Shifting from fee-for-service to enter into financial risk can be a big step into the unknown. The least complex pay-for-performance arrangements can have an impact on patient, operational and financial outcomes. A risk-bearing organization and its stakeholder hospitals, physician groups and other entities, must come together to become a high-performing team that provides the best quality and financial outcomes. But on a practical level, it’s also about making sure that what you want to happen actually does. Was that test ordered? Were discharge instructions followed? A good governance plan can help provide the answers.
How will you improve patient tracking, care coordination and ensure that treatment plans are carried out?
Governance brings everyone to the table to look at the whole picture of how healthcare is delivered to patients. Healthcare organizations most successful at taking on risk develop governance models that allow them to move beyond the view of their own care settings to effectively manage a fragmented delivery system with a sharp focus on immediate outcomes and costs.
Defining the new rules of the road
Value-based payment models differ from fee-for-service in that there is immediate responsibility for moving patients through the system as efficiently as possible. A good system of governance takes this into consideration as it rethinks everything from job roles and financial guidelines to physician accountability in the risk-bearing organization. The governing body sets a tone of rigorous oversight for managing patients, controlling costs, measuring performance and driving change to improve outcomes.
A strong governing model has five key responsibilities:
Assigns rules, responsibilities and committees. The governing body makes strategic, legal and financial decisions. It determines what will happen at the board level and what is delegated to clinical, population health, financial and other committees. It is important to set up a hierarchy of committees from the start that will govern all aspects of the risk-bearing organization and have a mechanism for communicating important information and outcomes to leaders and clinicians. The most effective organizations have a governance structure that is inclusive. Rather than having a small group of people setting standards and imposing them, different stakeholders–including physicians and nurses–come to the table to drive change.
Sets financial guidelines, pay structures and performance standards. The governing body designates a financial committee that sets the budget and creates a model that motivates people to work together and take responsibility for driving better healthcare outcomes. It determines how the organization will pay itself and physicians. Developing the right physician payment model is key. In a risk-bearing organization, physician pay should be based on specific market-based outcomes rather than units of work. For example, while primary care is often sub-capitated to ensure gaps are closed and patient care is tightly coordinated, in a risk-bearing organization, it may also make sense to sub-capitate other specialties such as cardiology in markets with large senior populations. The finance committee also makes up-front decisions about bonuses to avoid conflicts later on and determines what will happen if the organization doesn’t perform to standards.
Manages complex interactions between committees. It is important to spot financial trends quickly in a risk-bearing organization. There must be a plan for how clinical and finance teams work together to make decisions and take corrective actions. The governing body provides a framework for looking back at key financials (such as prior monthly expenses) as well as cash-out-the-door on a per-member basis and linking both to the biggest cost driver and the most manageable, the patient census. For example, an organization may adjust its financials if the length of stay is longer during a flu season month, or other seasonable trends.
Supports physician performance and peer-to-peer accountability. The governing body should create and establish trust and credibility on the front end with physicians. It must also ensure that the organization has physician leaders, staff and systems to support physician practices, help improve performance and hold them accountable for meeting quality goals. Physician leaders should have a seat at the table and participate in setting care standards.
Ensures data and information is shared across the organization. Information sharing is different in risk-based organizations because there is a singular focus on shepherding patients through the system to help drive better outcomes. On a broad level, the governing body decides how data is shared across committees, leaders and providers to understand care gaps and how to improve performance. Risk-bearing organizations also require data that gives them a view to what is happening right now with the patient population so that care is delivered in the right setting at the right time. The organization should have a committee of intensivists, nurses and a concurrent review team who constantly review real-time data on ER patients, admitted patients and those about to be admitted.
Rethinking care management
As governance is established, now is the time to hone new instincts and practices that provide a stronger line of sight into everything that is happening with patients on a daily basis. For example, while it is important to support primary care physicians in closing care gaps in a population health model, with financial risk, there should also be a focus on managing patient throughput and near-term costs. How will you improve patient tracking, care coordination and ensure that treatment plans are carried out? A new governance framework should support this shift in focus, allowing for new systems and processes, as well as people who understand and will adhere to what is needed to drive success under a risk-based model.