The 447-bed University of Vermont Medical Center made a big splash this past fall, when its CEO announced ambitious plans to tie 80 percent of its payment to quality of care by 2018, exceeding federal targets. H&HN recently spent a few minutes with CEO John Brumsted, M.D., discussing what influenced the decision, and what comes next.
What were the strategy conversations preceding this announcement? Why do this now?
BRUMSTED: Doing an environmental scan, we saw that the Centers for Medicare & Medicaid Services was being concrete in its declarations to move toward value-based payments for Medicare beneficiaries at a reasonably brisk pace. The state of New York, which is part of our market, is moving rapidly toward value-based payments and has the regulatory mechanisms in place to move providers in that direction, and the state of Vermont is also on record as wanting to move toward value-based reimbursements. So, from that perspective, because we believe that it aligns the incentives around the Triple Aim so dramatically, we wanted to move expeditiously at a quick but accomplishable pace toward value-based payments. And we wanted to be clear about it so that internally we were focused on what needed to happen and externally the payers and other providers that we deal with were clear in our direction.
What are the first steps? What are you doing now to make sure you hit this goal by 2018?
BRUMSTED: We’ve worked and continue to work hard to develop a network of physicians and hospitals in our market area that essentially are functioning as one organization clinically, administratively and financially, and we believe that we have to do that to continue to hit our quality and financial goals. Secondarily, we in both New York and Vermont have been engaged in the Medicare Shared Savings Program through accountable care organizations in each state to allow us to align ourselves with providers that aren’t directly in our network and also to align our incentives. The shared savings program allows us to practice, if you will, working with goals that align with being at risk financially, without really being at risk. We’ve been in the shared savings program in Vermont for three years now, and in New York, we’re in our second year. Essentially, that’s given us the ability to have a practice run at being at risk as a network, so we’ve done those two basic strategies.
What do you say to other CEOs who are content to just sit back and wait to see what happens with the first adopters of value-based care?
BRUMSTED: I think they clearly are making their decisions with their management teams and their boards based on their environment, their local markets and their view. Having been on this journey, although now with the stated goal, but clearly we’ve been on this journey since 2011, I would caution that if you’re going from a pure fee-for-service market and expect in the 2018 to 2019 time frame that there will be significant need to take value-based reimbursements or even capitated payments, that it takes time to build the financial, operational and, most importantly, clinical infrastructure and relationships to be successful. So, looking at it, we knew it was going to take us some time to do that. I was very happy with our progress to date, but it takes time, particularly when you’re big and complex and you’re pulling together what, in the past, were independent organizations into a larger network. It takes time and I would caution that it’s not something that you can do in just one contracting cycle.
Health care is a local game. What can you say about the unique circumstances of UVMC’s market that may have influenced your decision?
BRUMSTED: Well, I would say two things. One is, to which I just alluded, the regulatory environment in our market, which is primarily Vermont but also significantly in northern New York state, is moving toward value-based payments. The second is that, traditionally, we have been an efficient, low-cost and high-quality academic medical center, so we feel that we can move into more of a fixed revenue environment and do quite well.
What has UVM found to be the most essential skills or tools to be prepared for value-based care?
BRUMSTED: A high degree of clinical coordination and integration and, to do that around populations of patients, I think that is absolutely at the top of the list. That’s much easier to do within a network of providers that have a corporate relationship, like the University of Vermont health network, than it is in a looser affiliation like an accountable care organizations network. But we’ve found great traction in that. And the second is to really invest in the expertise of the people. Financial expertise, operational expertise, clinical expertise, experience in managed care environments — and we’ve done that as well.