Browse by Topic
More than 40,000 members value HFMA's thought leadership and practical strategies. HFMA is where you need to be.
Get acquainted with the
healthcare finance industry's leading professional association. Find out why our
members rely on HFMA as their go-to source for insight and
Members have many
options for helping them advance their careers. Conferences, seminars,
eLearning, certification, and more -- our education and events will keep you
Connect the dots on today's big issues, explore collaborations, get career-boosting tips, and network with colleagues nationwide at the leading finance conference. Save $100 off the full conference rate when you register by May 8.
Real-time presentations with nationally recognized experts, networking opportunities, and industry solutions—no travel required!
Learn about timely healthcare finance topics and earn CPEs. Most live webinars are free for HFMA members and $99 for non-members. View the latest schedule.
If you're a subscriber to any of our three newsletters, you have access to online education. Learn more or subscribe.
Get the perspectives of leading healthcare finance professionals on today's hottest issues.
Information about leading vendors helps your buying decisions.
Forum members can network during live webinars or access a library of past webinars on topics such as bundled payment, charity care, and ICD-10.
An ever-expanding collection of spreadsheets, policies, job
descriptions, checklists, and more that you can adopt and adapt.
Forum members can submit vexing questions to a panel of experts
using our Ask the Expert service.
Your source for employment solutions.
Find new employment opportunities or
reach out to qualified candidates.
Distinguish yourself as a
leader among your peers and advance your career by earning certification in our
healthcare finance programs.
Get an objective third-party evaluation of products and services used in the healthcare finance workplace.
MAP App is a web-based application that helps organizations improve revenue cycle performance based on industry-standard metrics called MAP Keys.
Find suppliers and products in this comprehensive vendor directory for healthcare finance professionals.
Guidance for understanding and communicating about the price of health care.
Transformation toward value-based healthcare is reshaping the delivery of care, patient expectations, and payment structures.
Improve your revenue cycle performance through standard metrics, peer comparison, and successful practices.
In 2007, Kalispell Regional Medical Center (KRMC), Kalispell, Mont., launched a pay-for-performance program with Blue Cross Blue Shield of Montana (BCBSMT). The program promised shared cost savings for the hospital and financial incentives to physicians if certain quality and cost goals were met. Built upon a clinical quality improvement project that was already underway at KRMC, the program was so successful that it helped reduce everything from morbidity rates to variance and resource consumption in the hospital's most strategic clinical services.
KRMC had a history of collaborating with physicians since its 2003 creation of a joint venture hospital--60 percent owned by the hospital, 40 percent owned by physicians. Hospital leaders believe the joint venture has helped create the collaborative hospital-physician culture required to engage the medical staff for this one-year pay-for-performance project.
This is a sample article from HFMA's subscription newsletter, Healthcare Cost Containment, which helps healthcare financial leaders identify and implement strategies for reducing costs and improving efficiency without harming quality.Learn more and subscribe to Healthcare Cost Containment.
Launching the pay-for-performance project took several years of prep work. One sticky point was getting the hospital's and BCBSMT's claims data to match, says Charlie Pearce, KRMC's chief financial and information officer. As KRMC was the first hospital in Montana to implement a true cost accounting system, administrators took pride in their data and were frustrated when it didn't sync with BCBSMT's data, Pearce says. "If you want to take full advantage of a pay-for-performance opportunity with carriers, you have to have better data than the carrier does so you understand what is happening to those patients and can change practice patterns to create more efficient patient care," Pearce says.
"Even though we didn't take on risk in that contract with Blue Cross, we needed to be able to validate their data with our system and define the baseline. That is what seemed to take forever during our negotiations," Pearce says.
In some cases, KRMC and the payer looked at data differences patient by patient. "Some of the differences were because their patients were on an older Medicare Grouper than we were on, which made a difference in how DRGs were assigned," he says. This became less of an issue once BCBSMT converted to a new financial system.
Another thorny issue was defining which type of patient would be counted within the pay-for-performance parameters. KRMC initially thought all Blue Cross patients would be considered. But the payer only wanted to include fully insured, in-state, BCBSMT patients-not those for which Blue Cross was just a third-party administrator. "The box we could put around patients to include in the pay-for-performance program was smaller than we thought, and that took some time to understand," Pearce says.
Under the pay-for-performance project, BCBSMT agreed to reward the hospital if its actual costs fell below anticipated costs. The rewards would be based on five key metrics of cost and quality at KRMC:
At the end of the project, resource consumption and variance were reduced in KRMC's top clinical services, including orthopedics, cardiology, and obstetrics. Morbidity improved 26 percent, and the readmissions rate was more than 10 percent lower than the national average. KRMC was also able to curb its 2007 inflation rate to 2.8 percent, down from 14.3 percent just six years earlier.
The initiative also demonstrated the axiom that improving medical quality conserves resources. KRMC's increased efficiencies, when compared with five other acute care hospitals in Montana, saved employers and patients about $4.6 million per year for five years. The hospital also conserved $1 million in Medicaid costs and $4.8 million in Medicare costs each year for five years.
The BCBSMT resources were conserved by the physicians as shared savings, which translated to more than $44,000 in physician bonuses. Qualifying physicians received checks ranging from $505 to more than $4,000 for their efforts, depending on their specialty group and how much they improved.
