October 13, 2008

A Recipe for Better Patient Care
By Selena Chavis
For The Record
Vol. 20 No. 21 P. 16

The completion of a recent collaboration between the CMS and Premier healthcare alliance suggests that transparency in healthcare coupled with pay-for-performance initiatives can yield high results.

It started as the first national pay-for-performance initiative of its kind, and ongoing findings suggest that it is a stunning success, according to many industry experts. Started in 2003, the Hospital Quality Incentive Demonstration (HQID) has delivered such positive results that it was extended for an additional three years.

A collaborative effort between the Centers for Medicare & Medicaid Services (CMS) and California-based Premier healthcare alliance, the HQID is a groundbreaking, multiyear government demonstration project that is part of an effort to analyze the effectiveness of value-based purchasing, says Vi Shaffer, one of Gartner research group’s lead healthcare analysts.

“You have to step back and understand the big picture … and the big picture is that this is important,” she says, pointing to an effort to change a practice of reimbursing for services that has been entrenched in government processes for decades to a new system where payments are rendered for quality. “The data is sufficient to suggest that public reporting with incentives makes a difference.”

Through the project, Premier collects a set of more than 30 evidence-based clinical quality measures developed by government and private organizations from participating hospitals. According to results released in June, the more than 250 hospitals participating in the HQID have raised overall quality by an average of 15.8% over three years.

More than 1.1 million patients treated in five clinical areas at the hospitals are living longer and receiving recommended treatments more frequently, notes Stephanie Alexander, senior vice president of healthcare informatics at Premier, who adds that there were a number of drivers pushing the need for this initiative. Besides the CMS’ desire to improve quality of care, there was a RAND study “that was plastered everywhere,” suggesting patients in U.S. hospitals were receiving substandard care about one half of the time.

“These are the major components that led to the study,” Alexander notes. “Medicare administrators felt like we are using Medicare dollars to pay for care based on cost as opposed to quality.”

HQID findings reveal that improvements in quality of care saved the lives of an estimated 2,500 heart attack patients during the first three years of the project, according to an analysis of mortality rates at participating hospitals. Patients also received approximately 300,000 additional recommended evidence-based clinical quality measures, including smoking cessation, discharge instructions, and pneumococcal vaccination, during that same time frame.

Further data analysis suggests that if all hospitals nationally were to achieve the three-year cost and mortality improvements found among the HQID project participants, they could save an estimated 70,000 lives per year and reduce hospital costs by more than $4.5 billion annually. The 1.1 million patient records represented in the analysis encompass 8.5% of all patients nationally within five noted clinical areas over the three-year timeline.

“We do regard it as a substantial success. If there is any surprise, it’s how well the hospitals performed,” says Mark Wynn, director of the division of payment policy demonstrations at the CMS, who adds that “mechanically, it also seems to work well. Sometimes you might find that a demonstration that works on a small scale might not work nationwide.”

Along with the overriding success of the demonstration, Alexander says Premier was initially surprised at how many hospitals stepped up to volunteer for the effort. “The reward was small compared to the risk if it didn’t work,” she says, pointing to the high-profile nature of the demonstration. “The other surprise is the rapid response of improvement.”

Pursuit of Perfection
Patrick Falvey, chief integration officer at Wisconsin-based Aurora Health Care, agrees that “the first surprise initially was how fast the group [improved].”

A not-for-profit health system made up of 13 hospitals and more than 100 clinics offering services to more than 90 communities throughout the eastern portion of Wisconsin, Aurora has received the designation as the project’s top performer.

Falvey says the project was an easy fit, as the organization had already established a top-down commitment “of being a top-quartile performer in quality initiatives.” But it quickly became apparent that staying on top would not be easy.

“Within the first six months to a year, if you weren’t doing 98% of things right, you weren’t even in the top half,” he says. “Our strategy moved to a pursuit of perfection. It’s not a matter of improvement, but now the question becomes ‘How do I have no error?’”

The HQID tracks process and outcome measures in five clinical areas: acute myocardial infarction, heart failure, coronary artery bypass graft, pneumonia, and hip and knee replacement. The third-year results revealed that Aurora’s hospitals were top performers in 40 of the 47 quality areas—the most of any group. Ten of its hospitals that have been a part of the quality effort are also ranked near the top in pneumonia care.

As a result of its success, Aurora will receive incentive payments in 24 quality areas. Overall, that means bonus payments of nearly $376,000 for the 24 areas in the top 20%.

And while those greenbacks are a sweet reward for a job well done, Falvey attributes little of the success to the incentive payment, noting that it’s really not that much compared with the organization’s overall budget.

“It wasn’t the incentive so much but the opportunity to compete on a transparent basis,” he says, pointing out that it was not only about taking on other health systems but also battling with fellow Aurora facilities.

Alexander believes the power of collaboration is one of the key ingredients to the project’s success, especially in light of the fact that there is data transparency in relation to quality today, and the rest of the country is still not up to par with the HQID hospitals.

