Creating Financial Value Out of Quality

Episode Overview

Transcript:

Daniel Marino: Welcome to another episode of value based care insights. I'm your host, Daniel Marino. An essential component of value based care is the ability of organizations to track quality, measure quality, take that quality and leverage it into value, align the organization in such a way where all of the operations, all of the incentives are really lining towards value. So as an organization, you're really emphasizing your ability to do what's best for the patient, and really begin to track that quality as a means of reducing costs as a means of improving say, patient satisfaction, physician satisfaction, making things much more efficient, and so forth. Many organizations, however, really struggle with quality. And it's not the fact that they don't deliver good quality care, I think many organizations do. But what they struggle with is aligning the organization around what to measure and get everybody in the organization focused on essentially measuring the same things, if you will. And as we've worked with organizations over the years and developing their strategy around value-based care, it's initially you're going in and you're creating efficiencies on how you're managing your high-risk population. So organizations are just starting to get into measures to manage risks. They actually do a pretty good job of achieving goals around what we would call low hanging fruit, because if you have patients who are high-risk, being able to create efficiencies, the Hawthorne effect comes into play. And just the sheer fact of being able to watch what providers are doing and getting providers to talk and pointing the organization in the direction of this inefficient care, in and of itself, creates opportunities and creates value. But once you get past that, then in order to really continue to achieve those goals, you have to begin to create value out of the quality of care that has been delivered, and frankly out of the quality measurements that an organization provides both physicians, hospitals, employers, payers, and even the patients. I'm very pleased to have a guest today, who has done a lot of work working with organizations around the country, and helping them to understand where to start on tracking their quality outcomes, how to begin to align the organization around value, and create some real changes in the culture that helped them achieve goals and value based care. Dr. Jonathan Burroughs is President and CEO of Burroughs Healthcare Consulting Network, and as I mentioned, it's a top health care consulting firm that has worked with organizations all over the country. Dr. Burroughs, welcome to the program, sir.

Dr. Jon Burroughs: Thank you, Dan. Thanks for having me.

Daniel Marino: So when we think about value based care, and this has happened to me time and time again, and I know this happens to you, organizations come to you and they say, look, you know, we have an opportunity to get involved in a value-based care contract, we want to start to move from fee-for-service into fee-for-value. We're not sure where to start? And probably we're not sure what to measure. So either they come asking, Well, do you have a starter set of measures, or each of the individual specialties measure things on their own, of which nothing really comes together to tell the story? What are some of the things that you've been able to see? Or how have you overcome that discussion at that initial insight with organizations?

Dr. Jon Burroughs: Well, as you pointed out, Dan, asking what quality measures to measure is putting the cart before the horse. There are preliminary steps that you have to take before you even get to the quality measures. And the first one is alignment. And we talk a lot about alignment, but I use it in a very simple way. Engagement is pride of ownership and alignment is shared self interests. So when we talk about alignment, you have management on one side of the equation that's looking to spend as little as they possibly can to make as much margin as they possibly can. And they look at quality as almost this overhead cost that's going to take away from the margin. So you have that perspective, then you have the physician perspective, they're being paid based on work RVUs (relative value units) which means they're trying to work as fast as they can, as efficiently as they can, as quickly as they can, and they want high margin procedures and tests, they don't want to take care of regular folk, because that doesn't pay the bills. And they're trying to optimize their revenue under a work RVU type model. And then on the third hand, you have the payers that want to pay as little as possible and get as much as they can. So you've got these three groups, which are completely unaligned. And before you can start talking about value, what metrics do we pick? You have to talk about alignment. How do you bring the payer, management and the physicians to the same table speaking the same language, and sharing the same self interests? And you've got to create a model around that first, before you can even begin the dialogue.

Daniel Marino: And I'll tell you, it's, it's easier said than done. Because historically, we're, you know, we've all lived in a fee-for-service environment, and hospitals, 60-70% of their revenue comes from surgeries, which are all fee for service driven, right. And then you've got, as you mentioned, physician compensation, which is all predominantly tied to RVUs. So in my mind, you know, as we're talking about this, it seems to me that you have to have a reimbursement structure that creates that incentive to force that alignment. And then you need to have the culture change within the organization to actually do it. And the payers, to a certain extent, have to sort of trust the process.

