Transforming the care delivery model across the continuum is a prerequisite to success under value-based payment systems. 

At a Glance

Transforming the care model is a necessary first step to succeeding under value-based payment models where payment is linked to outcomes. To maintain acceptable margins while improving quality of care and reducing costs, healthcare executives should develop strategies for:

  • Managing care across the continuum
  • Reducing readmissions for all diagnoses
  • Building and supporting the patient-centered medical home model
  • Achieving clinical integration  

Across the country, hospitals and health systems are preparing for the shift to fee-for-value payment models in a variety of ways. Many are putting a portion of revenue at risk through risk-sharing arrangements, such as bundled payments or participation in the Medicare Shared Savings Program, or are at least considering such arrangements.

To accomplish this move to new payment structures, organizations clearly must address many operational issues, including the need for enhanced IT capabilities and strategic contract management. Yet these types of operational changes are not sufficient in and of themselves. Organizations cannot expect to prosper under the new value-based payment model if they do not first address and transform four key aspects of the care model. 

Manage Care Across the Continuum

The pressure to reduce costs and improve quality in a system where payment is tied to value requires a new approach to the care delivery model. 

The traditional hospital-centric care model—organized around high volume, with most of the revenue on the inpatient side—delivers care that is typically more fragmented, driven by individual practitioners.

In contrast, the new model shifts care increasingly to outpatient settings, requiring a high degree of alignment across the continuum. Team-based, integrated care that makes optimal use of nonphysician caregivers is essential, both to increase capacity and to deliver better outcomes. 

To create this system of highly coordinated care, many systems are optimizing and expanding the role of case managers to extend across the care continuum. These new continuum case managers play a central role in supporting patient-centric care. There are several key strategies for success in this effort.

Focus on patients who are “disconnected”—who previously received siloed care at various points along the continuum—and on patients with chronic or complex conditions. These are the patients most at risk for uncoordinated care, duplicative tests and procedures, and overuse of resources. Coordinating these patients’ care across the continuum can reap rewards for both the patients and the system.

Pay attention to high-risk indicators. Patients who have had multiple emergency department (ED) visits in a single month and patients in targeted populations (such as those with diabetes) who have a high severity of illness are especially at risk for uncoordinated and unnecessarily expensive care.

Review clinical treatment barriers and socioeconomic factors. Barriers to coordinated care are not always clinical in nature. Socioeconomic factors can play a large role, influencing patients’ ability to follow treatment plans in ways that increase the risk of readmission. Some patients may need financial support to purchase prescriptions; others may require transportation to their primary care provider’s offices or language interpretation of care instructions. The continuum case manager should identify all relevant barriers. 

Develop a care coordination plan. The plan should be a guide to proactively manage care, ensuring that patients are connected to the right resources in the most appropriate settings across the continuum. Ideally, under this plan, the continuum case manager will work closely with setting-based case managers and coordinate care with a patient-centered medical home (PCMH) team, when available. 

Transition management is another key area of focus. To ensure that transitions from one care setting to another are coordinated and seamless, the continuum case manager should work closely with a transition coach or navigator, if available. 

Rather than focusing only on the immediate next setting, transition management should plan for all the care required to return the patient to his or her baseline or to a newly established baseline. Consistently achieving this outcome requires enlarging the traditional scope and perspective of transition planning—which has typically focused only on setting-specific discharge plans—to a continuum-wide transition management focus. 



Reduce Readmissions for All Diagnoses

Readmissions—and the costs they impose on the health care system nationally—have been a focus of concern throughout the move toward healthcare reform. 

In its 2007 report to Congress, the Medicare Payment Advisory Commission (MedPAC) estimated that up to 76 percent of readmissions might be preventable. To address this problem, the Affordable Care Act imposes Medicare reimbursement penalties for hospitals with high 30-day readmission rates for three diagnoses: heart failure, acute myocardial infarction, and pneumonia. 

The goal of the reimbursement provision is to improve care and reduce costs, recognizing that under the fee-for-service model, the generally positive revenue impact of readmissions may be a disincentive to change.

The reimbursement penalties—which began at 1 percent and rose to 3 percent in 2014—are already having an impact. More than 2,000 hospitals were penalized for higher-than-expected readmissions in the first year. Through 2019, the provision could reduce Medicare costs by $8.2 billion, according to the Centers for Medicare & Medicaid Services (CMS).

Given that the focus on readmissions will likely expand, hospital and health system leaders face a series of strategic and tactical questions. To stay ahead of the curve, a comprehensive approach is the best path forward. 

Focus on readmissions for all diagnoses, not just the three currently identified. CMS will certainly add diagnoses over time, and taking a broad approach will better prepare hospitals for what’s coming. 

That doesn’t mean hospitals have to address all diagnoses at once. Managing readmissions is a complex process that can’t be turned on overnight. Therefore, it makes sense to start with a smaller set, focusing first on diagnoses where a hospital is incurring financial penalties and then expanding to other conditions with a high rate of potentially avoidable readmissions. 

Plan for and manage expectations about revenue impacts. Reducing readmissions for all diagnoses is likely to have a short-term negative impact on revenues. That impact has to be taken into account during the planning process—and balanced against the knowledge that improving care and reducing costs is ultimately the best mid- and long-term strategy for prospering in the new healthcare environment. 

Look beyond discharge and transition issues for root causes. Higher-than-expected readmissions are often the result of fragmented care marked by inadequate coordination and communication among care teams. Systems with a high degree of clinical integration are well on their way to addressing and resolving these issues, giving them significant advantages in reducing preventable readmissions. 

Once a hospital or health system sets its strategy regarding readmissions, the questions become tactical. The organization should create systems to identify patients at higher risk of readmission. For each patient, the organization should identify possible risk factors (e.g., inadequate post-acute care team coordination, poor patient compliance, and language, financial, cultural, or other barriers). 

When a patient’s specific risk factors are known, a readmission avoidance plan can be completed. Hospitals that have succeeded in reducing readmissions typically assign someone in the role of care transition coach. That person, usually a nurse with case management experience, is charged with coordinating and executing the plan.

Some key steps to success include the following:

  • Screen the patient throughout the care continuum to assess and mitigate readmission risks.
  • Ensure that the entire care team is on board, including primary care physicians, home health organizations, and skilled and long-term nursing facilities, as appropriate.
  • Engage with the patient and his or her family to be certain they understand the patient’s diagnosis, the care delivered, and the follow-up care needed.
  • Provide complete and easy-to-understand discharge instructions in writing. 
  • Send a discharge summary immediately to all post-acute care providers.
  • Arrange the first follow-up appointment needed.
  • Conduct follow-up calls or an in-person follow-up visit as appropriate.

It also is important to recognize that not all readmissions are preventable, and some preventable readmissions are due to factors beyond the hospital’s control. Rather than serve as an excuse, these factors put an even higher premium on reducing preventable readmissions that can be influenced by a focused, strategic approach.

Build and Support the PCMH Model to Improve Quality

Typically, patients with complex conditions use more resources across the continuum of care. More providers and caregivers are involved, creating more opportunities for disconnection and unnecessary expense. 

The PCMH model is a way to optimize health management for this targeted population, especially patients with complex needs, and to engage patients in managing their own health. The medical home’s focus on coordinating care makes it an essential part of managing across the care continuum.

The multidisciplinary team involved in a PCMH should include participants such as a health coach, primary care physicians, specialty physicians as appropriate, nurses, nurse practitioners, physician assistants, medical assistants, pharmacists, and case managers. 

The team’s focus should extend to all nonacute settings, including skilled nursing facilities and home care. For that reason, partnerships with community resources are essential. The medical home model also emphasizes ease of access, including after-hours care, making innovative technologies such as telemedicine important, along with email and standard telephone access. 

Focusing in four key areas can help organizations optimize the PCMH model.

Health planning. The creation of a customized health plan ensures that care is coordinated and helps engage patients. Usually, a health coach is assigned to work with patients in developing the plan. The health coach assesses specific health risks and develops a customized plan, including chronic care as well as wellness monitoring and interventions that are age/gender-appropriate (for example, mammograms and immunizations). Health assessment tools are important in this stage for patient engagement and to identify modifiable health risks.

Health management. Once the plan is in place, the PCMH team closely monitors health status, including any hospitalizations and ED visits, and tracks health goals.

Evidence-based chronic care programs and guidelines for specific diseases, such as diabetes, serve as roadmaps for patients and the care team.

