Health Care Spending: Opportunities for the Congress and the Obama Administration," A Dartmouth Atlas Project White Paper, December 2008.)
Yet, 90 percent of physician care is still delivered by independent clinicians in small practices (10 or fewer physicians), and half of them are in solo or two-doctor practices. It can take years for IDSes to be structured and achieve the desired results, and we do not have the luxury of time.
Physician practice business models are not aligned with market needs; they need to evolve so they can better meet patient requirements and expectations. (See Pavia, L., "Solving the Primary Care Conundrum," AMGA Journal, 2009 [prepublication version].) Hospitals, in turn, must accelerate implementation of proven best practices. Independent physicians and hospitals can help each other accomplish these objectives—doing so will drive marginal improvements in cost, quality and access. However, in order to achieve timely and durable improvements in quality and cost throughout the health care system, these physicians and hospitals must reach beyond cooperation: They need to become clinically integrated.
Some features of clinical integration include:
Historically, integration has been achieved through the ownership structure. But a common ownership framework—whether it is an IDS, an academic medical center with its faculty practice plan, or a community hospital with a group practice subsidiary, management services organization or joint venture—does not guarantee enhanced integration or improved performance. Nor does separate legal ownership of physicians and hospitals preclude it. Structure can facilitate integration—and it is important to get whatever structure you use right—but it is not the structure that matters.
What matters is that physicians and hospitals work together. Independent physicians and community hospitals can achieve the desired benefits of integration—while remaining legally separate—by aligning their respective interests with the goals and features of clinical integration. We call this arrangement virtual clinical integration.
Make the Trends Your Friends
Independent physicians and community hospitals can get ahead of the tsunami of change and benefit from it without merging into a single organization or large system. There are several immutable trends that can serve as the building blocks for virtual clinical integration:
Cost reduction. Payment reform (reimbursement reductions) can result in better compensation for those providers that eliminate more costs than the reduction in payment.
Health care reform includes experiments in bundled physician and hospital payments and no payments for certain readmissions, never events and medical mistakes. Accountable care organizations and the medical home concept also include a variety of bonus and risk sharing arrangements. These new payment structures provide incentives to work together for the common good, while virtual clinical integration enables independent physicians and hospitals to share the financial results of improved performance.
Given the wide variation and potential payback of proven clinical processes, most organizations can see significant financial and health benefits simply by moving the average performance to the level of the best performing clinicians in the community. Achieving even these benefits, however, requires clinical integration.
Health information technology. There is a shared conviction among the Obama administration, Congress and many health care experts that electronic information systems are essential to improving the health and health care of Americans. (See Blumenthal, D., "Stimulating the Adoption of Health Information Technology," The New England Journal of Medicine, April 2009.) The costs and benefits, however, have not historically been aligned, and the result is that less than 15 percent of physicians currently use an electronic health record.
Physicians are willing to adopt technology that is cost effective for them: For example, nearly 90 percent of physician office claims are submitted electronically. (See National Ambulatory Medical Care Survey, Table 2, "Number and percent distribution of office visits with corresponding standard errors, by selected physician practice characteristics: United States," 2006.) But the return on investment must be clear.
There are now significant financial incentives ($17 billion ARRA funds) for physicians to prescribe electronically and for the physician and hospital to make "meaningful use" of a "certified" electronic health record. These incentives are in place for a limited time, and penalties will apply in the near future. There is also the forthcoming requirement to transition to the ICD-10 coding system, not to mention the potential operating efficiency and clinical benefits of these technologies. While there is an opportunity for hospitals to support physician acquisition and installation of these technologies, the real benefits will come only if physicians and hospitals use these tools to collect and share information and implement processes that use the information to improve results.
Accessing medication history and formulary information and using associated decision support tools can reduce unnecessary prescriptions, avoid adverse drug events and lower costs. Electronic renewals can reduce prescriber and staff time spent on administrative activities and can improve patient convenience and compliance. Centralized lab results and other clinical information can eliminate unnecessary testing, highlight trends or trigger interventions that could lead to early identification or avoidance of problems that reduce costs and improve patient convenience. Accessible and accurate medical information can save time and enhance treatment in an emergency. This is critical to achieving the cost reductions necessary to be financially viable.
To realize the full potential of these tools is to be clinically integrated. It is not enough to simply have an e-prescribing or electronic medical record system. Hospitals and physicians must change their behavior and ensure that their systems can and do communicate with each other; that there are standards for the form, timeliness and accuracy of the information; that the standards are adhered to; and that the information is useful and used.
Transparency. A recent study by Manhattan Research found that consumers were more likely to have gone online for health information than to have gone to their doctor in the previous year. With over 60 percent of adults turning to the Internet for health information, the "eHealth Consumer" audience is no longer a group of early adopters—they are the new norm for consumers old and young. Some independent sites like RateMDs and Healthgrades provide detailed reports. Most major insurance companies now provide members with provider cost and quality information. WellPoint has teamed up with Zagat to enable its 35 million members to rate and review their providers.
While word of mouth remains the most common way consumers evaluate their provider, access to information, increasing out of pocket expenses and the growth of high-deductible consumer-directed health plans (CDHPs) are encouraging more consumerism. Recent Blue Cross Blue Shield Association and Aetna surveys found that enrollees in CDHPs are more likely to track health care expenses, ask their doctor about the cost of treatment and participate in health or wellness programs.
Information regarding both clinical care and patient experience are increasingly available from both public and private sources. The Consumer Assessment of Healthcare Providers and Systems has developed standardized surveys of patients' experiences administered by the Agency for Healthcare Research and Quality. These surveys include hospital and clinician components as well as a health plan component. Results are available to consumers and researchers.