Other project administrators agree. “Every time you do a major project like this in a hospital, it’s very difficult and time consuming. This is not a trivial exercise,” Wynn says, pointing to the fact that collaboration and the opportunity to compete raised the bar for performance in these facilities. “For the most part, they were really taking this as an opportunity to push forward the quality improvement initiatives that they wanted to improve anyway.”

Wynn says that while there was not a perfect random sample, the demonstration represented a wide variety of hospitals, from small critical access facilities to large teaching hospitals with hundreds of beds. But the success had little to do with those characteristics. “The demographics were less important than where they started from,” he notes. “The hospitals that improved the most were those that had the furthest to go.”

Falvey says that when Aurora started the initiative, its facilities were well under average compared with the other hospitals.

Realizing the potential of the competitive environment, Medicare changed its strategy of rewarding only the top performers to also include bonuses for those organizations that improve the most, Wynn adds.

Success for top performers was also attributed to an inherent commitment from the top and an understanding that improvement was about overall “systems change,” Alexander says. “These hospitals learned quickly that they were not going to improve quality just by fixing the emergency department,” she says. “The board and senior leadership also had to be totally committed to driving quality up.”

The Role of Technology
Acknowledging that hospitals involved in the HQID were already collecting data using Premier tools, Alexander says that “they were in a good position from the standpoint of using clinical data for improvement.”

From a technology and systems standpoint, other healthcare organizations may have some catching up to do, she adds, noting that “there’s a will to improve, but [hospitals] are saying, ‘We can’t keep adding clinical staff to collect data.’”

Wynn says not all of the facilities had an electronic health record (EHR) in place, but almost all of the successful hospital programs are those “who are innovators with technology.

“While it is possible for hospitals to improve quality of care without an EHR, it is difficult,” he says. “It’s fairly obvious that hospitals that have not implemented an EHR need to get on board and do that.”

Whether or not the hospital had an EHR, all had to report to the CMS electronically through the Premier system. Technology was used during the demonstration to disseminate best practices, and the hospitals used a Web portal to collect their data, Alexander says.

While having electronic systems puts a healthcare organization in a good place from an efficiency and accuracy standpoint, Alexander explains that there are still frustrations with the idea of using clinical data to reach improvement goals.

“Hospitals are having to abstract answers. The industry is behind in automating [this function] with EHRs,” she says. “We’ve created EHRs, but we haven’t created and installed them to ensure we can collect appropriate measures on the back end.”

Moving Forward
“It’s a very important paradigm shift,” says Shaffer, who says there is every indication that the concept of value-based purchasing has become a focal point of Health and Human Services’ efforts to control cost escalation and improve quality as the country’s largest single healthcare payer.

In fact, Congress is considering whether to authorize the CMS to incorporate performance incentives in Medicare payments as early as the fourth quarter of this year, Shaffer adds. Incentive payments would then be a companion to the CMS’ rule denying incremental payments for certain preidentified and preventable hospital-acquired conditions.

“The fundamentals of this—if you listen to both [presidential] campaigns—should hold,” she says. “Legislation should move forward.” And the momentum will not likely stop there as the CMS is a trendsetter that will influence private insurance, she adds.

Shaffer notes that while the HQID begins to address the cost and quality issue, it still doesn’t get the industry to the harder issue of investment—spending money that would mitigate tomorrow’s risk for long-term consequences of disease.

“It’s always a challenging topic for government,” she acknowledges. “How does it make those leaps to more of an investment paradigm? That remains to be seen.”

Alexander points out that new projects may begin to address this larger issue. Premier has developed QUEST: High Performing Hospitals, a program that will assist hospitals and healthcare systems with driving healthcare to new levels of performance. Building on the success of the HQID, QUEST will seek to develop the next generation of quality, safety, and cost initiatives by accelerating access to proven safe and effective technologies. The program will measure the effectiveness of new technologies against the metrics on which participating hospitals will be measuring themselves. These measures include quality, efficiency, safety, and transparency.

— Selena Chavis is a Florida-based freelance journalist whose writing appears regularly in various trade and consumer publications covering everything from corporate and managerial topics to healthcare and travel.

A Closer Look
For hospitals participating in the Hospital Quality Incentive Demonstration project, the average Composite Quality Score, an aggregate of all quality measures within each clinical area, improved by 4.4% between the project’s second and third year for total gains of 15.8% over the project’s first three years. The improvements for the five clinical areas are as follows:

• from 87.5% to 96.1% for acute myocardial infarction patients;

• from 84.8% to 97.4% for coronary artery bypass graft patients;

• from 64.5% to 88.7% for heart failure patients;

• from 69.3% to 90.5% for pneumonia patients; and

• from 84.6% to 96.9% for patients who underwent hip and knee replacement surgery.

The pay-for-performance model used in the first three years of the project includes financial incentives for the top 20% of hospitals in each of the five clinical areas. The top 10% of hospitals receive a 2% incentive payment for patients in that clinical area. Hospitals in the second decile receive a 1% incentive payment. Hospitals in the top 50% of each clinical area receive public recognition on the Centers for Medicare & Medicaid Services’ Web site.