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PROPRIETARY AND CONFIDENTIAL
The Impact of Pay for Performance on Healthcare IT
Richard A. Norling
President & CEO
Premier Inc.
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Premier Inc.Performance improvement alliance owned by more than 200 not-for-profit health systems with 1,700 owned or affiliated hospitals
Owners
Affiliates
Envisioned Future:Premier hospitals and health systems will operate at costs in the lowest quartile and at quality levels in the highest quartile.
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The nexus of cost and qualityClinical quality and financial performance are inseparable
’
Efficiency withoutQuality
Unthinkable Quality without Efficiency
Unsustainable
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Understanding reliability• Important research emerging on the impact of
reliability in care delivery
• Ability to consistently perform key processes every time
• Even more powerful is ability to reliably deliver all key processes• Care bundles
• IT can play role in improving reliability once processes are defined and stabilized
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P4P will drive IT changes • P4P will drive additional investment in IT
• IT will be forced to think and operate more holistically between financial, administrative and clinical systems
• Quality and IT disciplines will increasingly be seen as revenue-producing activities if they can drive P4P incentives• In turn, incentives can pay for IT investment
• More visible, central role for IT function
• Significant challenges as IT leadership engages with clinical leaders
More about these issues later . . .
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P4P demonstration project with CMS
• First national P4P demonstration of its kind
• Three-year effort launched October, 2003
• Approximately 260 hospitals in 38 states
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Dramatic and sustained improvementComposite Quality Score:
Trend of Quarterly Median (5th Decile) by Clinical Focus AreaCMS/Premier HQID Project Participants
October 1, 2003 - September 30, 2005 - Year 1 Final Data, Year 2 Preliminary
70.0
0%
64.1
0%
73.1
3%
68.1
1%
86.8
7%
93.6
5%
82.5
1%
77.8
8%
92.0
7%93.4
6% 94.8
4%
82.7
2%
81.5
7%
93.9
8%
95.0
7%
96.0
7%
84.8
1%
82.9
8%
95.3
7%
95
.77
%
96
.85
%
86
.43
%
84
.38
%
95
.80
%
85.1
3%
89.8
8%
85.1
4%85
.92%
90.0
6%
89.0
%
73.1
%
78.3
%
91.5
%
88.9
% 90.5
%
76.2
%
80.0
%
92.6
%
90.0
%93.5
0%
60%
65%
70%
75%
80%
85%
90%
95%
100%
AMI CABG Pneumonia Heart Failure Hip and Knee
Clinical Focus Area
Co
mp
os
ite
Qu
ali
ty S
co
re
Q4-03 Q1-04 Q2-04 Q3-04 Q4-04 Q1-05 Q2-05 Q3-05
Benefitsall patients
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Impact of reliability
Improving patient care in clinical areas of pneumonia and heart bypass surgery:
Reduces Costs
Saves LivesReduces Complications
Reduces Readmissions
Shortens Length of Stay
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Finding 1
Reliable care costs less
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Finding 1
Reliable care costs less
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Finding 2
Reliable care lowers mortality rates
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Finding 3
Reliable care reduces complications
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Finding 4
Reliable care reduces complications
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Finding 4
Reliable care reduces readmissions
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Finding 4
Reliable care reduces readmissions
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Finding 5
Reliable care shortens hospital stay
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Finding 5
Reliable care shortens hospital stay
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PROPRIETARY AND CONFIDENTIAL
National implications
Estimating the improvement opportunity
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Extrapolating from HQID to all patients• “Performance Pays” Study
• Statistical analysis of our findings at a national level
• Applied project findings to all pneumonia and CABG discharges
• Premier Perspective™ Data Warehouse• The industry’s largest clinical and operational
comparative database
• Quality data from CMS/Premier P4P demonstration
• Cost data from client hospitals
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Measuring reliable care
“MEDIUM” 50% - 74%
“HIGH” 75% - 100%
“LOW” 0% - 49%
71%
PPM*M7M6M5M4M3M2M1
86%
PPM*M7M6M5M4M3M2M1
43%
PPM*M7M6M5M4M3M2M1
M
H
L
Care Measures
Care Measures
Care Measures
*Patient Process Measure
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Implication 1
Improving care could avoid over 3,000 deaths
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Implication 2
Improving care could avoid nearly 6,000 complications
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Implication 3
Improving care could avoid nearly 6,000 readmissions
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Implication 4
Improving care could avoid 500K days in hospital
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Implication 5
Improving care could save nearly $1 billion
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Improvement opportunityFor pneumonia and heart bypass surgery patients
in one year alone:
$1 billion
3,000 avoidable deaths
6,000 complications
6,000 readmissions
500,000 days
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National response to findings“The predominant answer emerging from these results could not be more encouraging – better care can indeed improve affordability.”
