Framing the issue:

  • The health care system already is under stress as it moves away from fee-for-service models of care reimbursement and toward value-based approaches.
  • Baby boomers typically have a willingness to change to make their lives more efficient and an interest in using new technologies.
  • In terms of numbers, though, the boomers carry the potential to overwhelm the system as it tries to adjust to the new ways of providing care.

The last of the baby boomers turn 50 this year, and providers, policymakers and others are scrambling to create new models of care that can withstand the inevitable onslaught of acute and chronic illnesses.

The importance of coming up with concepts of care that improve quality and can evolve over time is magnified by the urgent need to cut health care costs.

Many experts warn that the current fee-for-service system is not up to the task. "We have made exceedingly few preparations for the future," says Joanne Lynn, M.D., director, Center for Elder Care and Advanced Illness at the Altarum Institute, a nonprofit research and consulting firm.

Baby boomers are hitting Medicare eligibility at a head-spining rate approaching 10,000 per day. The good news is the generation may be well-positioned for a redesigned health care system that will target, among other things, increased patient engagement and innovative use of technology.

"Boomers are probably the ones who understand all the different players in the health ecosystem better than anyone else," says Paul D'Alessandro, principal and customer experience practice leader for health industries at PricewaterhouseCoopers LLC.

One big factor health care planners should keep in mind is the large age range of the generation, which currently stretches from 49 to 68. That means risk tolerances and requirements will vary. Just as older and younger boomers differed in their reactions to the shift in retirement plans from defined benefit to defined contribution, they're expected to behave differently in a redesigned health care system.

"We're going to look at those in their 60s as people who are very cost-containment focused, more risk averse, and test the models in that way," D'Alessandro says. On the other hand, "the 50s group is looking at quality and convenience measures. They're more willing to explore new attributes of a new care model, new financial levers, different patient engagement models."

Across the age spectrum, boomers typically lead more active lifestyles than their parents and grandparents did. Combined with medical advances, that will lengthen their life expectencies. But longer lives — and a prevalence of unhealthy weight — will expose them to more chronic conditions and other ailments.

This year's models

Before hospitals, health systems, physicians, insurers and other health care stakeholders can get to the point where boomers and other patients are active participants in their care, the new care models have to be put in place. "What we're seeing now is a whole lot of different models, which represents the fact that the industry is in transition and flux," says Jonathan Niloff, M.D., vice president and executive medical director for population health at McKesson Corp. Underpinning all the models is a transfer of financial risk onto the provider and the establishment of certain quality standards. There also will be a push to keep care within a given network of providers, known as narrow networks.

The risk transfer and quality components can take many forms, from the very basic shared-savings model in which providers and insurers share in cost savings that are achieved for given care, to the global payment model in which a health system is paid a set amount for caring for a defined population.

Many of the innovations being tested are intended to meet the federal government's effort to reduce hospital readmissions.

The University of Pittsburgh Medical Center health system is testing or already implementing a variety of new ways to treat patients of both Medicare age and younger. "The new models are saying, how do we do a better job, become more efficient, provide the care that's appropriate using, perhaps, different levels of care from what's historically been provided," says Deborah Brodine, president of UPMC Community Provider Services and of UPMC Senior Communities.

"In many cases, what that means is we're designing and developing different models of care to keep people in their homes, where appropriate, or to keep them out of the hospital generally."

An operator and owner of skilled nursing facilities, UPMC is putting a lot of emphasis on SNFs as a lower-cost alternative to hospital care. "We view our skilled nursing facilities as laboratories for new models of care," Brodine says.
UPMC is one of seven organizations working to better coordinate care between hospitals and SNFs as part of a Centers for Medicare & Medicaid Services Innovation Center project. UPMC calls its effort RAVEN, which stands for Reduce AVoidable hospitalizations using Evidence-based interventions for Nursing facilities.

The RAVEN approach uses of facility–based nurse practitioners to work on resident care plan goals and assess patients who undergo a change in condition.

Historically, SNFs weren't equipped to handle a patient who took a sharp turn for the worse, such as a spiking fever, and the patient ended up in a hospital emergency department, Brodine says. Having a nurse practitioner on-call can reduce the need to send patients back to the hospital.

RAVEN also uses evidence-based clinical communication tools, telehealth and regional information exchange.

Those kinds of innovations may work better for boomers than for older generations. Dave Caldwell, executive vice president of Humana-owned Certify Data Systems, says members of his baby boom generation are more demanding of providers and more willing to try new approaches that suit their better-informed world view. "We grew up in an age of expectations, not only for ourselves, but also for products and services," Caldwell says.

The baby boomers are far more knowledgeable about chronic disease, disease prevention and wellness than their parents' generation was, and they are going to demand more from the system and their providers, he says. That bodes well for the effort to get patients more engaged in their health and care within the scope of population health management.

Snags and SNFs

Some new ideas bump up against regulatory restrictions. Atrius Health is an alliance of six medical groups and VNA Care Network & Hospice that is part of a Medicare Pioneer ACO. It has run into regulatory limitations on such things as time-based limits on telehealth care in the home. "While Medicare will cover telehealth as long as patients have skilled nursing care needs, once they are no longer eligible for [home care] through the VNA, they're no longer eligible for telehealth," says Richard Lopez, M.D., chief medical officer for Atrius and a physician for Harvard Vanguard Medical Associates. "That doesn't make sense in the Pioneer ACO model or any ACO model. They still have their underlying conditions."