Hospital leaders largely credit their efforts at reducing variance for the pay-for-performance project's success. Such positive results are why variance continues to be a main focus of the hospital's efforts to improve quality and reduce costs, Pearce says.
In the process to reduce variance, KRMC works with a consultant to extract data from the uniform hospital discharge data set, measure patient severity and risk-adjust the data, and review mortality and morbidity rates of all clinical services. Charges are used as a surrogate for costs, as well as the number of resources used to care for a patient. The variance data are then presented to each clinical group at KRMC.
Three years worth of data is presented in a four-quadrant graph that plots the differences in charges and length of stay between the most and least efficient physicians. For example, for adult pneumonia, it's not uncommon for a typical hospital to report as much as $40,000 variance per patient case. Different prescribing patterns, such as the use of a more expensive brand-name antibiotic, often account for variances. For heart failure and shock patients, the variance at a typical hospital might be as much as $60,000 per patient.
In addition to improving quality, reducing variance can have a significant impact on the bottom line. This savings can add up, particularly as hospitals move to fixed payment strategies, Pearce says.
After identifying problem areas, physicians at KRMC then implemented best practices to reduce variance. To date, KRMC has had the most success with reducing variance in two DRGs: degenerative nervous system disorders and Cesarean sections without complications or comorbidities.
The problem is that when physicians try to develop clinical pathways "in a vacuum," they tend to focus on the sickest patients, which often drives up utilization and makes variances worse, says William Mohlenbrock, MD, FACS, chairman and CMO at Verras, which assists KRMC with this process. Instead, hospitals should develop clinical pathways that concentrate on a homogenous group of patients, rather than the entire DRG.
Hospitals should create two pathways per DRG: one that addresses less sick patients-those on the variance graphs with acuity index method (AIM) scores of 1, 2, and 3-and another for sicker patients-those shown on the graphs with AIM scores of 4 and 5, Mohlenbrock says.
Under the direction of its new chief medical officer, KRMC plans to step up its efforts to reduce variance within physician practices in specific disease states. Some of the DRGs that KRMC will focus on include:
These represent DRGs at KRMC where either variations have not been reduced, variations have increased, or the outcomes have not improved.
Interviewed for this article:
Charlie Pearce is chief financial and information officer, Kalispell Regional Medical Center, Kalispell, Mont. (email@example.com).
William Mohlenbrock, MD, FACS, is chairman and CMO, Verras, Las Vegas (firstname.lastname@example.org).
This article is based in part on a presentation by Velinda Stevens, president and CEO at KRMC; A. Craig Eddy, MD, JD, CMO at KRMC; and William Mohlenbrock, MD, FACS, chairman and CMO at Verras, at the American College of Health Executives' 2011 Congress on Health Leadership, March 22, 2011, www.ache.org.
How to Talk to Physicians Successfully engaging physicians to reduce variance requires:
Publication Date: Thursday, August 04, 2011
Tom Myers, chief strategy officer, The SSI Group, discusses the shifting payment environment and how it affects providers' patient access and claims management processes.
Jeff Chester, senior vice president and chief revenue officer at Availity, shares his thoughts on "Revenue Cycle 2.0" and how to best meet its challenges.
Mitch Morris, vice chair and global leader, healthcare, Deloitte, and Michael O'Rourke, senior vice president and chief information officer, Catholic Health Initiatives (CHI), share perspectives on the need for transformational IT in health care today.
Brian Kueppers, founder and CEO, Apex, discusses the importance of a robust patient payment strategy in boosting organization revenue and enhancing patient satisfaction.
Brian Grazzini, CFO, HealthPort, describes the importance of efficient and compliant information exchange and audit management in helping HIM staff spend less time on paperwork and more on mission-critical projects.
Cindy Matthews, executive vice president, Community Hospital Corporation, discusses how rural and community hospitals can use collaborative partnering to position for success through tough market conditions.
Rick Heise, senior vice president, revenue cycle, at Cerner Corporation, discusses the importance of integrating clinical and financial data to excel in health care’s changing payment environment.
Russ Graney, founder and CEO for Aidin, and John Laursen, head of business development for Aidin, share insights on how to improve care transitions between acute and post-acute care settings and incentivize high-quality patient outcomes.
Scott Elston, strategic accounts manager, GE Healthcare Services, describes how substantial cost reduction in health care requires rethinking business strategy and asset use.
Robert Williams, MD, director, Deloitte Consulting LLP, and Arielle Freiberger, product strategist, ConvergeHEALTH by Deloitte, explain how sophisticated retrospective, real-time, and predictive data analytics can inform decision making to reduce costs and improve care.
Stuart Hanson, director of business development (healthcare solutions) at Citi Retail Services, discusses how improving the payment experience can benefit consumers and healthcare providers.
HFMA's print, email, online, and mobile opportunities provide you maximum reach and impact. We will work with you to build a plan that meets your needs. Contact a sales rep.
HFMA offers online, email, and print opportunities to help you recruit the most talented healthcare finance professionals. Place your classified ads today.
Drive down costs while improving quality in a reform environment.
Stay informed about new directions in healthcare finance. Share tools and strategies for improving performance. Be an active participant in your profession. Together, we’ll reshape the business and practice of healthcare. Join us.
©2015 Copyright Healthcare Financial Management Association
HFMA.org is best viewed using IE9 or the latest versions of Chrome, Firefox, and Safari.
Join HFMA today and enjoy: