Pay for Performance

The pay for performance risk model delivers just that: financial incentives for meeting specific quality and/or utilization measures. It’s where many organizations start in assuming risk.

Here are two examples.

Holston Medical Group: Saving Money Through Segmenting Care

Pay for performance models take different forms, one of the most common of which is an accountable care organization (ACO). In 2012, only 29 of 114 Medicare ACOs generated savings in their first year. In 2013, Qualuable Medical Professionals, the new ACO for Holston Medical Group (HMG), reported a Medicare savings of $10.8 million, said Jason Tipton, HMG’s director of value operations and informatics and chair of data aggregation and analytics.

The physician-owned, multispecialty group achieved these results through focusing on efforts its highest-risk patients: driving down hospital admissions and readmissions, identifying inefficiencies (such as duplicated tests and high-spend services), and driving services to high-quality, low-cost facilities and providers.

The journey started with data. A Health Information Exchange established in 2012 gave HMG the analytics to stratify its patients into three risk levels:

  • Level 3 (5+ chronic conditions): This group was responsible for 54% of overall medical costs. HMG case managers educated these patients about their health and care, kept them in contact with HMG, and removed obstacles standing in the way of appropriate care.
  • Level 2 (2-4 chronic conditions): To reduce readmissions for these medium-risk patients, HMG focused on transitions of care after hospitalization, improving these outcomes through follow-up calls and close monitoring after discharge.
  • Level 1 (0-1 chronic conditions): To keep low-risk patients healthy, HMG used routine care protocols during office visits to address gaps in care, and closed 81% of these gaps in 2013 alone.

Pay for Performance Lessons Learned

Because inpatient care can be a significant cost area for patients with multiple chronic conditions, Tipton recommended that organizations use outpatient settings to deliver these patients advanced care conveniently and cost-effectively. HMG uses its Extensivist Clinic in this manner for conditions such as atrial fibrillation, acute renal failure, and COPD exacerbation.


Mayo Clinic: Change Starts with Governance

Fewer dollars for healthcare services. An expanded population in need of care. Market disruptors such as payer and employer carve-outs and narrow networks. This convergence of trends led Mayo Clinic to a plan for a patient-centric healthcare experience across its four regions, 18 hospitals, and the 525,000 patients it serves each year, as well as an academic research center serving another half-million patients annually.

The obstacles were many: daily management challenges, past experience with contracts and payments, inertia, and “provider angst,” said Brian Whited, a regional CEO for Mayo Clinic Health System.

Delivering a “right care, right time, right location” patient experience started with governance: moving from a confusing, multi-layered set-up of independent practices to a lean system led by a new Midwest Executive Operating Team.

With the patient always at center focus, the team worked through committees to launch parallel integration efforts for benefits and compensation, privileging and appointments, information management, and more.

In just four years, from 2007 to 2011, Mayo Clinic moved from a holding company model to operations as an integrated organization. According to Whited, integration prepared Mayo Clinic for its move to shared risk and yielded several practice benefits, including improved recruitment in difficult specialties and a community practice “learning lab” for product development.

He attributed success to engaging leaders from practice groups, making adjustments for culture and expectations, focusing on a common baseline goal, and engaging site leaders in roles with system responsibility. And throughout, he advised, remember that the needs of the patient come first.

AMGA: Your Partner for Value-Based Care. Contact Bill Baron, 703.838.0033 ext. 336 to take the next step.