The CFA Perspective

Physician/Hospital Alignment and Bundled Payment – Part Two

Continuing the discussion from Part One of physician/hospital alignment and the reemergence of bundled payment initiatives, let’s discuss the impact of health care reform in the area of bundled payment for care.  A national pilot program on payment bundling is included in H.R. 3590, the Patient Protection & Affordable Care Act.  This pilot program is set to commence in 2012 (no later than January 1, 2013) and run for five years.

 

Although conceptually similar to previous efforts by HHS, this pilot is intended to bundle payment for an entire episode of care inclusive of up to 30 days post-hospital discharge (implying an unprecedented level of physician/hospital cooperation, coordination and collaboration!).  While no identification of covered procedures/conditions has yet been made, but it seems reasonable that major cardiovascular procedures, and possibly certain medical cardiology admissions such as heart failure, will be included as has been done in past pilot projects.  Some other details included in the legislation (and pending final detailed regulations), include the following:

 

• Inclusive of Medicare beneficiaries
• Up to eight medical conditions for an episode of care to be selected
• Conditions will be a mix of chronic and acute
• Bundled services to include acute inpatient, physician, outpatient hospital, post acute, and other appropriate services
• An episode of care is defined as three days prior to admission, inpatient hospital admission, and the 30 days following discharge from a hospital
• Program to be established no later than January 1, 2013
• Quality measures to be developed under contract for use in the program
• The pilot to be conducted for a period of five years
• Applications can be submitted by an “entity” consisting of a hospital, a physician group, an SNF, and a home health care agency
• The Secretary of HHS will make bundled payments (amounts to-be-determined) to the contracting entity
• Quality measure to be reported and to include:
  • Functional status improvement
  • Reducing rates of avoidable hospital readmission
  • Rates of admission to emergency room after hospitalization
  • Incidence of healthcare acquired infection
  • Efficiency measures
  • Measures of patient-centeredness of care
  • Measures of patient perception of care
  • Other appropriate measures of patient outcome
• An interim report on the demonstration not less than two years after implementation
• A final report no later than three years after implementation

 

Participation in such a pilot project is always challenging – it must make both strategic and operational sense to the participant(s).  Notice the high level of cooperation, coordination and information required of the participating “entities” especially among hospital and physicians inclusive of both pre-hospitalization, hospitalization and 30-days post-acute care phases!  The work that will need to go into the program design on the part of all of the participants, just to be able to file an application, let alone pull off designing and managing such a program at the local level will be extraordinary.

 

Will this pilot program “have legs?”  Only time will tell.  However, it is vital for hospitals and physicians to recognize that such efforts will only continue and place an increased burden on hospitals to solidify their alignment strategies with select physicians.  It is hard to image that success under the requirements of care coordination, bundled payment and pay-for-performance scenarios can be possible without the appropriate physician/hospital alignment strategies in place.

 

CFA will keep you informed on further developments on hospital/physician alignment and bundled pricing, and would welcome your thoughts and comments as we progress. For further information, CFA recommends you review H.R. 3590 and, in particular, the proposed bundled payment pilot program.

Is the Heart Hospital Dead? (Well…Maybe)

The future of physician-owned or joint-ventured heart hospitals would seem to be dead.  What officially killed it is H.R. 3950, the Patient Protection & Affordable Care Act, which declares that, unless they have a provider agreement in place prior to December 31, 2010, physician-owned hospitals (of any type) are excluded from Medicare participation.  These controversial entities have suffered as of late from a confluence of market forces that did not bode well for the long-term health of the heart hospital.  In particular, two major factors worked against them:

 

• the continuing trend towards physician/hospital alignment, particularly specialty physician employment by hospitals; and,
• the continuing trend towards the development of outpatient services at the expense of inpatient hospital services.

 

Thus, freestanding, for-profit heart hospitals began to lose their novelty and market luster.  Even MedCath, the proprietary developer of heart hospitals, is divesting some properties and looking to sell itself or more of its hospitals.  It recently sold its ownership stake in the Heart Hospital of Austin (Texas) to St. David's Medical Center of Austin.

