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Metrics for the Second Curve of Health Care

April 2013

1 Metrics for the Second Curve of Health Care

Metrics for the Second Curve of Health Care

Resources: For information related to health care delivery transformation, visit www.hpoe.org.

Suggested Citation: Metrics for the Second Curve of Health Care. Health Research & Educational Trust, Chicago: April 2013. Accessed at www.hpoe.org

Contact: [email protected] (877) 243-0027

Accessible at: www.hpoe.org/future-metrics-1to4

© 2013 American Hospital Association. All rights reserved. All materials contained in this publication are available to anyone for download on www.hpoe.org for personal, noncommercial use only. No part of this publication may be reproduced and distributed in any form without permission of the publisher, or in the case of third party materials, the owner of that content, except in the case of brief quotations followed by the above suggested citation. To request permission to reproduce any of these materials, please email [email protected]

2 Metrics for the Second Curve of Health Care

Table of Contents Executive Summary………………………………………………………………………………………………………………………………………..3

Introduction……………………………………………………………………………………………………………………………………………………4

Strategy One: Aligning Hospitals, Physicians and Other Providers Across the Continuum of Care………….8

Strategy Two: Utilizing Evidence-Based Practices to Improve Quality and Patient Safety………………………..10

Strategy Three: Improving Efficiency through Productivity and Financial Management…………………………….12

Strategy Four: Developing Integrated Information Systems……………………………………………………………………….14

Measuring the Six Other Must-Do Strategies……………………………………………………………………………………………..16

Conclusion……………………………………………………………………………………………………………………………………………………17

Endnotes……………………………………………………………………………………………………………………………………………………….18

Table of Contents

3 Metrics for the Second Curve of Health Care

Executive Summary In 2011, the AHA Board Committee on Performance Improvement (CPI) identified ten must-do strategies for the hospital field to implement in order to survive and thrive in the transforming health care system. These strategies were identified in the groundbreaking report, Hospitals and Care Systems of the Future, found at http://www.aha.org/about/org/hospitals-care-systems-future.shtml.

Building off of health care futurist Ian Morrison’s first curve to second curve shift, CPI identified characteristics of the first curve (the volume-based curve) and the second curve (the value-based curve). Of the ten must-do strategies, four were identified as major priorities for health care leaders. “Metrics for the Second Curve of Health Care” expands on those strategies, focusing on the four imperative strategies:

1. Aligning hospitals, physicians and other clinical providers across the continuum of care 2. Utilizing evidence-based practices to improve quality and patient safety 3. Improving efficiency through productivity and financial management 4. Developing integrated information systems

In addition, there is another report hospitals and health care systems can use to self-assess and provide a road map on the first curve to second curve transition at http://www.hpoe.org/future-roadmap-1to4.

Table 1: Second Curve Evaluation Metrics (applicable to the hospital or the health care system)

Strategy One: Aligning Hospitals, Physicians and Other Clinical Providers Across the Continuum of Care

Percentage of aligned and engaged physicians Percentage of physician and other clinical provider contracts containing performance and efficiency incentives aligned with ACO-type incentives Availability of non-acute services Distribution of shared savings/performance bonuses/gains to aligned physicians and clinicians Number of covered lives accountable for population health (e.g., ACO/patient-centered medical homes) Percentage of clinicians in leadership

Strategy Two: Utilizing Evidence-Based Practices to Improve Quality and Patient Safety Effective measurement and management of care transitions Management of utilization variation Reducing preventable admissions, readmissions, ED visits, complications and mortality Active patient engagement in design and improvement

Strategy Three: Improving Efficiency through Productivity and Financial Management Expense-per-episode of care Shared savings, financial gains or risk-bearing arrangements from performance-based contracts Targeted cost-reduction and risk-management goals Management to Medicare payment levels

Strategy Four: Developing Integrated Information Systems Integrated data warehouse Lag time between analysis and availability of results Understanding of population disease patterns Use of electronic health information across the continuum of care and community Real-time information exchange

Source: AHA, 2013.

Executive Summary

4 Metrics for the Second Curve of Health Care

Introduction Hospitals and health care systems face common challenges in transitioning to a health care delivery system characterized by value-based payment focused on outcomes, population health management and a patient-centered, coordinated care-delivery approach. As hospitals and health care systems shift from the volume-based first curve to the value-based second curve, they must transform their business and health care delivery models to balance quality, cost, patient preferences and health status to achieve real value and outcomes.1 Hospitals and health care systems that are moving to the second curve use performance metrics to identify clinical, financial, cultural and process improvements; incorporate appropriate incentives; and evaluate results. The AHA Hospitals and Care Systems of the Future report from 2011 (found at http://www.aha.org/about/org/hospitals-care-systems-future.shtml) outlined 10 must-do strategies, with four high-priority strategies required to be successful in the transformation from the first curve to the second curve.

Figure 1: First Curve to Second Curve

Source: Adapted from Ian Morrison, 2011.

