John_ReddingIn an article in the November 2013 issue of hfm, “Achieving Clinical Integration,” John Redding, MD, MBA, PCMH CCE, manager of physician-hospital alignment for Blue Consulting Services in Chicago, shared tips on how healthcare organizations can best approach developing effective and sustainable clinically integrated networks (CINs). Redding also shared additional perspectives on a number of issues related to CIN development in the following interview.

hfm: How can developing a CIN help a hospital promote value by achieving the triple aim of an improved patient experience, improved population health, and reduced costs? Can you discuss, in particular, how a CIN can positively affect the patient experience, and what steps are required to ensure the CIN has a positive impact in this area?

Redding: In my opinion, every CIN should be aimed at helping a hospital or health system and its medical staffs fulfill the triple aim. The art to ensuring that this happens is working with physicians and administrators to prioritize those initiatives that impact the achievement of the triple aim and translating them into CIN measures and target levels of performance. My experience leads me to believe that there are a few keys areas to focus in within your CIN to improve patient experience: They are easy access, smooth handoffs and transitions in care, and customer service. To make an impact on these areas, organizations typically need to dedicate resources to ambulatory practice workflow redesign to enable enhanced access, supplement their IT infrastructure to ensure that the appropriate clinical information follows the patient across providers and sites of care, and establish a care management/population health infrastructure (human capital) to support patients outside of the practice or hospital. While the specific initiatives vary for organization to organization, two universal truths are that you will tend to improve what you measure and that you will get what you pay for. For this reason, patient experience needs to be measured throughout the CIN, and the key drivers of a positive patient experience should be incented.

hfm: What is a reasonable time period for CIN development to be ready to contract and commence? Is there a minimum timeframe that will allow for effective development of a CIN, and if so, how might that minimum time frame affect the identification of milestones for managing in reverse?

Redding: From my experience in planning and supporting the development of clinically integrated networks, I feel that organizations that are contemplating a CIN strategy should plan on a timeframe of 12 to 18 months to take clinical integration from concept to operational reality. The timeframe is highly dependent on the resources the organization is willing to dedicate to the initiative, the availability of administrative and physician leaders (to participate in the required committee work), and the ability of the CIN development leadership to make timely decisions. I often like to work with the organization to identify last possible date that they can offer a CIN product to a payer or employer, or to their own employees (through a self-funded plan), and work backward from that date to determine the development plan.

hfm: Can you talk briefly about how financial incentives are best structured in an effective CIN, as compared with an ACO or PCMH?

Redding: Unfortunately, there is no “cookie cutter” formula that will optimize the performance of a CIN. My general principles for developing an incentive program are to provide the participating providers with a reasonable opportunity to succeed, base the incentive program off of key stakeholder priorities (payer, employer, hospital, and physician), and keep the program and formula as simple as possible. It is important to understand that CINs can be composed of patient-centered medical homes [PCMHs] and can function as ACOs, so the means for incentives can be relatively flexible. 

CINs should be looking for incremental revenues and, in addition to potential premium fee-for-service contracts, can consider pay-for-performance bonuses, incremental care coordination fees, and shared savings. In line with keeping the program simple, I advocate for all incremental dollars that are earned (potentially including a portion of any fee schedule increase) be allocated to an incentive pool and be allocated to the physicians based on a single formula determined with significant physician input.

hfm: Based on examples of successful CINs, can you comment on the types of incentives that will promote the necessary level of commitment on the part of physicians?

Redding: For a CIN to be financially successful, which depends on the CIN’s attractiveness to a payer or employer in the long term, it must continuously create value for the healthcare purchaser. For this reason, key cost and utilization measures should be included. That said, quality metrics are far more meaningful to clinicians, so a majority of the program may be focused on evidence-based practices that are correlated with lower cost and/or utilization (at least in the long term). These metrics often fall into the population health category. In addition to these measures, I typically recommend that measures of physician engagement be included in the program (or in the membership criteria). For example, attendance in town hall meetings, validation of data provided to the CIN, or monthly log-ins to a clinical registry all are types of evidence of clinicians’ active engagement in the program.