Dr. Jon Burroughs: And here's the key, everyone has to be able to make more in the new system, or no one will change. In other words, if people look at a breakeven, why would they go through the heartache of the change, if they're gonna make less, they certainly won't go through it. So you have to create a model, that's a win-win, so that executives make more, the payers make more, and physicians make more. And that's where you need to be able to calculate the return on investment, for alignment compensation models and reimbursement models. And it has to work for everybody. If it doesn't work for one of those three groups, they're not going to do it. It's really simple. So it has to work for everybody. But here's the good news. If you start to monetize what you're actually doing, and you drill down to look at what is the return on investment, on doing X, Y, Z, you can actually find activities and measures and services that have a very high return on investment. And when you can talk around those and give everyone a piece of the pie, then you get that willingness to move from this entrenched position of the last multiple decades to something new. But you've got to be able to do better for everybody, or no one's gonna budge.

Daniel Marino: Absolutely, you have to be able to show that ROI. And so let's talk a little bit about that. So when an organization first starts to get involved in, say, a pay for performance, or a shared savings type of a contract, and they're focused on that low hanging fruit, right, so they're focused on the high risk population. And, as I mentioned, it's easy to make some changes there. Because frankly, you just create some small efficiencies, given the costs on a per patient basis, you can pick up some opportunities, you also can pick up some opportunities, as you started to get involved in this by just paying to report, right? I mean, the payers pay for that. So that level of an ROI, I think, is a fairly easy calculation. But when you get to the next level down, where you start to think about the quality initiatives, how are you aligning the quality initiatives, with a cost savings opportunity to produce an ROI, because the sheer equation of an ROI certainly has the opportunity over what you spend. Here in value-based care we're actually banking on the fact that we're spending less. So how have you framed or how have you gone about framing an ROI as you start to think about folks getting into value-based care?

Dr. Jon Burroughs: Well, first of all, you have to join the Chief Quality Officer with the Chief Financial Officer at the hip. And you also have to join the finance people and the strategy people with the clinical people at the hip. And what you have to start doing is what I call monetizing all of your measures. And there are an infinite number of things you could be doing. There's an infinite number of things you could be measuring. But here's the good news. There are a disproportionately small number of measures that will carry the greatest weight. And one of your strategic goals is to find out which measures they are. And then when you discover which they are, then you can put them on the table for the physicians, for executives and for the payers and say, let's assume some risk around these, because there's enough return on investment, that everyone will make money here. Where you get the spending less is that you're not going to be so diffusely focused on everything, you're going to focus on a smaller number of more important things that will make you far more efficient, and frankly, far leaner, and your expenditures.

Daniel Marino: So when you're thinking about those quality measures, are you thinking about those impactful measures that are tied to say chronic diseases? Or are you thinking about those measures in terms of maybe your specialist, sub-specialist, what the organization is doing well, in producing quality outcomes.

Dr. Jon Burroughs: All of the above, and with chronic disease, you don't just look at everybody, the sign of a population's health is your risk and severity adjusts people with chronic disease into sub-populations. And you start with the highest risk, medium risk, low risk, no risk, and healthy. And what you want to do is focus on the vital few. So you don't just focus on everybody. You focus on the vital few that are the most expensive, the most at risk, and that has the greatest cost savings.

Daniel Marino: That's your low hanging fruit, right? I mean, that's what you do when you initially kick it off.

Dr. Jon Burroughs: Exactly right. So it's interesting, people think they intuitively know what's profitable, and what's not profitable. But they really don't until you do the calculations. And I always tell people to suspend your judgment, because you really don't know what those quality metrics are worth until you actually do the calculations. And what's amazing to me, as I read the management literature, is only 1 or 2% of management articles written anywhere discuss the monetization of quality, and how to quantitate what a qualitative measure would look like, financially as an investment. And the key thing is, when you do any of this quality or value stuff, everything should be an investment and not a sunken cost. A sunk cost is a waste of money, that's where the cost of care just piles up, what you want to do is focus on investment opportunities that will give you a very quick and substantial return on investment. And that's where he's spending less, but spending wiser comes in, but you can't do that without making an informed calculation to be able to predict with substantial certainty what's going to pay and what's not going to pay.

Daniel Marino: An important element of that ROI calculation has to be tied to the revenue stream that you are getting from these value-based care contracts.

Dr. Jon Burroughs: Well, except you can start from scratch with them. I know organizations that are so good at this, and this is the big bell curve out there, that they literally rip up the value-based contract that we have and say, you know, this one is not working for anyone. Let's create one that works for everybody. And the key is the payers need to make the calculation, physicians need to make the calculation, and management needs to make the calculation. So they can all agree and come to it in their own time and way that this would be a very profitable investment in value based care to make if the three of us groups could partner together and do this successfully.