This guide builds on the first report further detailing each of the four high-priority strategies and creating specific metrics to evaluate progress toward the next generation of essential hospital management competencies. Table 2 outlines the second curve evaluation metrics for the four high-priority strategies. The four high-priority strategies detailed in this report (bolded) and the addi- tional six must-do strategies are:

1. Aligning hospitals, physicians and other clinical providers across the continuum of care

2. Utilizing evidence-based practices to improve quality and patient safety 3. Improving efficiency through productivity and financial management 4. Developing integrated information systems 5. Joining and growing integrated provider networks and care systems 6. Educating and engaging employees and physicians to create leaders 7. Strengthening finances to facilitate reinvestment and innovation 8. Partnering with payers 9. Advancing an organization through scenario-based strategic, financial and operational

planning 10. Seeking population health improvement through pursuit of the “Triple Aim”

Introduction

5 Metrics for the Second Curve of Health Care

Table 2: Second Curve Evaluation Metrics (applicable to the hospital or the health care system)

Strategy One: Aligning Hospitals, Physicians and Other Clinical Providers Across the Continuum of Care

Percentage of aligned and engaged physicians All affiliated physicians are aligned across all dimensions (structural relationships, financial interdependence, culture, strategic collaboration). All affiliated and employed physicians are engaged, collaborative and participative in all major strategic initiatives. Physician engagement survey data has been analyzed and improvement actions have been implemented with positive results. Recruiting and contracting include an assessment of cultural fit as well as a formalized “compact” or code of conduct with mutually agreed on behaviors, values and mission for all physicians. Percentage of physician and other clinical provider contracts containing performance and efficiency incentives aligned with ACO-type incentives Significant level of reimbursement risk associated with new payment models (bundled payments, two-sided shared savings with both upside and downside risk, or capitation payments). Participating in an ACO or PCMH model across a significant population, utilizing value-based incentives. All payment contracts, payment and compensation models are linked to performance results. Availability of non-acute services Full spectrum of ownership, partnership or affiliation of health care services available to patients. Distribution of shared savings/performance bonuses/gains to aligned physicians and clinicians All clinicians’ performance is measured and they receive benchmark data on performance against peers. Most clinicians share financial risk and rewards linked to performance, and many have received distributions of shared savings or performance bonuses. Number of covered lives accountable for population health (e.g., ACO/patient-centered medical homes) Active participation in a population health management initiative (e.g., chronic disease management, prevention) for a defined population. Able to measure the attributable population for health management initiatives and a sizable population is enrolled. Percentage of clinicians in leadership Active clinical representation at the leadership or governance level (30 percent or above). Physicians and nurse executives are leading development of strategic transformation initiatives.

Strategy Two: Utilizing Evidence-Based Practices to Improve Quality and Patient Safety Effective measurement and management of care transitions Fully implemented clinical integration strategy across the entire continuum of care to ensure seamless transitions and clear handoffs. Fully implemented use of multidisciplinary teams, case managers, health coaches and nurse care coordinators for chronic disease cases and follow-up care after transitions. Measurement of all care transition data elements. Data is used to implement and evaluate interventions that improve transitions. Management of utilization variation Regular measurement and analysis of utilization variances, steps employed to address variation and intervention effectiveness analyzed on a regular basis. Providing completely transparent, physician-specific reports on utilization variation. Regular use of evidence-based care pathways and/or standardized clinical protocols on a systemwide basis for at least 60 percent of patients.

Introduction

6 Metrics for the Second Curve of Health Care

Reducing preventable admissions, readmissions, ED visits, complications and mortality Regular tracking and reporting on all relevant patient safety and quality measures. Data commonly used to improve patient safety and quality, with positive results observed. Active patient engagement in design and improvement Regular use of patient-engagement strategies such as shared decision-making aids, shift-change reports at the bedside, patient and family advisory councils and health and wellness programs. Regular measurement or reporting on patient and family engagement, with positive results.

Strategy Three: Improving Efficiency through Productivity and Financial Management Expense-per-episode of care Tracking expense-per-episode data across every care setting and a broad range of episodes to understand the true cost of care for each episode of care. Shared savings, financial gains or risk-bearing arrangements from performance-based contracts Measuring, managing, modeling and predicting risk using a broad set of historical data across multiple data sources (e.g., clinical and cost metrics, acute and non-acute settings). Implementing a financial risk-bearing arrangement for a specific population (either as a payer or in partnership with a payer). Targeted cost-reduction and risk-management goals Implemented targeted cost-reduction or risk-management goals for the organization. Instituted process re-engineering and/or continuous quality-improvement initiatives broadly across the organization and demonstrated measurable results. Management to Medicare payment levels Projected financial impact of managing to future Medicare payment levels for the entire organization; cost cuts to successfully manage at that payment level for all patients.