Arnold Milstein MD, MPHUS Healthcare Thought Leader, Mercer Health and Benefits,
Medical Director at Pacific Business Group on Health,MedPAC Commissioner
“Premier’s analysis provides evidence that reliably delivering a set of basic care measures saves lives.”
Donald M. Berwick, MD, MPP, FRCPPresident and CEO, Institute for Healthcare Improvement
Clinical Professor of Pediatrics and Healthcare Policy,Harvard Medical School
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PROPRIETARY AND CONFIDENTIAL
The impact of P4P on IT
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Achieving the next level of performance• To date, most hospitals achieved these gains
without implementing new technological solutions
• BUT . . .
• As P4P expands, IT will feel impact and can play positive role in achieving top performance
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Increased need for IT assistance• Need to link multiple databases and non-
integrated systems to automate the process of reporting P4P activities to payors
• Efficient and reliable ways needed to capture process indicators• Capture in nurse charting system
Did it happen, was it documented and was the time recorded?
If nurse charting is not automated, P4P will require chart pulls and reliance on accuracy/completeness of manual documentation
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Increased need for IT assistance• Reminders/prompts needed at time of care delivery
• Clinical decision support capability in automated charting and order entry systems
• Vendors should be incented to standardize P4P data collection/reporting and alerting modules
• To track P4P impact on financial performance, key indicators need to be accumulated and inserted in a financial decision support system
• To extend incentives to physician/clinical groups (gainsharing) HR/payroll systems will need to be modified to reflect incentive compensation
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Increased stature for the IT function • IT can become direct partner in improving
institution’s quality
• Also seen as partner in increasing organization’s revenue through P4P incentives• Creates ROI platform for further IT investment
• Modeling system to forecast incentive payments
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New challenges for IT• For those IT leaders not deeply engaged in
clinical processes, P4P will bring new challenges• Clinical language and culture
• User acceptance of new processes and systems
• Need for very high systems availability
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A final note: IT and knowledge transfer• Through site visits and interviews, we have identified 7
key characteristics of top-performing hospitals:1. Quality is a core value of the institution2. Quality is a top priority of the executive team3. Physicians are engaged in quality improvement 4. The institution has a defined improvement methodology5. The institution has a defined methodology for prioritizing
improvement efforts6. The institution dedicates resources to quality improvement7. “Knowledge transfer” is institutionalized and
continuous Need ability to systematically capture best practices and
share them rapidly Great opportunity for IT innovation and leadership
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The next evolution of P4P• Paying disease management companies to manage
hospitals and doctors is an extra, unnecessary step
• Design system so hospitals and physicians are rewarded for disease management• Capitation now $12-15 per MD vs $120 for CDM company
• Let’s invest in essential processes of care delivery
Invest in essential care processes as foundation for a stable system.Disease management should not be an expensive overlay.
Physician HospitalPatient
Information, Collaboration, IncentivesThroughout Continuum
Physician HospitalPatient
Information, Collaboration, IncentivesThroughout Continuum
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PROPRIETARY AND CONFIDENTIAL
Thank you
Questions? Comments?