The 2006 Tax Relief and Health Care Act required the establishment of a physician quality reporting system, including an incentive payment for eligible professionals who satisfactorily report data on quality measures for covered services furnished to Medicare beneficiaries. Confidential reports are provided to the provider; however, results are not yet available to the consumer. The Hospital Quality Initiative is a similar program for hospitals with results available to the public.
Transparency heightens the implications of improving physician and hospital performance, which requires the cooperation of each, and integration can leverage the competitive advantage of both. Physicians cannot improve their outcomes if, for example, their patients in the hospital receive the wrong medication or get an infection or embolism. Similarly, hospitals cannot improve their scores if physicians are not following best practices in the hospital. And patients are not improving their health if the doctors and hospital staff are not using patient encounters as teachable events to address health risks and improve compliance.
Clinical effectiveness. The National Guideline Clearinghouse contains objective, detailed information on over 2,000 evidence-based clinical practice guidelines. Its web site provides comparisons, rating and comments, and guidelines can be downloaded to a handheld computer device. Yet, patients receive only 50 percent of the recommended preventive, acute and long-term health care. (See McGlynn, E.A., et al., "The quality of health care delivered to adults in the United States," New England Journal of Medicine, 2003.)
Only 14 percent of new scientific discoveries enter day-to-day clinical practice within 17 years. (See Balas, E.A., and Boren, S.A., "Yearbook of Medical Informatics: Managing Clinical Knowledge for Health Care Improvement," Stuttgart, Germany: Schattauer Verlagsgesellschaft mbH, 2000.) This is in part because what is efficacious in randomized clinical trials is not always effective in day-to-day practice.
Frequently, the major questions that need to be answered to close the gaps between scientific discovery and widespread use in community care are not the focus of these academic medical center researchers. (See Westfall, J.M., MD, MPH, et al., "Practice-Based Research—'Blue Highways' on the NIH Roadmap," JAMA, Jan. 24/31, 2007.) Clinicians, and patients, need to know which patient subgroups these recommended approaches do and do not work for.
The ARRA stimulus bill authorizes an additional $1.1 billion for comparative effectiveness research and ratchets up the expectations for consistent use of these results. Payers and payment structures are increasingly focused on the savings that can be achieved from use of these guidelines.
Physicians and hospitals must translate improved diagnostic tests, medicines and treatments into routine clinical practice if they are to achieve their clinical and financial benefits. This requires an infrastructure for identifying and agreeing on suitable practices, disseminating relevant information and removing barriers to consistent application, where appropriate. This may exist in IDSes but must be created among independent practitioners through virtual clinical integration in most communities.
Management and support services. While chronic care management programs have not yet conclusively been proven cost effective (see Peikes, D., et al., "Effects of Care Coordination on Hospitalization, Quality of Care, and Health Care Expenditures Among Medicare Beneficiaries: 15 Randomized Trials," JAMA, Feb. 11, 2009), there are a number of programs and services that have proven worthy of reimbursement or payment. These include:
Most of these services require a critical mass of patients and infrastructure that frequently is not available to smaller physician practices but can be achieved through virtual clinical integration. The result can be new streams of revenue for providers and improved care for patients.
The Path to Virtual Clinical Integration
Clearly, providers must increase operating efficiency, reduce errors, advance clinical effectiveness, enhance patient safety and improve health status, but they must also redefine their value proposition, demonstrate value and accrue the benefits of that performance. These are business strategies that require physician practice leaders to rethink their business model and hospital leaders to reconsider their relationship with physicians. This means using the business relationship to drive clinical results rather than using clinical services to drive the business relationship.
While it is more complicated for physician practices to embrace these behaviors, it is now necessary. There are common interests and concerns that hospitals can build upon to facilitate this transition. Innovative physician practice leaders can also help drive new business relationships and pave the way to mutual benefits among physicians and between physicians and hospitals.
One path to virtual clinical integration has the following steps:
1. Build a common understanding of trends, issues, challenges and opportunities. One approach is to hold discussion forums with physicians, perhaps divided among primary care, medical specialty and surgical specialty to capture their unique perspectives.
2. Assess the physicians' capabilities and interests. A confidential practice survey can offer insights into how specific practices are positioned, both in terms of business infrastructure and personal readiness to work with the hospital and other physicians, and to understand which areas are of greatest interest.
3. Define and prioritize options. A leadership group of physician and hospital representatives, using information from the confidential survey, national trends and the local market, can delineate high potential opportunities.
4. Develop key strategies. Based on the opportunities and readiness of physicians, specific strategies can be designed. These may include organizational initiatives such as a clinical quality institute or specific projects. This should be done in the context of an overarching strategy with a clear rationale, goals and objectives; defined investment parameters; timelines; and measurable results.
5. Deploy strategies with interested physicians. Not all physicians are in the same place at the same time. Starting with those best positioned to capitalize on the opportunities, and working with others to help them get better positioned, will keep the process moving.
Virtual clinical integration is a long-term business strategy. Physicians and hospitals can capitalize on the current incentives and business opportunities as a means to the end of structural clinical integration or remain legally separate.
Traditional physician-hospital alignment efforts—such as equipment ventures or outpatient surgery joint ventures, or even employment arrangements—have proven short-sighted as the market, regulations or reimbursement has changed. The fundamental changes in the delivery of care achieved by structurally integrated delivery systems have proven much more durable. These changes can be achieved by independent providers through virtual clinical integration, with rewards that supersede short-term gains and provide the flexibility needed to respond to the ongoing changes in the market.
Lou Pavia, Jr., is president of CareCompanion in McLean, Va.
This article first appeared in the on August 31, 2009 in HHN Magazine online site.