Strategy Four: Developing Integrated Information Systems Integrated data warehouse Fully integrated and interoperable data warehouse, incorporating multiple data types for all care settings (clinical, financial, demographic, patient experience, participating and non-participating providers). Lag time between analysis and availability of results Real-time availability for all data and reports through an easy-to-use interface, based on user needs. Advanced data-mining capabilities with the ability to provide real-time insights to support clinical and business decisions across the population. Advanced capabilities for prospective and predictive modeling to support clinical and business decisions across the population. Ability to measure and demonstrate value and results, based on comprehensive data across the care continuum (both acute and non-acute care). Understanding of population disease patterns Robust data warehouse, including disease registries and population disease patterns to identify high-risk patients and determine intervention opportunities. Thorough population data warehouse that measures the impact of population health interventions. Use of electronic health information across the continuum of care and community Fully integrated data warehouse with advanced data mining capabilities that provides real-time information in order to identify effective health interventions and the impact on the population. Real-time information exchange Full participation in a health information exchange and utilizing the data for quality improvement, population health interventions and results measurement.

Source: AHA, 2013.

Introduction

7 Metrics for the Second Curve of Health Care

Metrics for the Second Curve of Health Care enables hospital leaders to evaluate current position and progress along the continuum toward meeting second-curve metrics. It also provides organizations (or organizations in affiliation with other partners) with guidance on measures to help them assess potential gaps and provide a road map for planning future improvements. Additionally, the AHA, through its performance improvement strategy, Hospitals in Pursuit of Excellence, develops educational resources, including best practices, to help hospitals and health care systems bridge any gaps and successfully navigate the transformation to the second curve.

The time frame for transitioning to the second curve may be dependent on each hospital’s or health care system’s marketplace, but significant transformation across the health care field is expected to occur in the next three to five years. Some markets are moving more quickly toward the second curve, based on payer, competitor and other market pressures; others are moving more slowly.

Moving too quickly could have a negative impact on margin or other operations as organizations shift from volume-based reimbursement approaches to value-based payment approaches. The speed of transformation also is dependent on the organization’s resources or the resources provided through the organization’s partnerships or affiliations. However, this report provides direction to prepare for future capability development (either individually or with a partner/affiliation). Regardless of the market or where the health care organization falls on this continuum, it is important to strive for quality improvement, increased efficiency and IT capability development in order to move to a value-based care approach.

Introduction

8 Metrics for the Second Curve of Health Care

Strategy One: Aligning Hospitals, Physicians and Other Providers Across the Continuum of Care

It is increasingly important to align, engage and integrate providers into the organization. Second-curve hospitals and health care systems have clear physician/provider performance measures tied to payment incentives. Increasingly, provider contracts are incorporating performance rewards that are aligned with accountable care organization-type incentives. These incentives focus on quality, efficiency, patient experience, care coordination, population health management, patient safety and at-risk population care. Hospitals that form Medicare ACOs operate under a different set of rules and legal restraints than private sector ACOs, including antitrust laws, information privacy and security concerns and insurance regulation with the assumption of risk.

Successful alignment includes the availability and integration of non-acute services. Non-acute services include chronic disease management, preventive medicine, outpatient services, rehabilitation care, behavioral health and long-term care. As a result, alignment with multidisciplinary teams, including acute care and non-acute care providers, and non-clinical staff is necessary. When successful alignment occurs across the care continuum, all responsible parties are accountable and work under a care system with a patient-centered approach that rewards performance.2

One approach to improve provider alignment is strengthening providers’ strategic relationships with hospitals and health care systems. Physicians are seeking employment and other affiliations with hospitals and health care systems due to the ever-increasing administrative costs, regulatory burdens and the difficulty of remaining a financially viable independent practice.3 Additionally, as health care organizations move to provide care to populations across the entire continuum, they are seeking stronger relationships with primary care and non-acute care providers. To increase engagement, hospitals and health care systems also are increasing the number of clinicians in leadership positions.

Table 3 provides six evaluation categories, or criteria, that hospital or health care systems can use to track progress toward the first high-priority strategy. Accompanying each criterion are detailed metrics that hospitals and health care systems can use to evaluate their progression from the first curve to the second curve.

Table 3: Evaluation Metrics for Strategy One (applicable to the hospital or the health care system)

First Curve 1.0 Transitioning in the Gap Second Curve 2.0 Percentage of aligned and engaged physicians Limited structural physician alignment that exists through relationships (ownership, partnership, affiliation) or other collaboration.

Moderate degree of physician alignment with some financial interdependence, structural relationships or collaboration on strategic initiatives.

All affiliated physicians are aligned across all dimensions (structural relationships, financial interdependence, culture, strategic collaboration).

Minimal level of engagement and collaboration among affiliated and employed physicians on strategic initiatives.

Moderate degree of engagement and collaboration among affiliated and employed physicians on strategic initiatives.

All affiliated and employed physicians are engaged, collaborative and participative in all major strategic initiatives.

Physicians have not been surveyed on engagement.

Physician engagement survey data has been analyzed; however, no corrective actions have been implemented.

Physician engagement survey data has been analyzed and improvement actions have been im- plemented with positive results.

Phy

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