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John N. Fink

Focused factories, which concentrate on providing bundles of care related to specific conditions within a service line, will enable healthcare organizations to provide enhanced quality of care at lower cost-and better position these organizations to compete under value-based business models. Following are the top five advantages of a focused factory under payment reform.

Advantage No. 1: Enhanced ability to accept bundled payments. In 2009, the Centers for Medicare & Medicaid Services (CMS) began its Acute Care Episode Demonstration, which focuses on select cardiovascular and orthopedic conditions. By 2013, CMS will implement a national pilot program on payment bundling for acute, inpatient hospital services, physician services, and postacute services for an episode of care that begins 3 days prior to a hospitalization and spans 30 days post-discharge. In the private sector, bundled payment initiatives are active across the country. Participation in a pilot program can establish a hospital as the preferred provider in its service area by demonstrating its ability to integrate providers, manage the care of Medicare beneficiaries or members of sponsoring health plans, and track and report cost and quality performance metrics relative to benchmarks. Success in bundled payment demonstrations and pilots could position a hospital to gain a significant market share as Medicare and commercial payers provide incentives to patients to use the hospital for their specific conditions.

Advantage No. 2: Reduced readmissions. Beginning in 2013, hospitals with high readmission rates will experience decreased Medicare payments for all Medicare discharges. According to a study published in The New England Journal of Medicine, nearly 20 percent of the Medicare fee-for-service beneficiaries who had been discharged from a hospital were rehospitalized within 30 days, and 34 percent were rehospitalized within 90 days. Furthermore, half of all the patients who were rehospitalized within 30 days did not have a physician visit between the time of discharge and rehospitalization. The case management and coordinated care that accompanies a properly designed focused factory includes effective discharge planning and follow-up care.

Advantage No. 3: Reduced incidence of hospital-acquired conditions (HACs). On Oct.1, 2008, CMS stopped paying hospitals for the treatment of specific preventable adverse conditions that were not present upon the admission of the patient. PPACA expands the current restrictions for HACs. Beginning in 2015, hospitals that are in the highest quartile for certain preventable HACs will receive only 99 percent of the reimbursement that they would have otherwise received for all inpatient discharges. Focused factories can more successfully avoid HACs because clinical personnel are trained specifically for the types of patients seen in the focused factory and are able to use their experience to reduce the likelihood of HACs.

Advantage No. 4: Ensuring adherence to evidence-based measures (EBMs). Defining the processes that promote EBMs, report on quality and cost measures, and coordinate care is a proposed legislative requirement for an accountable care organization. The organizational structure of a focused factory, especially one that is managed by a physician-owned management company, supports the promotion of EBMs and corrective actions for variances from EBMs and inferior quality outcomes.

Advantage No. 5: Enhanced payment resulting from improved outcomes. Payment reform will reward providers that deliver care that achieves the six aims for improvement proposed by the Committee on Quality of Health Care in America in Crossing the Quality Chasm-A New Health System for the 21st Century: Health care that is safe, effective, patient-centered, timely, efficient, and equitable. Focused factories are better equipped to ensure consistent application of care protocols, focus care on the specific needs of the patient, provide care efficiently, and promote the physician leadership that is necessary to achieve these aims.

For more information, see John Fink's "Focused Factories: Meeting the Challenges of Payment Reform," hfm, January 2012.


Publication Date: Monday, January 02, 2012

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