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Leading the way: Children's hospitals believe in value-based future

Despite fewer mandates, pediatric hospitals are bullish on how pay-for-quality can improve the health of their patients and their operating margins.

Jeff Lagasse, Associate Editor

Tim Robinson, executive vice president and chief financial and administrative officer for Nationwide Children's HospitalTim Robinson, executive vice president and chief financial and administrative officer for Nationwide Children's Hospital

While many healthcare providers and private insurance companies are embracing value-based care as a way to enhance care quality and rein in unnecessary spending, there's another factor driving adoption. Most hospitals have little choice in the matter due to federal government mandates such as the value-based purchasing program and bundled payments.

Children's hospitals, however, are exempt from many of these mandates. Yet many of the nation's top institutions are embracing value-based reimbursement not because they have to, but because they see the model as best for the health of their child patients and the financial success of their organizations.

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"Back in the late '90's, Ohio moved into Medicaid managed care on a voluntary basis," said Tim Robinson, executive vice president and chief financial and administrative officer for Nationwide Children's Hospital in Columbus, Ohio. "It started in the urban counties, again on a voluntary basis. As we saw this occurring, the first group of HMOs in the space were not very well capitalized. There were a series of defaults. We thought we'd go at risk, and do what's best for the kids."

Medicaid accounts for 53 percent of Nationwide's payments, representing a payer mix that many other children's hospitals encounter as well.

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While business incentives for the transition helped, Robinson said the model supported the hospital's mission of providing care regardless of the ability to pay, and making sure children were receiving the right quality of care.

The state expanded the reach of its managed care, and Nationwide expanded its engagement with the children on Medicaid. The hospital ended up overseeing all of the children in the Medicaid population and was then able to build an infrastructure focusing on wellness initiatives and other programs to improve clinical quality. Certain assets enabled the hospital to do this, including good relationships with community pediatricians, for whom financial incentives were provided.

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Nationwide also operates a neonatal network, where a lot of the risk is centered. This enables the system to be focused -- understanding where the clinical issues are, and where the opportunities are from a wellness perspective.

The system's situation is fairly unique in that a majority of the area's physicians are part of the system. There are other examples of this type of situation, primarily in Texas: Texas Children's Hospital has a large state HMO with a high number of children at risk, and similar situations exist in Kansas City and Wisconsin. Like them, Nationwide Children's strategy is shaped by the region's large concentration of Medicaid patients.

Preparing for value

While children's hospitals saw the opportunity for value-based programs, a lot of pieces had to be in place before the shift could successfully happen.

"You need to have a network," said Robinson. "You need to have the data analytics infrastructure. You need to have the care coordination capabilities. You need to have a culture that enables wellness and prevention and that holistic view of patients and family. You need to have pharmacy engagement. We had the luxury of growing it slowly, and building it as it matured within the state, and building relationships.

Robinson also said that Nationwide's status as an academic institution helped in the transition. "There's an opportunity to look at what's a substantial amount of claims data about this population, and we can look at it through the lens of academic curiosity, see where there's efficiency in certain areas -- drugs, wellness visits -- and try to translate that into better outcomes."

Like other organizations, Nationwide puts a lot of effort into capturing and interpreting data.

"It's a prerequisite to understanding your business, and what the needs of the population are," Robinson said. "It's the ability to take that to another level, having the academic presence to demonstrate that we can, say, bend the cost curve. Academic colleagues are looking at these things with a certain scientific rigor."

One of the biggest differences between children's hospitals' adoption of value and that of their adult counterparts is simply the nature of pediatric care. Children aren't beset by as many chronic conditions, but specialty care is more prominent. Most children are well, but the truly sick ones consume a lot of resources and require a lot of help. So there are a lot of things about primary care management that don't translate the same way.

There are other challenges as well, especially as it pertains to data. Nationwide in particular is getting claims data from 225,000 people from five different health plans, and the data comes after the claims are adjudicated, so it's always, as Robinson put it, "in the rearview mirror." Because of the financial risk, there tends to be more volatility over time. Year to year, even quarter to quarter, there can be more extreme swings in a system's financial performance. There are things a successful system needs to be prepared to do.

"Culturally, there's two different approaches," said Robinson. "You have different economic incentives, a commercial population that isn't at risk and one that is, but we have one standard of care, so you have different financial outcomes from the same health outcomes. The challenge is how do you manage that from the commercial side. Then there's the day-to-day. It's hard work trying to affect the health status of kids and trying to move the needle on complex issues such as prematurity, and making sure the resourced population and the underserved are getting access. All of those things, plus adherence, social elements and social determinants, are things you're working against."

Not one model

While the overarching philosophies of value-based is universal across systems and geographic regions, specific market considerations have to be taken into account when formulating a transition plan, particularly in pediatric care.

In 2013, the staff at Ann and Robert H. Lurie Children's Hospital of Chicago looked at where the market was heading, and created a three-pronged approach. The first step was forming a clinically integrated network; the second was developing a care unit that would provide care coordination services to the Medicaid population. The third step was getting a handle on the state's push to move that Medicaid population into managed care.

The clinically integrated network got off the ground in 2014, with hospitals, networks and pediatricians coming together to focus on improving care and reducing costs, and in return hopefully strengthening the system's relationship with payers.

