C-suite CV Executives Prepare for an Evolving Landscape

Many challenges confront C-suite hospital executives—from the federal government’s healthcare reform efforts and reimbursement reductions to decreasing hospital revenues and increasing competition—all of which are unlikely to diminish in the near future. Recently, four physician executives sought to elucidate the clinical, economic and practice management considerations impacting the healthcare landscape.

Producing quality in a new era

Changes in the delivery of cardiovascular care are inevitable, but change is not always easy. “We’ve all been very comfortable practicing in the traditional fee-for-service model,” says Bufalino. “Yet, some U.S. providers are beginning to understand how to function in a capitated or shared-risk environment, while still managing to provide high-quality care in a cost-effective manner.”

For this to occur, administrators must convince physicians and staff that changes will not restrict or ration care, but rather improve quality of care while simultaneously paying attention to efficiencies—a value-based model, rather than volume-based.

Intermountain “encourages evidence-based medicine to reduce variation by giving our staff the tools to perform the best care and function as an integrated team,” says Lappé. While physicians and nurses are essential to pull everyone together, senior management also must trust that the department is delivering the highest quality care, he adds.

“The biggest challenge is getting physicians, who are traditionally autonomous, to change their game,” says Knopf. Cajoling physicians within one group to work together is complicated, he says, but when a private practice integrates with a hospital and physicians are part of a larger organization, those challenges become exacerbated, especially because physicians have to interact with the nursing, administration and finance teams.

In this complex milieu, academic medical centers face the additional challenge of fulfilling their unique missions, Yancy says. “Changes in the broader landscape reduce reimbursement, bundle codes and make our operating margins narrower, but by definition, we should be inefficient in clinical practice because we need to parcel out time for education and research. How do we continue to fund those ventures going forward? You cannot practice evidence-based medicine without the laboratories where the evidence is generated.”

Every institution should hold that mission, says Lappé, especially in the rigorous collection of data and collaborative sharing of those data. “In this model, the entire healthcare system becomes the laboratory.”

Evidence-based guidelines in any setting can only be assessed through measuring performance, says Bufalino, whose practice has employed EHRs since the 1990s and can now measure 32 quarters of care with 600,000-plus visits. “While we’re now at 90-plus percent on all consortium measures, we were not there when we started. Providing feedback to physicians is key to achieving quality parameters.”

While the new epoch poses many challenges, Yancy recognizes potential opportunities. “We’re talking about the future of healthcare, which is, in fact, quite exciting rather than the doom and gloom of having to cut and slash. The right answer is we’ve just got to do it better.”

Prioritizing purchasing

Adhering to a strict CV service line budget, Northwestern uses a committee of physicians and administrators to prioritize requests for capital purchases. “Vital equipment that needs replacing or mission-critical items lead the way; equipment that could add value or generate margin is next,” Yancy explains. “Exploratory items end up in a lesser tier. Providers are very reluctant to take on debt right now, as the potential to discharge that debt in the future is uncertain,” he says.

Knopf adds, “Every institution is struggling with how to obtain and dole out capital. Capital is generally derived from the margins, which typically determines the provider’s credit rating.” Piedmont’s method of distributing capital is similar to Northwestern’s when assessing a proposed technology’s ROI over a three- to five-year horizon, as it must show benefit to the healthcare system.

Providers that are seeking to simplify and unify their supply chains may gain new ways to negotiate with industry. For example, 10 cath lab directors decided that they would not buy devices from a particular company, which would not agree to the directors’ pricing model. “I was amazed that the physicians supported this decision to take certain vendors out of the lab,” says Bufalino.

Intermountain takes a similar stance. “We view devices more like commodities,” says Lappé. “We have buckets of devices: bare-metal stents, drug-eluting stents, cardiac rhythm management devices. Anybody willing to supply devices at a pre-specified price, we’ll work with, while still gathering feedback from the physicians on the outcomes produced by the devices.”

While provider relationships with industry have changed, the value of medical devices hasn’t. “We can’t function as physicians without new technologies,” says Knopf. “MedTech is under tremendous regulatory stresses but, as we begin to extract waste from healthcare, industry also needs to extract waste from its system.” For this, he proposes that vendors reduce the number of representatives that service a healthcare system from 15 to one or two, because providers have made similar internal changes from 10 cath lab directors to only one. 

Another risk of the current landscape, according to the panelists, is innovation. MedTech has invested enormous resources into clinical trials, generating invaluable evidence for clinical practice. To this, Yancy suggests, “We have to find the right middle ground, where the collaboration is transparent, positive and defensible, but we can still count on industry to make R&D investments that are necessary for progress. We know how to fix this over the next one to three to five years through efficiency and cost reduction, but we can’t lose what’s most valuable to the healthcare system, which is innovation.”

Staying competitive

While many providers struggle with solvency, Piedmont partly relies on health IT as one way to remain competitive in metro Atlanta, with an ongoing EHR rollout across its network. “We’ve met the meaningful use parameters,” Knopf says. These technologies can inform physicians about the financial implications of their actions, such as cost per case, which may lead to behavioral corrections, he adds. For instance, “when we understand the most common reason for heart failure readmission is because a patient didn’t see a physician within a week, it can easily be fixed by connecting the home health agency and the skilled nursing facilities.”

Patient satisfaction also has taken a front seat in differentiating providers. While annual hospital rankings recently have garnered much publicity, Lappé suggests that regionally, it only matters how well a provider delivers care. Providers could benefit from embracing patient-centric care and treating patients as customers, says Yancy. “We have to be attuned to providing care that satisfies the customer, because a satisfied patient actually has better outcomes.”

The biggest barrier, according to Knopf, is whether providers have adequate margins to invest in IT infrastructure and other systems that can generate the data required for outcomes analysis. “Data drive decisions, and many institutions don’t have the proper infrastructure to collect data,” adds Knopf, who says Piedmont has invested more than $200 million into its EHR rollout. “How can facilities, other than large providers, undertake these investments in the future?”

The panelists agree that solutions that can truly impact healthcare expenditures lie in preventive care and in developing novel ways to fully integrate the patient as a partner in the process, allowing providers to perform better care with fewer resources.