One Health System’s Approach to Turning a $22M Loss to a $35M Gain

Tackling Reimbursement Challenges

At Cape Cod Healthcare (CCHC), we grapple with the same complicated environment as other hospitals and health systems. Cost, quality, safety and service drive our strategic decision-making, with an added twist. Cape Cod’s population is no longer growing; it is aging rapidly and declining economically. We face a significant payer mix challenge in the coming years as more of our patients rely on public payers, such as Medicare and Medicaid. We estimate that our reimbursement rates could shrink by as much as $400 million over the next decade, so we must rethink and reconfigure operating cost structures and care delivery systems to ensure our future survival.

Turning Crisis into Opportunity

Our enterprise intelligence solution already has helped us build a strong foundation for change. We implemented the technology in 2008 when our health system was in the grips of a severe financial crisis. The solution provided a central repository where we could analyze disparate data to identify and correct inefficiencies and restore fiscal stability.

CCHC’s Resource Center was created in 2008 as a strategic analytic resource to the CEO and the leadership team. The group utilized McKesson analytics software to develop accurate, detailed and actionable data that was integral to the development of new and effective strategies. These strategies included expense control, volume and market growth, attainment of more favorable reimbursement rates and improved relations with physicians. Since 2009, Cape Cod Healthcare turned a $22 million operating loss into a $35 million gain by 2012.

With our financial health and clinical operations now thriving, our attention is increasingly centered on the ever-changing healthcare landscape. Analytics are instrumental in providing us with a single source of truth to help us effectively manage the transition from activity-based reimbursement to a new model that rewards healthcare providers for quality outcomes and cost effectiveness.

Forging Strategic Partnerships

Strong physician-hospital relationships are critical to success. As part of our corporate long-range strategic plan, CCHC has developed a vision of One Cape, which includes a visionary clinical integration strategy with our physician-hospital organization (PHO). Rather than a merger or takeover, One Cape is a strategic partnership that builds a foundation for value-based care delivery and payment models, while ensuring access to essential healthcare services for all residents.

Clinical integration with regional providers, through our PHO, is a foundational element of this strategy. A clinical affiliation recently was signed with the highly regarded Brigham and Women’s Hospital in Boston, which will provide better access to tertiary care and clinical bench strength

We fuel our One Cape strategy with analytics. Sharing meaningful data with physicians makes them partners in the process and opens up conversations. Here are some examples:

Scorecards for Enterprise and Strategic Reporting – We’ve used our analytics technology to create scorecards to monitor inpatient and outpatient business. The outpatient scorecards capture patient utilization, patient origin, patient demographics and provider referrals for our five ambulatory centers. The inpatient scorecards capture and report acuity, cost, margin and Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey data.

We’ve created similar scorecards to monitor, assess and improve performance among hospitalists and the hospitalist program. The scorecards measure key performance indicators such as patient satisfaction, cost, productivity and coding intensity. Scorecards make the process transparent for physicians and operations.

Peer-to-Peer Benchmarking – Currently, we are developing procedures to measure surgical practitioner variation and streamline OR cards/pick lists to reduce supply costs. Data is collected on core measures, cost, case mix, length of stay and other metrics.

The data is blinded and shared with surgeons so they can compare themselves with their peers. Developing these procedure-based benchmark measures for physicians provides valuable incentives, drives dialogue, influences behavior change and removes the silos that impede shared decision-making.

Reducing Hospital Readmissions

Analytics facilitate our Transitional Care Program goal to reduce patient readmissions. A nightly report that identifies high-risk patients discharged to home or to a skilled nursing facility is sent to our PHO’s Director of Clinical Operations. The Resource Center team provides meaningful, real-time reporting for the PHO to facilitate care coordination, including scheduling a PCP visit within 48 hours as well as a pharmacist visit as appropriate.

Seamless transition from hospital to home or hospital to skilled nursing facility lowers readmissions and increases patient satisfaction. Currently, the program covers Medicare patients, but we plan to expand it to our commercially insured patients as well. Our analytics software is part of the infrastructure necessary for robust population health management in the future.

Reaching Beyond Our Core Mission

Healthcare reform is forcing providers to move beyond their core mission and reach outside their hospital walls. From strategic partnerships to population health management, organizations must find meaningful ways to keep costs in check, yield better performance and generate superior outcomes.

With nearly 70% of our patient population insured by federal and state payers, CCHC is further challenged to drive revenue and patient satisfaction with exceptional service delivered at the lowest possible cost. Our recent acceptance as a Medicare Accountable Care Organization (ACO) will help us meet this goal.

Under the Medicare Shared Savings Program (MSSP), Cape Cod Health Network ACO will deliver proactive management of population health through increased coordination of care. Medicare will require the ACO to meet or exceed set quality standards and to provide care within an established annual budget. If successful, the ACO will share with Medicare any cost savings that result from this coordinated effort.

In the past, the Resource Center’s efforts focused on using actionable data for decision making and to identify business opportunities to improve Cape Cod’s operations. Now, as part of the Strategy, Community and Government Relations division, we provide enterprise intelligence to assist in strategic planning for the future and prepare for the new environment of accountable care and participation in the MSSP.

McKesson’s enterprise intelligence solutions have given us the real, hard data we need to remain viable and proactively tackle the transition to a value-based reimbursement environment. Armed with a deeper understanding of our operations and challenges, we are well positioned to successfully address a future filled with certain change.