David L. Potash

Under a new integrated approach to clinical management, hospitals' finance managers participate with clinicians in a team-based approach to ensure the organization delivers high-quality, cost-effective care.

At a Glance   

  • Hospitals should move from the traditional siloed approach to managing the clinical side of the enterprise, where finance leaders and clinicians play distinctly different roles without coordination, to an integrated approach that assembles a multidisciplinary team to focus coordinated attention on identifying and pursuing opportunities for clinical process improvement.
  • Senior executives should lead this top-down effort to establish goals and set priorities for action, using an integrated, high-level reporting dashboard that shows overall performance in terms of quality, efficiency, and patient experience.  
  • Implementing integrated clinical management requires a clear, consistent communications plan and messaging for physicians and managers to show why it is increasingly necessary for both hospitals and physicians.  

In most industries, successful finance executives rely on a combination of quantitative skills, abstract reasoning, and clear communications. Along with other members of the executive team, they develop and implement processes designed to meet their business goals, using explicit controls to govern how these processes are performed.

Not surprisingly, the challenge is greater for the hospital finance leader. Much of the care delivery process is not under his or her direct control. Clinicians-chiefly physicians-make independent decisions that directly affect costs, outcomes, and employees' work environments. For finance leaders, this situation has typically called for a laissez-faire approach to managing the clinical side of the enterprise, in deference to the clinicians.

Four interrelated trends are making this approach untenable in 2011:

  • Copious literature demonstrates that healthcare delivery in the United States today has a tremendous amount of unwarranted variation in services provided, costs, clinical outcomes, and patient satisfaction.
  • Transparency efforts such as Hospital Compare give the citizenry the ability to talk with at least some knowledge about any given hospital's quality of care and level of patient satisfaction.
  • The costs of delivering care continue to rise steadily, while payments often do not keep pace.
  • The marketplace is rapidly moving toward value-based purchasing (VBP), heightening the need for hospitals to excel in quality, efficiency, and patient satisfaction.

These trends require a new, integrated approach, led by the senior management team, involving collaborative relationships among hospitals and their medical staffs, contracted groups, and employed physicians. Many hospitals are buying up medical practices or entering into arrangements with physicians to form accountable care organizations (ACOs). It is in the context of these developments that hospital leaders must accomplish a parallel task: to achieve fully integrated clinical management.

Clinical Management 1.0

For many hospitals, achieving effective clinical management requires a significant shift from the status quo. On paper, and in the budget, hospitals typically have multiple resources addressing this task. Depending on a hospital's size, individuals may be charged with managing resource utilization, discharge planning, quality outcomes, CMS Core Measures, clinical risk management, patient safety, ongoing professional practice evaluations, credentialing and privileging, and medical staff communications.

The ability of these people to perform optimally depends on two critical factors. First and foremost, the executive team must take the lead in consistently communicating the importance of clinical quality, efficiency, and service excellence. And second, the individuals expected to carry out improvement efforts must receive the support they need to act as a true clinical management team.

Yet under traditional clinical management approaches, these two factors are all too often lacking. Managers are kept busy putting out small fires or
performing isolated tasks. Little or no time or data are available for identifying real opportunities to address the big picture. Reporting quality data is seen as a headache or just another task to perform, not as a useful guide for focusing day-to-day management.

To understand the extent of change required to achieve truly effective clinical management, one needs to recognize the limitations of the approach that is impeding the success of far too many hospitals.

Traditional clinical management has several distinguishing attributes. For one, individual accountabilities and organizational structure encourage a "siloed" effort. In a traditional siloed organization, management roles are separate by function, with separate data reporting, inefficient targeting of patients, and fractured physician communications.

Moreover, data support for the different clinical management functions also is siloed, as different IT systems support different individuals. Nowhere is it possible to view data that display performance across the domains of quality, efficiency, finance, and patient experience. Much of the managers' time that could be directed at improvement is spent finding and manipulating data.

Again, these siloed activities cause communications with physicians to be fragmented. Physicians not only must deal with daily calls and face-to-face encounters, but also are confronted, seemingly at random, with periodic reports on isolated aspects of physician and hospital performance. If physicians are not adequately prepared for such reporting, with clear explanations of its purpose, they are likely to become skeptical and concerned about "economic credentialing."

Lack of support from senior management is a significant limitation of historical clinical management. The assumption is that nurses are somehow managing physician behavior, and that nonclinical management is not qualified to assume this responsibility. Physicians are not encouraged or expected to participate in meaningful management of clinical processes. And when reports that include benchmarking are used, the implicit message is that a physician should be satisfied to be at the mean or better of the performance scale, despite the potential for a higher level of performance.

The 2.0 Solution: Integrated Clinical Management

Clinical management today requires accountability, integration, and a coordinated focus on improvement. Managers and clinicians should be able to use common data and strategies to improve quality, efficiency, and the patient experience of care. To this end, this new solution requires the formation of an integrated clinical management team, composed of representatives from finance, process improvement, quality managers, case management, nursing, coding, information technology, and medical leadership. In addition, department managers (e.g., from pharmacy, the OR, and laboratory) should be pulled in for specific initiatives.

This team should meet at least once a week, to focus day-to-day efforts collectively on pursuing known opportunities for improvement and identifying new opportunities. The team members should work together to establish shared success metrics and targets, such as improving knee replacement cost by implementing efficiencies and decreasing complications, while raising these patients' Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) performance ratings in physician and nursing communications, as well as overall hospital rating.

The team also should develop clearly defined clinical management initiatives, present them prospectively to executive management, and routinely review step-by-step progress of approved in initiatives. Such initiatives can be directed at particular clinical categories of patients (such as patients with pneumonia or undergoing surgery for obesity), at individual physicians, or at use of certain hospital services or supplies.

The most critical success factor for the integrated clinical management team is to have integrated clinical data reporting to ensure everybody is looking at the same information. Individuals will apply their own areas of expertise to interpreting the data, but as a group, the team will recognize clusters of opportunities. Under a siloed approach, one manager might be aware that a surgeon is frequently late to the OR, while another might be aware that the physician receives low HCAHPS scores, and yet another sees the physician's costs of care are well over the benchmark. In fact, all of these perceptions can be incorporated as a cluster into a broad, physician-centered intervention.

The benefit of these clusters is that a single directed "fix" can produce improvements across several domains. For example, reducing complications can raise quality scores, lower costs, and improve patient satisfaction. Similarly, expediting direct admissions can enable treatment to be administered more rapidly, resulting in lower utilization costs, fewer complications, and increased patient satisfaction and scores on CMS Core Measures.

A number of solutions are available in the marketplace to address this data need. Such a tool should use recent data to provide hospitals with a complete picture of financial, operational, satisfaction, and quality performance by facility, department, clinical category, physician, and physician group. The tool should facilitate monitoring and managing of the continuum of care, including tracking of Agency for Healthcare Research and Quality measures, healthcare-acquired conditions, and multiple readmissions.

The integrated clinical management team's efforts also should be patient-centered, taking into consideration the holistic needs and perceptions of each patient. Although each team member has a functional responsibility, all managers and caregivers share a responsibility to create the best possible patient outcomes and experience.

Physician involvement is required for analyzing data variations to identify potential opportunities. A collegial approach to discussing variances with physicians, soliciting their input, is best (e.g., "Your average cost for knee replacement cases is $3,000 more than the other orthopedists in the hospital. What are some possible reasons for that difference?"). It is also best to provide a physician with the information on his or her variance prior to any meeting discussing the variance to give the physician time to review patient data and give an informed response without being put on the spot.

The team should analyze physicians' responses to such queries and follow up with detailed objective quantitative data to support or refute. Department chiefs, peer review, or medical staff committees can be consulted to help involve physicians more formally in this process.

The key is not to assign blame or "bad marks" to a physician. Rather, the shared goal should be to understand what causes variances and what can be done to decrease them.

Opportunities will always exist. Targets and benchmarks should aim for the results of best practices, not normative means. Determining the "right" benchmark should not be limited strictly to defined peer comparisons, but to applying benchmarks that most effectively uncover opportunities. For example, telling a physician that he or she is at the benchmark mean for length of stay gives the implicit message that mediocrity is the goal. On the other hand, comparing that physician with the best 10th percentile of physicians sends the message that an opportunity needs to be pursued.

Getting Started

In addition to initiating the integrated clinical management team, senior executives should lead a top-down effort to establish goals and set priorities for action. To this end, they need an integrated, high-level reporting dashboard that shows overall performance in terms of quality, efficiency, and patient experience. This single-page report should present the aggregate metrics, and display and quantify specific potential opportunities in rank order. The report should clearly depict higher-than-expected costs, Medicare losses, and lower-than-expected quality scores and patient satisfaction results by physician, physician group, and clinical category.

Meanwhile, routine operations meetings should include the team leadership, and should review current metrics and the progress of current

The message also should be reinforced to both staff members and physicians that, more than ever, "every case counts." Under the new Hospital Inpatient Value-Based Purchasing (VBP) program rule issued by the Centers for Medicare & Medicaid Services (CMS), from the time the program gets under way (as early as Oct. 1, 2012), there will be an annual withhold amount rising to 2 percent of inpatient Medicare revenue by 2017. How much of this withhold is returned to a hospital will depend initially on the hospital's performance on clinical process of care measures required by CMS (70 percent) and on responses to the CMS-administered HCAHPS survey (30 percent). Because national competition on many of these measures is so great, poor performance on a single case could result in a loss of several thousands of dollars not returned. For this reason, hospitals should expect to see reports that identify opportunities by quantity of failures, not simply by score.

Exhibit 1


For example, a hospital with a score of 92 percent for 100 cases involving patients with acute myocardial infarction (AMI) in the clinical measure AMI-7A (Fibrinolytic therapy received within 30 minutes of hospital arrival) might believe that it is performing well. In reality, because other hospitals are performing much better overall, the hospital's eight failures will cause it to lose thousands of dollars per case.

Integrated clinical management requires integrated data reporting and analysis tools. Fully integrated reporting is characterized by:

  • Inclusion of metrics across resource utilization, quality processes, quality outcomes, financial performance, and patient experience on the same reports
  • Use of readily available, existing data that are submitted using simple queries
  • Reporting across a range of clinical categories, physicians, physician groups, geographic units, and service lines
  •  Ability to drill-down to clinical detail by line-item service level
  • Access to individual patient reports showing every line-item service provided, organized by department, with chronological day of service attached
  • Exceptional ease of use, with intuitive navigation for direct data access for all team members
  • Flexibility to allow use of different benchmarks for different reporting and analysis needs
  • Ability to automatically identify, quantify, and display failures and suboptimal performances across all data domains, individually and in clusters (by clinical category and physician)
  • Ability to support Ongoing Professional Practice Evaluation (OPPE) reporting

Bringing Physicians on Board

Implementing integrated clinical management requires a clear, consistent communications plan and messaging for physicians and managers to show why it is increasingly necessary for both hospitals and physicians. The communication plan should stress that transparency, cost control, and VBP are increasingly strong forces, and that, although they are more pressing for hospitals than for physicians today, they are also being brought to bear on physician performance. Furthermore, the rate of change for physicians will be more rapid (from voluntary reporting to required reporting to pay for performance). The integrated clinical management team should be positioned as a resource to help physicians perform as well as possible under the new rules.

It should also be stressed that opportunities determined by failures and high variances are more important than overall scores or meeting an average benchmark, that every case counts more now, and that improvements are always possible.

The integrated clinical management team should understand that the reports are only the beginning for achieving improvements. Everyone should understand that raw data reports do not directly indicate quality or efficiency, nor do they represent "report cards." They are simply pointers to potential opportunities. Detailed analysis is required to move from "days and dollars" reports to the clinical factors producing those results. This analysis should look at actual ordering patterns and timing of care, as well as hospital processes of care. Teaching cases should be readily identifiable from clinical drill-down, to help communicate ways different behaviors in the future will produce different results. Physicians are likely to enjoy discussing clinical questions, because that is where their strengths and interests lie.

Exhibit 2


It is important to remember, too, that opportunities will always consist of some factors that the physician controls and some factors the hospital controls. Every time the physician writes an order, he or she controls what the patient receives. How that order is implemented is controlled by the hospital, and involves staffing, processes, and supply costs. Both sets of factors should be included in the analysis. Even if a physician's name is at the top of a report, it should be clear looking at the report that the physician did not have full control over the reported numbers.

One area in which physician involvement is required is in standardizing high-cost medical devices, such as joint prostheses or pacemakers. Allowing each staff physician to demand a specific make and model leads to a costly free-for-all. Physician involvement in narrowing choices should be based on their collective clinical evaluation of quality; cost considerations should come in when there is no scientific evidence that higher cost produces higher quality. Emphasizing quality as the primary driver will help to achieve agreement. With the recent history of device failures and reoperations, physicians have needs that are aligned with the hospital, and should understand why their expertise is required.

As a final note, one of the best tools for integrated clinical management, the Ongoing Professional Performance Evaluation (OPPE), is already required by The Joint Commission. By organizing physician-specific performance metrics across six core competencies, physicians receive broad feedback with highlighted areas of opportunity. Hospitals that treat OPPE simply as a reporting challenge are missing the opportunity to look at a physician's or group's performance across the domains of quality, efficiency, and patient experience. The OPPE process can provide a basis for identifying, prioritizing, and communicating potential areas for improvement. Physicians will be pleased to see that the clinical management team not only understands the limitations of the data, but also supplements the data with analysis and physician involvement.

A Foundation for New Best Practices

Changing economic pressures on hospitals, along with developing partnership needs, are driving an evolution in their relationships with their medical staffs to adopt a new, integrated approach to clinical management. Although best practices in integrated clinical management are yet to be seen, hospitals should lay the groundwork today.

Optimal integrated clinical management should be patient-centered, and include the physicians in analysis and corrective action planning. Using this approach, hospital processes and day-to-day communications can be designed to produce the optimal outcomes and high levels of satisfaction-among patients and clinicians, alike-that are everyone's goal.

David L. Potash, MD, MBA, is senior vice president and medical director, Press Ganey Associates, Inc., South Bend, Ind. (dpotash@pressganey.com).


Publication Date: Monday, October 03, 2011

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