 

On June 3, Physician Hospitals of America, representing 260 physician-owned hospitals, along with the Texas Spine & Joint Hospital filed suit in U.S. Federal Court challenging the constitutionality of Section 6001 of the new law.  They denounce the passage of healthcare reform, saying it will destroy the 60 hospitals currently under development, cost 25,000 jobs in 38 states, and cost billions of dollars in invested costs.   This time, politics, and of course, supporting market trends, seem to have won out over entrepreneurship and the free market.  Unless, that is, that section of the law is overturned in court!

 

The overall strategic, competitive and financial value of the freestanding heart hospital concept has been debated time and again over the past several years, with full-service hospitals out to kill it, and our purpose is not to rehash this debate here.  It would seem then, that the following conclusions can be drawn from a distillation of current trends and recent legislation:

 

• There will be no new physician-owned heart hospitals developed in the U.S. if H.R. 3950 stands and/or the specific prohibition on physician ownership is not repealed or overturned in court.
• Existing physician-owned or joint-ventured heart hospitals, while under increasing economic pressure, are still viable competitors to hospital cardiovascular programs in specific markets and under specific market circumstances.
• Physician/hospital alignment strategies up to and including employment models can be viewed as a successful alternative against physicians considering options such as heart hospital support, ownership or participation.
• Hospitals and health systems will continue to develop their cardiovascular programs by incorporating heart hospital concepts into their strategies, including developing new hospital-owned heart hospitals and/or purchasing existing/competing heart hospital ventures to expand their capabilities, market reach and market share.
• Physicians can no longer view freestanding heart hospitals as viable investment opportunities. Existing development will be halted and no new development will be allowed.

 

If there is a lesson here, it is that even in a market-driven economy such as healthcare, politics cannot be divorced from economics and market trends must be continuously and critically evaluated by all providers if they are to succeed and prosper.

 

What do you think?  As always, CFA values your thoughts and comments.

The Transradial Approach to PCI – A “Win-Win” for Everybody?

When was the last time you came across a simple and straightforward change in clinical technique that typically results in better clinical outcomes, fewer complications, higher patient satisfaction, and lower cost per procedure?  While that has occasionally happened in the cardiovascular field, the increasing trend for substitution of the transradial (through the wrist) for the transfemoral (through the groin) approach for PCI, seems to be a real "win-win" for everyone involved.

 Traditionally, guidewires and catheters for PCI are inserted through the femoral artery.  Bleeding or vascular complications occur about 2% of the time.  Patients are recovered lying flat and immobile for 4-6 hours to prevent bleeding, which has also been helped by the advent of vascular closure devices.  The patient is more comfortable, dangerous bleeds are reduced, but vascular complications still exist.  Enter the transradial approach in the late 1980's.  Outside of the U.S., about 40-50% of all PCI's are done transradially.  In the U.S., that number currently is in the low single digits and only a small percentage of U.S. interventional cardiologists have been trained to use this approach.

 The advantages of the transradial over transfemoral approach are significant and include:

• The initial needle puncture is simple and straightforward
• Not impacted by a patient with peripheral vascular disease, obesity or female gender
• No need to recover the patient lying flat and immobile; patients are recovered sitting up and can leave the cath lab almost immediately post-procedure; this allows (theoretically) the patient to forgo spending an overnight stay in the hospital
• Because no vascular closure device is required, a significant cost is eliminated
• Less bleeding and other complications, significantly decreasing the risk of mortality
• If present, bleeding or other complications are readily identified and easy to address
• Overall case cost is decreased by obviating the use of vascular closure devices
• It is safer, more convenient, and more comfortable for the patient

 There are several reasons the approach has not been used more frequently, including:

• Lack of trained cardiologists
• Lack of financial incentives due to the existing reimbursement structure
• Lack of a marketing campaign by device manufacturers (who have concentrated their efforts outside the U.S.)
• Lack of patient demand because the approach has not been widely publicized
• An impression that the learning curve is too steep and learning inertia on the part of busy interventional cardiologists
• Lack of recognition and inclusion in practice guidelines or recommended practices by professional societies