Benefit designs that promote self-care (such as office visits with no copayments) are also important enablers for effective health management, as are rewards for healthy activities, such as participating in smoking cessation programs. Family support, electronic medical records, and social media also can support self-care and education.

Daily team huddles. Interdisciplinary meetings should be conducted on a daily basis, focusing on planning for patients with upcoming clinic appointments as well as care coordination needs for patients who have been seen in the ED or the hospital within last the 24 hours. A daily meeting promotes effective communication among team members and can be a key contributor in organizational efforts to improve quality and reduce costs. 

Population health management. Using the PCMH approach, patients can be assigned to various populations, based on their condition or diagnosis. The model then works to optimize health outcomes for each population. 

An important population health management strategy is to identify and flag high-risk patients, such as diabetics with A1c blood glucose control level greater than 10 percent, for targeted interventions. Another strategy involves contacting patients who are overdue for care (for example, reminding chronic obstructive pulmonary disease patients to receive flu shots due to their heightened risk of becoming seriously ill from the flu). 

Ultimately, successful management of patient populations hinges on three key elements: the central role of primary care physicians, patient involvement and personal responsibility, and expanded care coordination focused on wellness as well as disease and chronic care management. 

Focus on Clinical Integration Across the Continuum

True clinical integration aligns incentives and governance structures across previously independent physicians. Becoming clinically integrated is essential to delivering high-quality, affordable care and achieving success in the post-reform environment.

Many organizations are well under way in their journey toward clinical integration. Others are moving more cautiously, depending on their organization and their market. No matter how far an organization has progressed, its strategy should incorporate two fundamentals.

A systemwide approach to standards. Caring for patients in a clinically integrated way requires evidence-based standards of care that span the multiple settings where care is delivered for any given condition.

For example, the University of Kansas Hospital in Kansas City, Kan., has established a pathway for total joint replacement that spans the continuum. The pathway addresses preoperative testing and education in the clinic; the care delivered in the hospital, including an expected length of stay; and post-discharge follow-up care. 

Developing standards that cover the patient journey from start to finish obviously requires coordination and buy-in at many points along the pathway. Many organizations have found that moving to service-line leadership structures, rather than setting-specific leadership, facilitates the process of creating single standards of care. In addition, a systemwide clinical governance structure with the authority to approve and enforce the standard of care across the health system is essential. 

Continuum-based clinical governance structures. Clinical integration is the backbone of new care delivery models. To make clinical integration work, hospitals and health systems must consider a wide range of governance issues, including the extent to which governance is centralized and where governance for quality issues should reside.

New systemwide committee structures will be required, along with changes to existing provider-specific codes of conduct such as charters and bylaws. The new systemwide committee structures should include physician leadership from each provider within the system, and the committees should have the authority to approve the system standard of care, as well as metrics to hold physicians accountable for their performance.

Moving Beyond the Hospital Walls

Managing across the entire care continuum is a key step in the move toward improved quality and reduced costs. It’s also a challenge, because the new payment models do not yet fully reward many of the care activities that fall outside the hospital walls. 

Boston Medical Center is one of many organizations that is moving with care and diligence into this new territory. “Clinical integration isn’t simply about whether orthopedics talks to primary care,” says Kate Walsh, Boston Medical Center’s president and CEO. Indeed, managing care along the full continuum requires a range of community partnerships and services that help people stay healthy, such as behavioral health services, as well as programs that address root causes of illness. 

Yet at this point during the transition, many or most of those services do not generate revenue for hospitals. “That’s where we have to do our work,” Walsh says. “There has to be a way to do this.”

Although national in scope, the shift from volume to value varies from market to market. Some organizations are moving faster than others. Many of those taking the lead are faced with investing in care activities that are not supported by current payment models. 

Managing this transition is one of the largest challenges healthcare organizations face. But the effort is worth it. As the healthcare market continues to evolve, the ability to deliver high-quality, affordable care across the full continuum will be crucial to ongoing success.  

Laura Jacquin is a managing director, Huron Healthcare, Chicago.

Publication Date: Tuesday, April 01, 2014

Login Required

If you are an existing member, please log in below. Username and password are required.



Forgot User Name?
Forgot Password?

If you are not an HFMA member and would like to access portions of our content for 30 days, please fill out the following.

First Name:

Last Name:


   Become an HFMA member instead