Atrius also was one of the providers that received a waiver of another Medicare rule that requires a three-day inpatient stay before skilled nursing care can be provided through the program. With the waiver, the Atrius ACO can admit patients into a SNF directly from the ED.

At the University of Kansas Hospital, officials have tightened the relationship with post-acute by placing a SNF in the same building as its newly reconstructed 29-bed rehabilitation unit. The building design put a lot of emphasis on meeting the demands of patients, such as a state-of-the-art gym, says Patricia Sanders-Hall, vice president of ancillary diagnostic and therapeutic services.

"The boomers know what to expect, and we've been trying to upgrade their acute experience because of those expectations," says Sanders-Hall, who also is a boomer. "Very definitely, this is a generation that is demanding more. We're more informed. We know what to ask for now."

There are signs that boomers already are more active in their care and in the design of new care models. "We already see evidence of this in their health care and health care decision-making," says Joseph Agostini, Aetna's chief medical officer for provider collaborations and large group plan sponsors within Medicare.

As boomers become more technologically savvy, they do more research online and use applications and trackers around exercise, health and wellness.

The uptake on the new models is happening relatively quickly at Aetna, which is collaborating with more than 120 providers on Medicare innovation. Agostini says 20 to 25 percent of its medical costs will be in value-linked coverage in 2014.

Taking a knee, or hip

In addition to being more engaged in their care, boomers likely will be heavier users of the system, which poses a problem for the new models, at least initially. St. Joseph Hospital in New Hampshire experienced those differences firsthand as it enrolled its insured employees in a Pioneer ACO run by Dartmouth Medical Center, says Richard Boehler, M.D., president and CEO of St. Joseph Healthcare and a baby boomer. "If you look at the boomer profile of those in the hospital business, I'm sad to say that we're all a little bit heavier, we have more chronic conditions, … and we have ease of access to health care," Boehler says. "That's sort of the perfect storm for trying to do population management."

Some procedures are done so frequently among the boomer set that cost savings and quality improvement can be achieved through models such as bundled payment. BlueCross BlueShield of North Carolina has established bundled payment initiatives with selected providers in knee and hip replacement surgeries, an increasingly common procedure. Among those 55 to 64 years old, the rate of total hip replacements per 10,000 people climbed to 25.6 in 2010 from 17.7 in 2006, according to the Centers for Disease Control and Prevention. For the same age group, the rate of total or partial knee replacements climbed to 66.4 per 10,000 people in 2010 from 47.9 in 2006.

BCBSNC did its first knee replacement bundle as part of a pilot in 2011, and continues to add knee and hip replacement bundled payment contracts, says Elaine Daniels, senior strategic contract consultant for the insurer.

The North Carolina Blues has enacted bundled payment contracts with Triangle Orthopedic Associates for both hip and knee replacements, and with OrthoCarolina and Duke University Health System for knee replacements. The agreements include quality components as well. "We want people to say, 'I want the best knee replacement, and the best knee replacement is with a bundled provider,' " Daniels says.

She noted that because the agreements require all the providers involved to be in a network, care navigators who are overseeing the procedures are creating what is almost a concierge care experience. And the program is reducing costs, Daniels says.

Eventually, she says patients with chronic conditions could be part of a bundled payment approach. "Chronic care is where we can do some wonderful management of members' health care."

Executive Corner

Ahead of an expected inflow of boomers into the health care system, hospital officials are paying closer attention to how skilled nursing facilities and other post-acute health care organizations treat patients, given the increasing role post-acute care providers play in care coordination.

Restructuring for better coordination

The best care in the world in an acute care hospital can be negated by a lack of coordination between a SNF or rehab hospital. Hospitals are adding oversight of care at post-acute facilities and changing the relationships of facilities they deal with. "Hospitals are being looked to manage this post-acute care pathway," says Cindy Reisz, a member of law firm Bass, Berry & Sims.

Adding a SNFist

Hospitals are increasing use of a relatively new clinical role for physicians or nurse practitioners to manage the care of hospital-discharged patients at a SNF or group of SNFs. Sometimes called a SNFist (pronounced sniffest), the clinician's job is to ensure that a patient's post-acute care is appropriate, and to also raise the level of care that can be provided in a post-acute care facility. Atrius Health with its accountable care organization decided to use a physician in that role, while UPMC in its new models uses a nurse practitioner. Hospitals also are hiring third-party companies to do the coordination, Reisz says.

Trimming relationships

To accommodate the more intense coordination with post-acute facilities, hospitals and health systems are reducing the number of facilities in their post-acute care networks. That's going to change the makeup of the post-acute care market as the industry evolves. "The mix is going to change dramatically" among SNFs, nursing homes, rehabilitation hospitals and other providers, says Steve Pacicco, chief executive of SigmaCare, a post-acute care technology company.

About the Series

This is the fourth installment in Hospitals & Health Networks' yearlong series examining the many ways the nation's roughly 75 million baby boomers will affect the U.S. health care system as they grow into old age. As the industry adopts new care models that will reward care for quality and efficiency, the waves of aging baby boomers will stress the system. But their receptiveness to technology and smarter care can give a boost to those new care models. The series will include articles in the magazine and in our e-newsletter, H&HN Daily. Here's the complete lineup:

The boomer challenge

Chronic conditions

The financial impact

New care models

Staffing and management

Innovation in facilities and care design