 As with any procedure, there are certain contraindications and potential complications.  Additionally, physicians need to be trained in the procedure by those with solid experience.  Like all new procedures, there is a learning curve.  Despite these factors, the transradial approach is gaining momentum, fostered by recent study results and an increasing recognition by influential physicians that this approach has real benefit.  CV services management staff should fully evaluate this approach, seek out physician champions and put together an implementation plan to successfully integrate this technology into their program.  This can be a perfect hospital and physician performance improvement project or targeted metric as part of a physician/hospital alignment effort.  It's not very often that a modest clinical change can simultaneously improve clinical outcomes, reduce complication rates, increase patient satisfaction, and lower procedure costs and be a "win-win" for all involved!

 For further information, CFA suggests you review the article, Trends in the Prevalence and Outcomes of Radial and Femoral Approaches to Percutaneous Coronary Intervention:  A Report from the National Cardiovascular Data Registry, published in the November 2009 Journal of the American College of Cardiology - Cardiac Interventions.

Poll Indicates Cardiologists More Likely to Integrate with Hospitals

With the ongoing interest in physician and hospital alignment and integration strategies, this December 11, 2009 poll from the American College of Cardiology (ACC) is most interesting. Credit is given to our colleague, Walter Unger of Unger and Associates, for bringing this poll to our attention. The poll was conducted by Jim Fasules, M.D., FACC, ACC's Senior VP of Advocacy, and reported by ACC CEO Jack Lewin, M.D. Participants in the poll were asked, "Did your practice integrate with a hospital in 2009?" Here are the responses:

• 13% said yes, my practice integrated in 2009.
• 23% said no, but my practice has concrete plans to integrate.
• 50% said no, but my practice is thinking about it in the next 1-2 years.
• 15% said no, my practice has no plans to integrate with a hospital.

These results show just how strong the trend towards integration really is. A total of 36% of practices have integrated or have "concrete plans" to integrate. Another 50% of the respondents state that they are thinking about it. While the respondents are (presumably) only cardiologists, and the poll was not inclusive of other cardiovascular physicians (particularly cardiac surgeons) who may entertain the idea of integration, the poll is still a powerful indication of just how strong the integration movement is.

CFA is involved with clients where the circumstances leading up to interest on the part of cardiovascular physicians in integrating vary considerably. One would think the predominate reason for cardiologists and cardiac surgeons, among others, to consider alignment with local hospitals is purely economic. The initial stimulus frequently is; however, other factors come into play. It is logical to assume that physicians who have not been financially successful would be the first to consider an integration strategy. But this is not necessarily so. Consider the following:

Recently, in the southeast, a group of cardiovascular surgeons affiliated with the largest volume and most prestigious cardiovascular program in their state expressed interest in integration with their affiliated hospital. By every comparative metric applied, they were a highly financially successful group of surgeons with a significant geographic monopoly based on strong referral patterns. While their overall cardiac surgical volume had trended down, their group and individual incomes were stable as they aggressively managed their practice expenses and diversified into vascular surgery to maintain case volume and revenue. This group went to the extensive measure of taking one of their surgeons out of active practice and sending him for retraining in state of the art vascular procedures to build practice volume. Yet they still believed the overall, long term trends were working against them. The historical financial success of their practice did not preclude them from reconsidering their future direction.

Hospitals need to be prepared for this Physician-hospital alignment and integration movement by proactively thinking about their overall strategy and tactics before the issue arises. One of our senior staff attended a seminar on alignment this past year where a hospital administrator from the Midwest said that he lived in dread of any phone call or personal visit from one of his medical staff, because so many of them were asking to be bought out and employed! He was overwhelmed by the issue and knew that he needed to prepare a strategic response to this trend if he was going to keep his head above water.

CFA recommends that all hospitals and physician groups be prepared to deal with the issue of integration. With up to 50% of poll respondents actively considering integration with a hospital, it is imperative that each hospital and physician group understand the economic and political trends that promote alignment and integration, and the implications on their respective businesses.

To view the poll referenced in this posting, please refer to The Lewin Report