"We focused on a few key things to start," said Scott Wilkerson, executive director of Lurie's clinically integrated network. "The first is, we needed to create a unified patient record across those practices and the hospital. We have over 100 pediatric and speciality practices, and we wanted to bring that together. We developed a quality plan that focused on key quality and operational measures. We took that data and developed measures for things like immunization, and things like readmission rates, avoidable visits. We're trying to develop measures and get baseline information on a number of those things using the data we mined. We now have data on about 300,000 kids.

"We also tried to create contracts with payers -- five contracts with over 100,000 kids, both commercial and Medicaid," he said. "And one of them is a shared risk program."

Wilkerson said the key to overcoming challenges is to first identify what they are and then develop a plan that can chip away at them over time. For example, managing the data has presented Lurie with some difficulties. Some of the data pulls are automated, some are manual and some come in proprietary files, so there's some heavy duty management and data cleaning involved on a daily basis. But the goal, said Wilkerson, is too important to not stay on top of it.

Pediatric-focused CINs may be the key to unlocking the challenges inherent in the very nature of pediatric medicine -- namely, that the patients themselves are different, and come with their own unique set of maladies and needs.

For one, Wilkerson said children tend to get lost in the shuffle at times. Adults tend to be more costly than children, with the typical adult representing a cost that's about 40 percent higher than the average child. Because of the cost difference, adults are almost always the primary focus when it comes to broad paradigm shifts or system reform.

For another, the prevalence of conditions differs between child and adult populations. Adults see more complications from things like smoking, obesity and Type 2 diabetes. Children, by contrast, deal with issues that are more congenital in nature. That means the relevant quality measures are going to be different as well, which presents challenges.

"With the payer, let's say we're going to agree on five to eight quality measures," said Wilkerson. "Ours are going to all relate to kids. Ours are much more focused and granular, whereas they have to account for the whole population.

"It can be tricky to get the attention of payers," he said. "Most of their costs are spent on adults, so you've got to make a strong case."

Trying to get payers to latch on to those pertinent quality measures can be especially thorny given that data, which can be used to make a case for a measure's relevance, is mostly patchwork. Amy Knight, chief operating officer of the Children's Hospital Association, said it's one of the toughest components in the volume-to-value shift.

"It's challenging," said Knight. "You can say, 'How fast can you get aspirin to someone showing up in the ER who has chest pain?' Well, you don't have too many children being rushed to the hospital with chest pain."

And then there are 30-day readmissions rates. Hospitals receive less federal reimbursement when they don't hit certain readmissions benchmarks, but in a children's setting, it's often difficult to avoid such rehospitalizations, given the congenital nature of certain children's health issues.

"When you're dealing with Medicare on the federal side, aggregating enough data on the pediatric side to say, 'OK, this is a good measure' has been extremely hard," said Knight. "It's hard to get the data to support those because we don't have a centralized data set. We would love for Medicaid to have it. More than 50 percent of kids at children's hospitals rely on it for care. The challenge is Medicaid is administered at the state level, so you're dealing with 50 different sets of data … that's not ready at the national level."

A clearer path

Despite the challenges, children's hospitals have a handful of advantages over their adult contemporaries when it comes to the volume-to-value shift. One, said Wilkerson, is that they can focus exclusively on pediatric care.

"We can focus on kids-only issues," he said. "We're only focusing on metrics that affect our medical staff, and they can just focus on areas related to their clinical expertise. Also, we're not asking them to work on drivers that don't relate. Their measures relate to their business and it's not a mixture of other stuff. We think that focus on a defined population allows you to dive deeper."

Aside from data -- acquiring it, cleaning it and sharing it -- one of the most important things for children's hospitals to do, said Wilkerson, is to involve physicians in the decision-making process.

"Value-based care is really thinking about the population and not just individual patients," he said. "That's different than what a physician experiences often. Now we're trying to get them to think about what happens across their population. We're asking them to change lenses, so that's quite a big difference. So we're sharing quarterly performance reports with the practices, and there's just been great dialogue sharing.

"Doctors don't just want to be presented with options," said Wilkerson. "They want to help shape the options. They want to be in the room when the decisions are made. From a business standpoint, you've got to make sure you're including them."

Because children's hospitals don't face as many federal mandates as do adult hospitals, there's a bit more flexibility both in the means and pace by which they move toward value. The question is how fast to move. Often, said Knight, the payers aren't ready -- and risk is a scary thing.

That's why many hospitals and systems are eyeing adult hospitals' efforts closely, taking notes and drawing lessons from the models that work and the ones that don't. When children's hospitals all start to move to value en, Knight expects they'll do so quickly. After all, there'll be a lot of experience at that point.

One thing all children's hospitals will want to do is keep children healthy as they grow into adults -- because that's their mission, of course, but also because healthy adults will be less of a burden on the healthcare system.

"It's going to be fascinating," said Knight. "I wonder if the volume-to-value shift is more about reform, because we're going to have to take a hard look at a lot of things we do. As we look from volume to value, we're going to prioritize our resources differently, and that's a huge shift for all hospitals. If our goal is really to keep children healthy, not just care for them when they're sick, we're going to have to prioritize those things differently and pay for them differently. People want to lower costs, but it may be about paying things differently -- we invest very little in wellness and reading and social determinants of health and so forth. So it's really investing in our health differently than we are today.

"It's a paradigm shift," she said.

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