Daniel Marino: As you're going through this, clearly, the first step is addressing alignment, you have to have alignment, right? Physicians, executive payers and, you know, employers, and certainly the patient's all sort of have to be aligned. And then when you start to think about that, then focusing on what's the right measure, or what's the right group of measures that you need to invest in as an organization, I think is absolutely key. But there's a lot of measures that are out there. You have measures by different specialties. You have measures that are important to the hospital, you have HEDIS measures or claim based measures that are important to the payers. How do you sort of ramp down that list so you know something that is meaningful?

Dr. Jon Burroughs: Well, the first thing you have to do, because you measured a lot of you mentioned a lot of things there. And some of what you mentioned are regulatory measures, and some are strategic measures. And I just want for your audience to make that distinction. Regulatory measures are measures you have no control over they are externally imposed onto you like HEDIS measures by National Committee for Quality Assurance, like value-based measures, like case mix index, like hierarchical condition categories, there are all these measures out there that you have no control over, no say over. And they impact what you get paid, how much you get paid, how well you get paid, and how well your quality metrics are by external reviewers. That's first of all. You want to separate out which measures we have no control over? And does the window to the world reflect upon how well we're doing? Now, the way you address regulatory measures is that payers, executives, and physicians have to agree, we're going to hard wire our systems. So we get home runs. With these each and every time.

Daniel Marino: We know we have to do it, we have to hit the ball out of the park, we have to measure it, we're not going to fight it. We just need to do this.

Dr. Jon Burroughs: Right. Now, the way you do that is by doing process reengineering. And what I mean by that is you can actually program your electronic health care record, regardless of who your vendor is, whether it's Cerner or Meditech or Epic or whomever it is, but you hardwire that, so the electronic record will not allow you to deviate. When you hit one of those regulatory measures. For instance, during the days of core measures, acute myocardial infarctions, community acquired pneumonia, congestive heart failure. We hardwired our electronic medical record, so that wouldn't allow us to complete an order, a transfer, a discharge, or anything, if we didn't check all the boxes. In other words, we had to hit these core measures 100% before the program would allow us to move on. Now, you can do that by programming your systems. So that's step number one. You want to get five stars and everything, and you want to optimize your reimbursement under the regulatory payment. So that's step number one. But all three groups have to agree we're going to do this. We're going to create a standardized process that prohibits us to veer off track. And you got to do that first. Now, what that's going to do is optimize your payment based on what you're already doing. But the big money ball, and for those of you who are familiar with Moneyball, you know, that was a movie and a book about the Oakland Athletics. And they, they revolutionized baseball, because a gentleman from Harvard, whom the coach of the Oakland A's hired, in the movie it was from Yale, but in real life who was from Harvard. Figured out, you know, you shouldn't be buying players, you should be buying wins. And in order to buy wins, you have to buy runs, and you want to buy players who can get on base, and get runs and wins. Now, strategic quality is what I'm talking about here, is the Moneyball for health care. And it means of the infinite ocean of quality metrics, there are actually very, very few that will have the greatest impact on your success. And your job every year is to figure out which metrics those are, and they're going to be different for everybody. Because different people do different things. Well, whenever anyone asks me, What's the best health care system in the United States? I always answer none. Because there are organizations that do certain pieces really, really well. And then other pieces were not so good. And I'm not going to mention organizations or what they do well, or what they don't, that's a little secret that I have that I only give to people when they really want to know. I won't mention it publicly. But suffice it to say, I've never seen an organization that does everything well. I've yet to encounter that organization. So what you do, what you do is, every one's going to have different strengths and different weaknesses in their organization. And your goal is to look at, particularly your weaknesses, and say, What could we improve by emulating certain best practice metrics that if we could do these two or three things, and an entire year, we could substantially improve our clinical and financial performance? And that's called strategic quality. And it's called strategic quality, because it's carefully chosen based on the true monetary value and the true return on investment calculation that you can realistically make.

Daniel Marino: If I'm hearing you think about that, because there's different strategic quality measures, different quality measures that I guess are influenced by different specialties. So if we think about diabetes, for instance, primary care driven. Endocrinologists play a big role. Podiatrists play a big role with annual foot exams. Ophthalmologists play a big role with annual eye exams. Are you thinking about it in terms of a strategic measure that has all these components that are specialty driven, leading to outcomes of, let's say, more advanced care, management and care outcomes of diabetic patients? Or am I reading into it too much?

Dr. Jon Burroughs: You're reading into it, because it depends. It always depends on what that metric is. And I'll give you an example. Many organizations do documentation really poorly. Okay, and they're leaving hundreds of millions of dollars on the table.

