The CFA Perspective

Developing an Episodes of Care Mindset, Part 1

Posted by John Meyer, FACHE and Richard Clark

2/16/17 6:00 AM

Developing an Episodes of Care Mindset, Part 1.jpgAs most of us know by now, any transition to bundled payment will necessarily involve episodes of care (EOC).  This blog, however, is not about preparing for bundled payment ‒ rather, it will focus on the value of the EOC as a foundation for analysis leading to reduced costs and enhanced value, regardless of when (or if) bundled payment initiatives become commonplace. In the cardiovascular world, providers and practitioners need to develop the mindset of thinking both conceptually and practically in terms of episodes of care as a logical precursor to optimally using data analytics to improve overall performance.

EOC Definition

An episode of care can be defined as ” the managed care provided by a healthcare facility or provider for a specific medical problem or condition or specific illness during a set time period.”  The defined time period would include both the index hospitalization plus any post-acute care (PAC) treatment as necessary for a 30-, 60- , 90- or 120-day period.  Good examples of cardiovascular EOC include CABG and cardiac valve surgeries, AMI, CHF and A-Fib, among others.

The EOC model emphasizes care over time and consists of the index hospitalization (when the patient enters the hospital for a specific condition or procedure for the first time), and subsequent clinically related services, inclusive of PAC services such as home health, skilled nursing, outpatient services (e.g., outpatient cardiac rehabilitation), other short-term hospital services, etc.  For example, in a 90-day EOC, both acute and PAC services will be included to encompass all patient-related care stemming from the index hospitalization.

EOC even without Bundled Pricing

CFA strongly recommends that hospitals and health systems not wait for EOC to be paid by bundled prices:

Hospitals should be aggressively thinking of EOC right now and begin to analyze and plan for your cardiovascular patient population, what care coordination they will need, and where the gaps lie in building a product of real value.

There is inherent value in the EOC mindset regardless of payment model.  The EOC becomes a “product” that can be examined, assessed, measured, valued, and most critically, managed and optimized over time. Success comes from those who best understand how to build value within an EOC and organize resources to produce the best EOC product.  The bonus is that when/if bundled payment models are implemented, you will be ready to set prices and manage costs.

How to Use EOC as an Analytic Cornerstone to Improving Care and Reducing Costs

Regardless of payment mechanism, hospitals are under constant pressure to improve care and reduce costs  ‒ in other words, increase value.  Reorganizing your thinking and your analytics around EOC can be a great tool for accomplishing this task.  How might this work?

Using Episodes of Care as an Analytic Cornerstone

PAC Data:  EOC are empowered and optimized by access to information.  While hospitals have had access to their own data (as imperfect as it is), PAC data has not been available and/or held closely by both PAC providers and payers. This will need to change if providers are to build value into an EOC.

Readmission:  Readmission is a major component.  Hospitals are now actively managing readmission as an incentive element of Medicare payment.  Under EOC, readmission rate is tied directly to what CMS measures as the medicare loss ratio (MLR).  This is a critical factor that must be managed across the care continuum.

Analytic Databases:  Access to critical data is through proprietary analytic databases that provide the ability to analyze episodes by definition, provide all related acute- and PAC-related utilization and costs, and compare with critical benchmarks or standards.  Using a Medicare-specific database can provide critical information on this group of cardiac patients as a basis for analysis.  Some hospitals are now pilot testing the use of EOC and analysis through proprietary analytic databases.  Analytic data can provide you with the following information:

  • Utilization and cost by both acute and PAC provider
  • Variations – in care patterns, cost and quality outcomes -- among patients within a specific EOC
  • Issues of care coordination, inter- and intra-facility communication and hand-offs
  • Issues of appropriateness of admission by level/type of care and subsequent readmission
  • Assist with root cause analysis and reducing clinical care/process variation

Physician Engagement:  Focusing on quality outcomes associated with an EOC is the best way to engage physicians in the analysis and reengineering of patient care.  It is always easier and more effective to encourage physicians to focus on issues of quality and operational efficiency rather than on issues of cost.  In CFA’s experience, when quality is enhanced, operations become more efficient and effective, care coordination is improved, and cost is lowered concomitantly.

Focused Analytics:  An EOC analysis provides clinicians with direct information to engage them in critical analyses relating specifically to standardized groups of patients.  Issues such as risk-adjustment models, identification of at-risk patients in a timely manner, application of best practices, patient appropriateness criteria, applicable guidelines and protocols can be studied and implemented to enhance outcomes, cost-effectiveness and predictability.

Analytic Modeling:  Having access to powerful analytics, one can utilize such a system to do predictive analytic modelling, alternative scenario development, and the application of risk adjustment models to predict future utilization and financial outcomes.

Enhancing Value:  Providers can use EOC analyses to make their best value case for selection by and payment from payers.  Payers will want to know how the optimized coordination of care across the continuum contributes to optimal value.  Competing on value and pricing can be a competitive advantage.

Note:  There are a lot of technical considerations to EOC that will need clarification over time.  These include defining episodes, identifying patients early in the process, risk stratification modeling, “attribution” (e.g., which provider “owns” or is responsible for the patient), concurrent episodes (when a patient has a specific procedure, but develops an independent clinical problem), and many others.

Resource Requirements

Using EOC analytics will take commitment, an appropriate infrastructure, time and resources.  Hospitals need to be prepared to make the necessary investment to be able to devote sufficient resources – both budgetary and staff – to be successful.  An “analytics team” is recommended – consisting of both managers and clinicians – that can manipulate data, support working task forces appointed to study each episode under consideration, and handle detailed follow-up research (both clinical and organizational).


Episodes of care are an important consideration in delivering and optimizing value-based care, and maintaining healthy operating margins, regardless of reimbursement model.  Consider the cardiovascular EOC as a basic building block for both clinical care and, ultimately, payment.  To effectively prepare and improve EOC performance, hospitals need to :

  • Understand the care elements that make up the EOC
  • Evaluate the drivers of patient care uniformity versus variability
  • Optimize utilization of PAC resources, and the inherent costs associated with all of these moving parts

Understanding and using EOC as analytic models will help the provider make the changes necessary to enhance performance, enhance outcomes, and optimize financial performance.     

Starting your data analytic journey is a natural for cardiovascular services.  It is a reasonably highly clinically integrated service line with a history of best practice, appropriateness criteria, care coordination, data registry utilization and multi-disciplinary team involvement.  Opportunities for EOC development as models for increasing value are growing.

In Part 2, CFA will discuss baseline EOC data analyses as a precursor to bundled pricing, with examples from a proprietary analytics database applied specifically to cardiovascular patients.

If you are interested in learning more about strategies to enhance your cardiovascular service line performance, please contact CFA at (949) 443-4005 or by e-mail at

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