LUMINA Insights Blog

Now is the time for healthcare organizations to take the next step in elevating quality while reducing the cost of care. This will involve creating service line structures designed to function in the developing environment of value-based payments. In contrast, the original purpose for most health systems was to more tightly tie specialists to each other and to health system programs, not necessarily to improve the patient experience and outcomes.

Recently, several clients who are working to improve value-based contracts have asked, “How do we better engage specialists in the reduction of total cost of care and improve access and outcomes for our members?” Nationally, the total cost of care increased 4.3 percent in 2016, and, according to CMS, is expected to increase at a rate of 5.5 percent from 2017 to 2026, leading to a steady increase in the percentage of healthcare spending compared to the gross national product.

This spending includes more than 30 percent hospital costs, 20 percent physician and clinical services, and 10 percent pharmaceuticals. Several studies that compare specialists with primary care physicians suggest that revenue generated within the surgical specialties far surpasses all the rest. Clearly, engaging specialists in developing and implementing reduction in total cost of care is imperative.

The implementation and use of clinically integrated networks (CIN) continues to be an essential strategy in the journey to value-based care. The healthcare delivery system continues to become more and more complex, with new technologies, ongoing changes in the competitive landscape with mergers, acquisitions, and partnerships, and challenging payer contracts that are heading to real risk-based contracts in multiple episodes and larger populations.

Financial challenges again rank No. 1 on the list of hospital CEOs’ top concerns, according to the American College of Healthcare Executives’ annual survey of top issues confronting hospitals. In addition, Moody’s recently confirmed its negative outlook for nonprofit hospitals, citing weak volume, reimbursement constriction, and increased numbers of Medicare patients.

Financial issues are especially challenging for tertiary and quaternary hospitals, whose financial success is dependent upon referrals to their advanced care services. Because mergers can often prove impractical or might even be prohibited, Lumina Health Partners and the law firm Hogan Marren Babbo & Rose have developed a strategy to for tertiary and quaternary hospitals to integrate clinical programs with current or potential referring partners. This approach involves service line integration among hospitals and physicians, focusing on quality and “best site of care” principles.