To Prevent VBP Financial Loss, Think Like a Clinician

Karen Minich-Pourshadi, for HealthLeaders Media , October 31, 2011

Van Cleave points to length of stay as an example of how different goals for the financial and clinical staff can influence one another.

"Clinicians need to have enough time to complete the [patient] education cycle, to monitor the illness, and to get the patient tuned up to a higher level before discharge. If it's rushed, there's risk. What we need [from CFOs] are the right tools for an efficient process so patients get the right education and care. We need to set standards so when the patient reaches certain milestones we can help them make the transition to home," he says.

Financial leaders have focused on LOS since 1983. That's when Medicare introduced the prospective payment system and announced it was going to pay hospitals a flat fee to cover costs based on an expected LOS. CFOs reasoned that if their hospitals could shorten patients' LOS, the result would be greater margins. They encouraged doctors to discharge patients as soon as they no longer required an acute level of care.

What has been the outcome of this effort? Providers have managed to shorten LOS, but at the cost of 30-day readmission rates. In 2010, Medicare released a study of heart-failure patients showing that between 1993 and 2006, mean LOS decreased from 8.81 days to 6.33 days. In-hospital mortality decreased from 8.5% to 4.3% during the same period, and 30-day mortality decreased from 12.8% to 10.7%. But 30-day readmission rates (which are not part of the VBP measures) increased from 17.2% to 20.1%.

Just as your clinicians' actions influence patient outcomes and reimbursements, so too do the actions of financial leaders. You may know how VBP will influence your organization's bottom line, but have you asked clinical leaders how to improve your metrics? By understanding the clinician's perspective, CFOs may get a clearer picture on how to hit VBP measures and improve HCAHPS scores.

Complying with VBP is going to challenge organizations for the next few years. It puts 1% of Medicare payments for hospitals and health systems at risk in the first year, and that percentage will grow as the measures grow. Nevertheless, it really is possible to win with VBP.

But doing so, Van Cleave observes, requires that "everyone has to pull in the same direction and be very clear about the goal and the numbers to succeed."

Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media.

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