From quantity to quality: Hospitals looking ahead to 2015 health reform measure

March 6, 2012, 7:42 a.m.

With healthcare reform on the horizon, California hospitals need to cut costs, which will place more responsibility on the shoulders of community health clinics.

State hospitals will need to whittle patient numbers down in order to remain financially sustainable when one healthcare reform measure arrives in 2015, the Los Angeles Times reported on Monday.

According to the Times article, hospitals in California are in the midst of a rapid transition: They must move from a system where hospitals' and doctors' pay are based on patient outcome – not the length of a patient's hospital stay, or the number of services of they receive. The shift is mandated by the Affordable Care Act, a key feature of which is to pay physicians "based on value, not volume."

With this new reform measure, hospitals will be getting paid less per patient than they are now, and so will need to intake fewer patients in order to remain financially sustainable. Otherwise they risk being forced to eliminate services – or shut their doors entirely.

Although this measure doesn't take effect until the first day of 2015, California hospitals are trying to get a head start on finding the most cost-effective ways to remain in operation because this method of compensation for medical providers is such a drastic shift from the current paradigm.

"How can we change our mindset from how many patients we have in the beds to how many patients we are keeping healthy and out of the hospital?" Michael Rembis, president and CEO of Hollywood Presbyterian Medical Center, said to the Times. "We haven't figured out how to do that yet."

California hospitals' efforts to decrease their patient load come at a time when the state is seeing a spike in preventable hospitalizations due to a lack of primary care. To get their patient numbers (and costs) down, more care will have to be provided in doctors' offices and clinics.

Community clinics provide a "critical" framework of care for communities like South Los Angeles, as U.S. Secretary of Health and Human Services Kathleen Sebelius said in February, and health workers in the area are saying collaboration will be key to taking on this influx of patients.

Nina Vaccaro, the executive director of the Southside Coalition of Community Health Centers, said the reform measure is a good thing. "It makes more sense if you're paying a hospital system based on quality versus quantity, because we don't want patients to use the emergency room unless they really have to," she said. "We do want those patients to seek primary care."

Part of the challenge with that, she explained, is the increased responsibility – and patient load – of community clinics, which will shift the cost from the hospitals to the clinics. But primary care is cheaper than hospital care, and Vaccaro said there are collaborative systems and models that can be financially sustainable for both hospitals and clinics.

Accountable care organizations (ACOs) could be a big part of the answer. ACOs are groups of healthcare providers that work together and coordinate to provide care to a group of patients and ties payment of providers to both quality and reduction in cost to patients.

Vaccaro said focusing on quality would result in better health outcomes for the community, which would decrease costs for care providers.

"You have to make sure the cost-savings is not just being found on the hospital side," she said. "You have to make sure that whatever resources and funding hospitals are saving goes back to boost primary care, so there is enough primary care that maintain that cost-saving.

"Everyone has to hold up their end of the bargain to make everybody whole," she continued. "Everyone essentially is being held accountable."

Jim Mangia, president and CEO of St. John's Well Child and Family Center, which is a member of the Southside Coalition, said the upcoming reform measure is a "very good thing."

"I think it's going to create better systems of care," he said. "I think it's going to create more appropriate use of care, and I think it's going to force coordination between various levels of care" – coordination, he said, that hasn't been happening as it should.

Mangia said St. John's, along with other providers, is part of an integrative healthcare delivery network, which is essentially an ACO.

"Our goal is to improve care, improve quality and reduce unnecessary costs," he said. "So I think we're already kind of putting the systems in place that will be necessary to meet those federal guidelines."

Photo by Tim Samoff via Flickr Creative Commons.

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