Daniel Marino: And because they don't code correctly,

Dr. Jon Burroughs: Exactly. So one of your Moneyball measures, there might be case mix index, or hierarchical condition categories. Sure. Right off the bat, exactly. If we could get our CMI from 1.2, up to 2.3, which is where it really belongs, we're gonna go from a negative 2% margin up to a positive 10% margin. Doing that one thing, just that one thing. Now that would involve everybody. Or in the outpatient setting hierarchical condition categories, if you see a lot of Medicare patients, and you're not documenting well in the ambulatory setting, you're leaving hundreds of millions of dollars of Medicare revenue on the table. So that's what I'm talking about. Some things may be specialty specific, some things may involve everybody, some things may just involve the ambulatory players, some things may just involve the subspecialty hospital players. And some measures may just involve management, you may have a supply chain or labor problem, which only management can fix. So different measures are going to cross across different boundaries, based upon what that measure is. And you have to identify the measure first, before you can say, okay, these are the stakeholders who are going to be impacted by radically changing our performance in these measures. You identify the measure first, then you can say, okay, to whom does this impact and whom impacts the measure?

Daniel Marino: Well, and you're also then as I'm hearing you speak, you have to track that specific measure, to some level of a financial outcome. So whether it's through clinical measures, like the A1C, or it's more of a performance measure, like capturing your HCCs (hierarchical condition category), if you will, it has to connect to something. And that's something that has to be some type of a financial return, either in terms of cost savings for the organization, or hopefully being able to implement the return or financial incentive on that value-based contract.

Dr. Jon Burroughs: Yes, and particularly if you engage in a bundled type contract, yes, or a cost of care type contract, or continuity  of care type contract, you're going to want to know what the total cost of care is across the continuum of care. So therefore, the hemoglobin A1C for diabetes, is going to be a leading indicator for the cost across the entire continuum of care. What you have to do is quantitate these measures to see if we could do this, how much could we potentially earn, then you can decide what resources we want to invest in this to get a home run?

Daniel Marino: Right? Well, it really sounds like to me, what you're describing here, is really a strategic quality plan. That is allowing the organization to focus on what they need to do now and do it well. And then being able to build on top of that leading to an ongoing financial return, but understanding what the investment is going to be so you can actually hit those targets.

Dr. Jon Burroughs: Yeah, and if you know, you're gonna make another 50 million off having a successful CDI program (clinical documentation improvement), then investing two or 3 million into it is nothing. So again, the problem is, and I respect a lot of chief financial officers out there, that a lot of CFOs come from an accounting background. And what a lot of management teams need is entrepreneurial skills on the management team. So you can get people in management thinking like this, so they can stop thinking of an investment of 5 million into a CDI program that's going to make them 50 as a cost. We don't have it in our budget this year. It's not our capital expenditure this year, blah, blah, blah. You know that's what you talk about with sunken costs. When you talk about investment with a hurdle rate, or return on investment rate, or a breakeven rate or analysis, etc. You're talking about this money that we're gonna get back tenfold. If I invest 5 and get back 50, this is like a seed on planting on the ground, and I'm gonna get this beautiful plant out of it. I see so many organizations who say, well, we can't do this this year, because we don't have the capital. Well, then borrow the capital. If you know you're gonna get a tenfold increase. You need people in health care who can think like that, to realize that you have to invest capital to get capital, and if you don't have the money, you get the money,

Daniel Marino: Absolutely. You invested in it, then you've got to track it. But that's where that's where your return is gonna come around. Why do you think organizations have been so slow to make that transition? Because as I'm hearing you speak to it, and maybe it's because I play in this space all the time. It's logical, it makes sense. You're running a business, the business components are different. But to me, I mean, it seems like this is what has to be done. If we see ourselves if we want to be successful in the environment of value-based care. Why do you think it's been such a challenge for organizations?

Dr. Jon Burroughs: Because I think traditionally, under the old fee-for-service model, a fixed reimbursement and defined benefit, which meant whatever you billed the payer, they paid you. You could have very minimal business skills to be successful in health care. And I think we developed this whole culture around this fixed-sum game, meaning we just send out a bill and the payers pay the bill. I mean, it wasn't that long ago, 20 or 30 years ago, that was the model.

Daniel Marino: That was the model, right? You submitted a bill and, you know, you get either 100% or 90%. And you were happy as a clam.

Dr. Jon Burroughs: Exactly. So in that era, it didn't require much business acumen to do that. We're moving towards a market-based health care system where people are going to buy and sell health care. And we have to now manage health care as a bonafide business as a real industry. I mean, we call ourselves an industry, but because of all the artificial constraints, I still speak to executives who think that the only source of revenue is from third party payment. They're locked into that model, whatever we don't get from an insurance company, we don't get, but you can turn health care into a business such that third party payment actually becomes the smallest part of your revenue stream.