If the real question is, “What magnitude of financial incentive is likely to affect physician behavior change?,” the general perception is 20 percent of a physician’s income needs to be at risk. My personal rule of thumb is that if a physician can purchase his or her teenager a car, new or used, with the annual incentive, then that physician is likely to consider complying with the CIN program. Of course, incentive pools grow over time, so physicians should be educated that this threshold may not be met in the first few years of the program, but should materialize as the number of payer and employer contracts grows over time.

hfm: Assuming physicians are involved in the process of developing the CIN, what types of incentives are they likely to prefer?

Redding: What we sometimes forget about the noble profession that physicians have chosen is that they are human like the rest of us. Most physicians like to succeed, so they prefer incentive metrics that pertain to the physician’s patient population (for example, pediatricians want measures focused childhood conditions), that apply to areas where the physician has direct control over the outcome (for example, the outcomes are not dictated primarily by nursing care), and that are reasonably attainable (for example, they allow for incremental improvement instead of requiring immediate top-decile performance). In regards to how the incentive dollars are paid, physicians prefer one-sided/no-risk incentives (e.g., upside bonuses and opposed to withholds or potential shared losses).

hfm: Can you describe some of the potential pitfalls that hospitals should be aware of that can arise during the process of aligning with physicians (lessons learned from both successful and the more “challenging” CINs)?

Redding: To answer this question, I would refer readers my article published in the November 2012 issue of hfm, “4 Pitfalls to Clinical Integration,” where I directly address this topic.

hfm: Can you cite case examples of health systems that have developed successful CINs, and describe some of the key factors that laid the foundation for that success?

Redding: From a patient care as well as a financial perspective, there are currently a number of successful CINs throughout the country. One of the better-documented success stories is Advocate Physician Partners in my hometown of Chicago. 

In addition to investments in IT and care management, successful programs exhibit a number of common traits.

They have a compelling vision. CINs are more than contracting vehicles; they provide a means to optimize patient care. They enable hospitals and health systems to realize their mission, and physicians to fulfill their calling. Successful CINs have compelling visions of delivery system transformation and magnetic leaders to convey that vision.

They have physician leadership with professional management. In a successful CIN, truly collaborative culture is developed and cultivated over time. The organization makes a conscious effort to recruit and cultivate true physician leaders.

They embody organizational commitment. The program’s sponsors view the CIN as a pillar of their overall corporate strategy, and they have committed sufficient financial and human resources to ensuring the CIN’s success.

Successful CINs also project a dynamic mindset. Successful programs evolve over time. They set their physician members up for success (by providing them with the resources to continuously improve their performance), but continuously raise the bar in terms of the baseline target performance that must be achieved to realize incentive payment. As the bar rises, potential financial incentives tend to grow until the program reaches maturity (a majority of payer/employer contracts are held by the CIN).

hfm: What would you say to hospitals in rural markets that are considering a CIN because they lack sufficient financial resources to employ physicians?

Redding: Hospitals in rural, suburban, and urban markets are pursuing clinical integration because they cannot afford to employ all of the physicians that they would need to serve their patient populations. What hospitals in this situation need to be aware of, regardless of their location, is that although clinical integration holds to potential for a healthcare organization to align with a broader cross-section of its medical staff at a lesser cost than widespread employment, clinical integration is not an inexpensive undertaking. Many hospitals whose financial constraints lead them to select a clinical integration strategy over an employment strategy encounter sticker shock when they get to finalizing the network’s annual operating budget. Sticker shock has a tendency to lead to the evolution of multihospital/multimedical staff CINs when the catalyst organization looks to recruit partners to increase the breadth of the network and defer some of the ongoing expenses. I refer to this as evolving into a virtual health system or health network.

John Redding, MD, MBA, PCMH CCE, is manager, physician-hospital alignment, Blue Consulting Services, Chicago.

For more information, see John Redding's "Achieving Clinical Integration", hfm, November, 2013 

Publication Date: Friday, November 01, 2013

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