- Physician/Administrator alignment
- Driver-based budgeting
- Detailed costing
- Robust decision support (particularly pertaining to capitated care, self-insurance, and pay for performance)
After considerable investigation and follow-up, I validated something we all seem to intuitively comprehend – The need to map/model the entire process of care delivery, including referrals and ancillaries. Next, the integrated model must connect these processes to costs, revenue, resources, budgets, etc. Only then can physicians and administrators make the requisite decisions that impact the quality of care as well as the cost of care delivery.
The Key Challenge
Care delivery processes are comprised of objective and subjective tasks. For example, the admissions process is a combination of objective tasks than can easily be mapped, qualified, and quantified; however, the type of care or treatment plan is determined by the physician’s professional recommendation, which is largely subjective. These subjective activities challenge traditional approaches to process modeling, evaluation, and resource utilization. As a case in point, one doctor explained to me that there were 15 different treatment plans available for one type of bone cancer.
Accelerating healthcare reform must consider the physician’s activities since they are the key drivers of system resources.
Bill Thompson, president and chief operating officer of St. Louis-based SSM Health Care says, “Eighty-five-plus percent of the decisions that drive quality and cost are going to be determined by the physicians.” (1)
To date, healthcare systems have cut costs that have not directly impacted patient care. Consequently, costs have been trimmed from non-core areas such as supply chains and administration, but real, tangible hospital performance improvement will not occur without quantifying the physicians’ activities in terms of costs and profits.
Healthcare administrators, caregivers, technologists, and strategic planners cannot improve the system of care without understanding how the physician’s activities impact the hospital’s utilization of resources, costs, and profits. Existing healthcare practices cannot track activities such as CPTs, DRGs, and ancillaries, back to originating physicians; therefore, they cannot properly understand and predict cost. Additionally, most physician and physician groups are not incented beyond administering the appropriate care. This lack of incentives, combined with contract-based physician relationships, limits the impact physicians can have in helping healthcare providers to drive cost down, increase efficiencies, and improve financial performance. As a result, healthcare costs – which now account for nearly 20% of the GDP – continue to rise. In response, healthcare providers are being pushed to do more with fewer resources, thereby threatening the quality of care.
Caregivers and administrators are turning to new technologies, with robust analytical capabilities, that properly map physician activity and referrals as the causal drivers of system utilization and material consumption.
This new approach, commonly referred to as Integrated Delivery Planning (IDP), builds an integrated, simultaneous representation of system-wide activity. This integrated representation includes causal drivers of the activity, the resulting resource utilization, and the detailed costing and financial impacts of these activities.
Using integrated, holistic modeling enables healthcare professionals to remove the performance barriers that have continually challenged caregivers, operations, finance, and IT. Specifically, IDP delivers insight and impact by:
- Quantifying the financial impacts of physicians, procedures, and ancillary activities
- Determining the true value of referrals
- Aligning activity drivers and system capacities
- Accurately forecast activity, resource utilization, and financial performance
- Providing What-If analyses to address revenue and profit losses resulting from disparate planning activities
- Improving collaboration between hospital administrators and physicians
- Connecting budgeting processes directly to business decisions (e.g., physician staffing, new resources/service lines, referral investments, etc.)
IDP is an essential ingredient in the transformation of healthcare. IDP effectively addresses current HDO issues, including cost reductions, physician-administrator alignment, and physician staffing alternatives. IDP is also uniquely suited for addressing emerging trends in care delivery, including pay-for-performance, self insurance, and capitated care.
(1) Healthleaders Media Breakthroughs: Aligning Hospitals & Physicians Toward Value, (In conjunction with PricewaterhouseCoopers)
