“It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.” – Charles Darwin
When considering the ever-evolving healthcare industry, Darwin's quote couldn’t ring more true. With the impending move from volume (fee-for-service) to value-based (outcome) payment models, all healthcare organizations—from independent physician practices to large hospital systems to outpatient facilities—must re-evaluate how they manage revenue cycles. For those that don’t, significant lost revenue is sure to follow.
While many organizations have revenue cycle management systems in place today, few have evolved their systems to be able to tightly measure and manage cost, care and outcomes across the entire episode of care, ranging from physician visit to surgery to post-surgical care, including physical therapy. This requires access across the continuum of care, which few providers benefit from today.
To maintain a healthy revenue cycle, providers must adapt what they are doing to engage in collaborative service delivery models. Technology must be in place that provides visibility across the entire healthcare ecosystem; this includes insight into what is happening to a patient after they leave a treatment center or facility and before they come back. In this new data-drive payment model, technology will play a key role in revenue success.
Historically, the healthcare industry has followed a fee-for-service payment system which focuses on volume. Under this ‘do more’ model, healthcare providers are paid for each service they provide. Every test, X-ray, blood test, patient seen and procedure translates to more money. With the introduction of bundled payments and value-based care, the industry is slowly moving away from this model.
With retrospective bundled payments, which is where Medicare is today with its pilots, it is business as usual. Providers continue to bill for each service independently under the fee-for-service model. Now, based on the value of care (outcome), there is a percentage of savings that may be allocated for those who do a good job. As the healthcare industry moves toward value-based care, the retrospective model will migrate to the prospective bundled payments model, which means fee-for-service might disappear entirely.
Under the prospective bundled payment model, which is a truer outcomes-driven model, the payer must look ahead and pay providers a single, pre-determined price for an entire encounter at the time of service delivery. This payment covers all of the related services for a procedure or condition across care settings, including follow-up. Commercial payers are leading the charge in the prospective model with a focus on physician engagement; it is about making sure the healthcare organization has a handle on variables across the institution. This means a hospital or ambulatory surgery center (ASC) has to determine if it has the capabilities to affordably perform a case based on the bundle. It might also require the hospital to engage a physical therapist. Actionable information is key to determining how to proceed.
As the industry transitions to prospective bundled payments, which is expected to be the foundation for value-based care, technology will no longer be a “nice to have” but a necessity to survive. In addition to changing the way patients receive care, this model requires a significant change in how information is managed.
Meaningful use has been the impetus for a large number of hospitals and physicians to adopt core technology, such as electronic health record (EHR) systems. This is now being replaced by the new proposed MIPS and APMs models under MACRA. However, in the outpatient care/ASC and physical therapy markets where meaningful use does not apply, EHR adoption has been slower. As the industry moves to value-based care, widespread EHR adoption is essential.
At the most basic level, all organizations will need an EHR system to house their clinical information. Without this baseline technology as a starting point, moving to the new value-based payment model will be difficult at best. To be successful with value-based care requires the ability to gather and analyze information about patients, partners (facilities, hospitals and clinicians) and payers. An EHR will serve as the underlying system for everything moving forward. Without this information, it will be impossible to make informed business and clinical decisions.
Looking at the longitudinal view of the patient, across all care settings, is necessary to be able to identify, treat and perform necessary follow-up for a patient in a value-based environment. Interoperability technology is the foundation for such a platform and not only enables connectivity amongst partners, but also provides a platform for more sophisticated technologies such as population health and patient engagement.
With the base technology in place, revenue cycle management analytics technology should be the next focus. This technology will provide the much needed insight into key performance indicators, such as cash on hand, dates outstanding, cost accounting, supplies, resource usage and much more. HR, accounting, inventory management—these are just some of the other systems that will need to be added along the way. These systems should feed into the base technology to allow analytics to be performed.
In the value-based payment model, especially around bundles, healthcare organizations also need to consider what technology is needed to engage patients. This includes providing education, two-way communication and benchmark surveys. The ability to communicate that a healthcare organization has high-quality service with very low readmissions is particularly important for value-based care. This is also where sophisticated patient engagement technology, patient portals and telemedicine will come into play. For example, active communication with patients regarding their adherence to post discharge procedures will help lower readmissions. Telemedicine offers the ability to interact with patients in a cost effective manner when they do not have easy access to clinicians.
The initial push for value-based care will be directed at hospitals and doctors. While surgery centers and therapy centers are engaged in bundled payments today, it is only at the retrospective level. However, expect things to change quickly because providers will not get the full balance of money until they see results. It may take a few years, but preparation takes time. This will require full engagement of all organizations across the entire healthcare ecosystem, surgery centers and therapy clinics included.
Organizations must start small; implementation should not happen all at once. Begin by looking internally to make sure your own technology offers the capabilities necessary to maximize your position in the community (i.e. doctors, hospitals and patients). With everything in place, then you can evolve to more advanced technologies such as population health, telemedicine, patient engagement technology, sophisticated referral systems and even social media. Getting the right technology in place is a journey, one that takes time and planning.
Regardless of the final components of the value-based care payment model, one thing is certain: It will be data driven. Therefore, without the proper technology in place, success will be difficult, if not impossible, to achieve. At the end of the day, healthcare organizations must track costs, deliver high quality care and favorable outcomes. Technology is a key enabler and will play a significant role in an organization’s evolution to value-based care.
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