Bobbi BrownIn my years as a healthcare finance executive in the state of California, I had the opportunity to participate in several groundbreaking pay-for-performance initiatives. One reason this experience was so positive is that the California payers had collectively determined what they wanted to measure, which meant that the quality measures providers needed to track were consistent regardless of payer.

Measuring quality is rarely so straightforward today, particularly because most payers do not collaborate when establishing metrics. Health systems have to report on Medicare quality measures that determine important incentives and penalties. They also have to juggle the requirements of the host of private payers that have established their own value-based programs, all of which require different metrics.

Being paid for value is an exciting development, and the opportunities to benefit from value-based purchasing contracts are greater than ever before. But it can also seem complex and intimidating. It doesn't have to be—and it won’t be if organizations prepare systematically.

The process of preparing for value-based purchasing should begin with a critical first step: Assess your current performance. There are three additional steps that are also critical: Organizations should implement education programs, develop a healthcare analytics strategy, and identify areas for clinical quality and cost improvement. But as the all-important first step, assessing current performance warrants special attention.

Simply put, the first element of a successful value-based purchasing strategy is to understand where you stand now. This effort has three facets.

Ask important questions about performance. Key questions to ask about both past and current performance include the following:

  • Have you had quality-improvement strategies in the past? What were the results? If the initiative was less successful than you had hoped, can you pinpoint why?
  • How do you compare to peers and national benchmarks?
  • What are your top three areas for clinical and financial improvement?

The key to answering these questions accurately is data. It is difficult to measure performance if you don’t have an analytics strategy in place for doing so. Every organization does have an analytics strategy—even if that strategy doesn’t yet involve a sophisticated analytics infrastructure. The strategy may simply involve spreadsheets and nurses performing chart abstractions to pull relevant clinical data. Of course, such a system is not scalable in an environment where multiple payers are requiring more sophisticated quality reporting. Nonetheless, organizations should work with what they have to get the information they need—even as they work to develop strategies on how to streamline their analytics efforts.

Understand the quality measures that affect you most. Determining which processes present the greatest opportunities for clinical and financial improvement is an important early step in any value-based purchasing initiative. If you already have a sophisticated analytics infrastructure in place that combines clinical and financial data, you can identify areas of greatest cost and quality variation using the data.

Even if your analytics system is less developed, you’re likely aware of areas where you’ve failed to meet performance benchmarks used by the Centers for Medicare & Medicaid Services (CMS) and other payers. But you also need to look to the future to the measures is planning to implement soon. For example, in 2015, CMS will begin assessing a Medicare performance payment penalty for hospital-acquired conditions (HACs). Some of these HACs—such as central line-associated bloodstream infections (CLABSIs) and catheter-associated urinary tract infections (CAUTIs)—are already included under CMS’s Hospital Inpatient Quality Reporting (IQR) requirements and value-based purchasing. Failure to focus on such measures therefore equates to twice the penalty.

Obviously, very few, if any, hospitals have the resources in place to address every measure perfectly. Hiring 100 nurses to reach 100 percent compliance might be desirable, but that probably isn’t fiscally feasible. Instead, a cost-benefit analysis would be in order. Organizations also can benefit from modeling the potential drop or increase in revenue by year and by payer for the various value-based programs to identify which programs and measures should receive the greatest attention. Then, as the organization becomes more sophisticated with value-based purchasing, it can take on more and more measures successfully.

Collaborate with clinicians to understand measures. Understanding each of the clinical measures isn’t always intuitive for a finance executive. I constantly turned to the quality department to find out what each measure really meant and what our past trend had been. I would also talk to clinical experts. They not only can explain unfamiliar clinical terms, but also can share their opinion of where the best opportunities to improve might lie. They also can pinpoint specific measures or aspects of measures that would be difficult to work on—and explain why.

Here is a simple, real-world example of the utility of this kind of conversation. As a finance executive, I might not understand the implications of the following CMS measure for perioperative care: “prophylactic antibiotic received one hour prior to surgical incision.” So I would ask the clinician questions such as the following:

  • From a clinical perspective, why did CMS pick this measure?
  • What’s our score on this measure?
  • In our facility, what is required for us to perform well on this measure? 
  • Would 90 percent of physicians adhere to this standard anyway, or are they doing so because it’s a measure?
  • Is this an area where we need to educate clinicians?

Clearly, a lot of insight can be gained from clinician resources—and it doesn’t require technical skills or an analytics infrastructure. These conversations also present the opportunity to ask clinical teams if they need support from a financial analyst. Assigning a financial analyst to help clinical teams assess how their clinical performance translates to financial outcomes in the value-based purchasing environment is an effective collaborative strategy.


Bobbi Brown is vice president of financial engagement for Health Catalyst, LLC, Salt Lake City.

Publication Date: Wednesday, April 30, 2014