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5 ways to break barriers to successfully implementing payment reform

Bundled payment and payment reform in general are hot topics in healthcare circles, and will prove to be a challenge for many. Jay Sultan, thought leader for payment reform at TriZetto, a healthcare management solutions company, shared with Healthcare Finance News five key ideas for hospital leaders to consider in order to break barriers to successfully implement payment reform at their organizations.

[Also: Payment reform critical to healthcare IT efforts]

1. Make a real commitment. Sultan said the most important aspect of implementing payment bundling successfully is getting started by "making the right level of commitment to it."

"I think the key is to understand that these changes are coming no matter what and you can be intentional about getting this under way and be a 'winner,' or pay a penalty for 'losing," said Sultan. "One key point I can make is that you don't have an option here. The industry is going to go there and you don't have a choice. Call it commitment, dedication to full-time implementation, however you want to characterize it, I think being real about it and making the right decisions with it are important."

Sultan added that all employees need to understand that changes that will be happening and that a lot of communication is key. "You just can't communicate enough. And this can't be done without high-level direction. Not just approval, but support and active participation. Be real about it and put in adequate resources," he said.

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2. Focus on what you're going to fix before you write a contract. "It's easier to contract for risk than manage risk. And many people don't understand what it means that you need to manage risk. What I tell hospitals is if you first contract for bundles and then manage them, you won't be successful," said Sultan.

Sultan said hospital executives should understand where there might be "unwarranted variations in care," whether it's in a particular care process or somewhere else in the organization. "The variations are almost always a pointer for something that can be done better. Find those variations," he said.

Examples of these variations include high readmissions rates or high lengths of stay that tend to be scattered in type. Once the variations are identified, figure out how to solve the problem at hand. "Maybe partner with surgeons about the problem. Partner with whoever is involved. Now that you know what's broken, you can begin to fix it and figure out who to work with in order to fix it," he said.

Lastly, figure out a dollar amount for how much can be saved once the problem is solved. "How much can I contract for and what is the best deal I can get?" Sultan said. "Always remember that payment reform is not magic pixie dust and won't fix the problems without change."

3. Take on the responsibility of a payer. "When hospitals accept risk, they are taking on this responsibility that payers have. How am I going to manage utilization? How do I keep people from doing things I don't want them to do?" said Sultan. "It's about population health management, communication to patients, sending patients to the right places." Sultan added that figuring out the right solutions for healthcare providers will allow executives to solve the payment problems as well.

4. You have to be able to measure what you are doing. "Quality and cost accounting are major problems," said Sultan. "On the quality side, it's important that we get robust measures of quality, and we are not rationing care when it comes to the patient."

Sultan said it's important to come up with "really good functional measures," in order to make sure patients are really where they should be at all times. "If you can't measure it, you can't fix it," he said. "You have to rethink and invest in how you're measuring patient levels."

5. Get started now. "When I talk to a lot of provider organizations, they tell me that they can't get payers to contract with them. The number one complaint I hear from payers is that hospitals are never ready to contract with them, saying that the hospitals say they are ready for payment reform but not all of the actual work is done. The payers then don't want to contract with them," said Sultan.

He added that it's important for hospitals to engage with payers and form some sort of partnership. "The idea is that it's going to take more than a grudging willingness to get this all started. There's a tremendous 'first mover' advantage for hospitals here. Gain the knowledge you need and find doctors in your organization that are committed to this," he said. "Let payers know the cost of care and where it often varies."

[Also: 5 key points for healthcare executives when transitioning business models]

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