Daniel Marino: Absolutely. And there's been there's been a number of organizations who have done that, but they've been a very entrepreneurial in their thinking, I would agree with you, a vast majority, still, sort of are hanging on to that traditional approach around just submitting the bill, whatever we got, and without creating a differentiator for themselves in the new world of value-based care.

Dr. Jon Burroughs: They were in the health care business. A wonderful article that I hope everyone has already read, called Marketing Myopia, was written by the head of marketing at Harvard at the time, and basically about how the railroad industry went broke in the United States in the early 20th century. And the basic theme of the article is that if you're not building your business for the future, you're in the process of failing. And, basically, he said, The problem with the railroad industry is that it didn't realize that it was in the transportation industry. Coca Cola is an example of a company that gets that, because most of what they produce now, is not Coca Cola. It's beverages, including water. And they're becoming the largest purveyor of bottled water in the world. And the key thing is, we have to think of ourselves not as a third party reimbursement business, but as a health care industry. And frankly, we should be looking for more entrepreneurial ways to grow our industry, so that we can rely on disposable income and cash and not on third party payments. And organizations that can figure that out, are going to be way ahead of the herd.

Daniel Marino: Well, and it is coming down to that you have to differentiate yourself and you have to think about your business and your model differently. In thinking through our discussion today. I certainly want to thank you for your insights here. This has been fantastic. Are there any pieces of advice? Or what advice would you give to executives, health care executives, or even physician executives who are listening in and are interested in kind of moving forward with this?

Dr. Jon Burroughs: Think of health care as a business that requires entrepreneurial skills. If I could change one thing on health care management today, it's that. Stop getting locked, stop being locked into the accounting model. And by the accounting model the only way to make a revenue is by cutting costs. Right? That's the model we inherited from the 20th century. It's not going to work out for you in the 21st century. The model for the 21st century is to grow revenues faster than you grow costs. And that's how you're going to make a great margin. You're not going to do it by cutting costs. And I call that the accounting model. Because when you think of life as a fixed sum game, a fixed revenue game, that's the only way you can make money laying, laying people off cutting costs, etc.

Daniel Marino: But that's only gonna take you so far. If you cut too much cost, you're gonna cut services and then you're gonna be restricting your revenue.

Dr. Jon Burroughs: Everyone who cuts costs, ends up cutting revenue inadvertently. You cut into the bone. And so that's my biggest advice. And bring on business entrepreneurial expertise to both your clinical and nonclinical leadership.

Daniel Marino: That's great advice. I definitely agree with you. Well, Dr. Burroughs if our audience is interested in connecting with you, what's a good way for them to get ahold of you? Should they look you up on LinkedIn? Or do you have an email address you're willing to share?

Dr. Jon Burroughs: All of the above I'm on LinkedIn. My email is Jburroughs@burroughshealthcare.com. And my telephone, if anyone would like to speak is (603) 733-8156.

Daniel Marino: Well, Dr. Burroughs, this is fantastic. I really appreciate this. There's not many folks around the country who have such a prescribed approach as you do in looking at quality and really tying that to some level of financial outcome. I commend you on your thinking around that. And one of the things that really caught my attention, which we've been talking about for quite some time, is helping organizations create the strategic quality plan. I'm a firm believer in that because it does kind of brings all of that together.

Dr. Jon Burroughs: And you have to go through that exercise to get there.

Daniel Marino: You do. Absolutely. Well, Jon, thank you very much for coming on today. Love to have you back sometime. And again, I'm sure our audience appreciated your insights as well. Thank you so much.

Dr. Jon Burroughs: Thanks Dan, for having me

Daniel Marino: Exciting topic today. Dr. Burroughs brought up a lot of great elements. I would encourage folks to really think about as you're building quality and particularly your measures, think about it in terms of the end in mind, and really around where you need to go in creating an ROI. Why do you want to do it? What's the benefit in being able to capture that? And I think an important element there is you have to create alignment across the leadership of organizations, physicians, the payers and so forth. And I think if you do that, it'll create that differentiator for an organization, but you're going to get everybody really excited about the direction that you want to go and certainly achieve a lot of good results. So until next time I am your host of value-based care insights, Daniel Marino. Have a wonderful day.

About Value-Based Care Insights Podcast

Value-Based Care Insights is a podcast that explores how to optimize the performance of programs to meet the demands of an increasingly value-based care payment environment. Hosted by Daniel J. Marino, the VBCI podcast highlights recognized experts in the field and within Lumina Health Partners.