THERE IS PERHAPS no more nebulous word in the English language than “quality.” Not only does it have multiple meanings and a subjective character, but it’s also inherently abstract and seems impossible to quantify.
Ironically, hospitals are being tasked with basing their entire business strategy on this largely enigmatic concept under the synonymous labels of pay for performance (P4P) and value-based purchasing. Put mildly, it’s an imposing task.
Despite reservations that may exist about quality-based initiatives throughout the healthcare provider sector, doing nothing is apparently not an option. Congress and the Centers for Medicare & Medicaid Services have launched plans to implement a value-based purchasing program for Medicare in 2009 that would predicate hospital payments on quality factors.
Led by Sen. Charles Grassley (R-Iowa), the system is designed to curtail “skyrocketing” healthcare spending and “’bend’ the long-term growth curve (by) concentrating taxpayer dollars on higher quality care and helping to weed out ineffective and lower quality healthcare,” he said.
Understanding quality, assessing its relevance to an organization and implementing a plan of action promises to be a challenge, but it’s long overdue, says Rusty Holman, MD, immediate past president of the Society of Hospital Medicine.
“There has certainly been a long history of research and discussion about it, but only in relatively limited circles and not in the mainstream,” he said. “This is about transparency – sharing information with the public about the state of healthcare quality. It helps drive meaningful change.”
Perhaps the most fundamental change brought about by quality initiatives is with the fee schedule matrix. The quality movement’s intent is to no longer base charges on patient volume, but rather to align them with efficacy and safety, said Janet Corrigan, president and CEO of the National Quality Forum.
“Whether it’s fee-for-service or DRGs that are paid by procedure or by visit, it is a volume-based payment mechanism,” she said. “When a hospital improves its safety and quality, fewer patients have complications and come in for readmissions, and revenues therefore drop. It is an unintended consequence of our current payment system.”
Corrigan contends that rewarding improved patient safety and quality through programs like P4P is common sense.
“With P4P, we have a set of quality indicators, and if the provider and the hospital (do) well with those indicators, they should get paid more,” she said. “Those systems can be structured in different ways, such as rewarding year-over-year improvement. In other cases, they can reward the best performance among hospitals in a community or even in the country. These programs are starting to become widespread.”
Not only is it possible for quality be measured, it can be done so in a methodical, comprehensive manner, say members of Premier’s executive team. The San Diego-based hospital group purchasing organization recently announced the results of a Medicare P4P study that effectively demonstrated how the median cost-per-patient for selected procedures declined by more than $1,000 during a three-year period.
The project, known as the Hospital Quality Incentive Demonstration, set performance standards for hospitals treating patients with pneumonia, heart bypass, heart failure, heart attacks and hip and knee replacements. Premier executives say the study shows that if all hospitals in the United States were to achieve what was accomplished under HQID, nearly 70,000 patient deaths would be prevented and annual hospital cost savings would total about $4.5 billion.
“We’ve learned that rewarding performance in addition to publicly reporting transparent results are two engines that drive performance higher,” said Blair Childs, senior vice president of public affairs. “One of the challenges in healthcare is getting quality delivered in a reliable way – the imperative that is demanded for healthcare by employers, insurers, consumers and by the providers themselves. The evidence from the HQID project is that rewards and transparency of information create a performance improvement engine.”
In assessing the healthcare industry’s level of awareness about quality initiatives, proponents say the era is still in its formative stages and has a long way to go.
“There is great variation in awareness levels,” said Stephanie Alexander, Premier’s senior vice president of informatics. “We are currently working hard to boost awareness from a financial standpoint, and we are looking to the CFOs to work with clinical staff on the quality issue. Together, they can drive value.”
Ultimately though, it is the hospital’s senior management team that has to provide the blueprint, Holman said.
“It has to start at the top,” he said. “There must be a clear vision and goals set out for a value-based purchasing or P4P model. These goals should be to improve quality and patient safety, avoid unnecessary costs and stimulate investment in effective systems, whether for patient care or information technology.”
Even as the awareness level rises and spreads, Corrigan concedes that the payment transformation process will take years to complete.
“It will take a decade or two to get payment systems to where they should be in achieving the best outcomes for patients,” she said. “We’re just at the tip of the iceberg now.”