New payment methodologies will force specialty distributors to change their approach to sales
As specialty distributors approach hospital and IDN customers with new-technology opportunities, they need to keep in mind the things with which their potential customers are preoccupied – continuing pressure to provide safe, high-quality care in the midst of a transition away from fee-for-service reimbursement. Doors will open if those distributors can prove their technologies can help hospital and IDN executives get “from here to there.”
Unsustainable cost increases
The traditional fee-for-service approach to reimbursement has led to unsustainable cost increases, said Bill Bopp, president, Gulf South Quality Network LLC, New Orleans, a clinically integrated network comprising eight hospital members and more than 1,600 participating physicians. Bopp made his comments at the 2014 IMDA Annual Convention and Manufacturers Forum. IMDA is the association for specialty sales and marketing companies.
Physicians and hospitals have traditionally gotten paid more for doing more. But Medicare is moving toward reimbursing providers on the basis of outcomes, he explained. Hospitals and IDNs that fail to perform stand to lose as much as 7.5 percent of their revenues. “The days of fee-for-service in the next 18 to 24 months will be gone in most of the country,” he predicted.
With that in mind, Bopp laid out the chief dynamics playing out in healthcare today – dynamics that IMDA members should remember as they try to share technology solutions with their customers.
- Limited funding. Medicare is ratcheting down on reimbursement, and private payers are facing pressures of their own. With today’s healthcare exchanges, insurers have to take all comers, said Bopp. No longer can they exclude people with pre-existing conditions. They’re taking a risk, and it is in their best interest to make sure network providers deliver care efficiently.
- Data is key. The highest infrastructure-related investment for most hospitals these days is information technology. For example, Gulf South’s IT budget is $6 million, said Bopp. With data, providers can get a better view of how they’re performing from a clinical and financial perspective, identify opportunities for improvement, and track (and duplicate) success. “When you bring in products or ideas, they need to be data-driven,” he told IMDA members.
- Medicine is shifting from specialty care to primary care. In the near future, health plans will insist their members pick a primary care physician or practice, whose responsibility will be to monitor people’s health over the long term.
- Reimbursement is shifting from fee-for-service to pay-for-performance. As a result, healthcare providers will be held much more accountable for the way they care for people, and the amount of resources they consume while doing so.
- Consolidation will continue. Hospitals are looking for ways to cut infrastructure costs, and the only way many can do so is to merge with others.
- Medicaid programs are expanding, which will bring downward pressure on reimbursement.
- Baby Boomers will continue to transition from private-pay insurance to Medicare. That means more revenue lost for hospitals and doctors.
- Value-based purchasing will expand. Medicare is penalizing hospitals for readmissions and for providing care that leaves patients unhappy or unsatisfied. Private payers are climbing aboard the value-based train as well.
Penalties for readmissions
Another speaker – Marc Lato, M.D., FAAFP – gave IMDA members a glimpse of the challenges facing hospitals and IDNs as they work to reduce hospital readmissions. Lato is vice president of medical management for St. Joseph’s Hospital and Medical Center, Phoenix, Ariz., part of Dignity Health.
The government has targeted readmissions for a good reason, he said. Every year, 2 million Medicare patients are readmitted within 30 days of discharge. The FY2014 formula for penalties was based on readmissions for acute myocardial infarction, HF and pneumonia. In FY2015, the government will raise the maximum penalty, and will add three conditions: acute exacerbation of chronic obstructive pulmonary disease, elective total hip arthroplasty, and total knee arthroplasty.
Medicare has penalized 2,217 hospitals for excess readmissions since October 2012, the first year of the hospital readmission reduction program, he said. The average penalty in FY2014 was 0.38 percent, down from 0.42 percent the year before. These 2,225 hospitals will forfeit $280 million in Medicare funds over the next year.
In their attempt to reduce readmissions, Dignity and other providers are focusing on the process by which patients are “handed off” from the inpatient setting to outpatient care, such as the home or long-term-care facility. Such transitions can be associated with adverse clinical events, unmet needs and poor satisfaction with care.
Traditionally, many pre-discharge activities have been performed for the convenience of the provider, not the patient, said Lato. For example, instructions for medications and follow-up care are given when it’s convenient for the physician, but with little regard for whether the patient can understand the instructions or whether he or she has an advocate – a family member or friend – to listen, ask questions and get clarification. Some hospitals may compound the problem by having too many coordinators, too many assessments, too many care plans and too many follow-up phone calls, he said. Patients who fail to follow instructions are called “non-compliant,” a term that attaches a certain blame to them. In fact, they simply might have failed to understand the doctor’s instructions.
Critical-thinking care managers with decision support technology tools, who can engage the patient in his or her care, can help reduce mistakes and improve the patient’s satisfaction level. Meanwhile, hospital staff can assess patients who may be at high risk for readmission, and train patients to communicate proactively. These patients need to understand the “red flags” of their condition, which necessitate a call or follow-up visit to their doctor. Other elements of successful transitions include physician engagement and accountability, family/caregiver engagement, and cross-continuum collaborative teams.
Next year’s IMDA convention will be held in May in St. Louis, Mo.
IMDA award winners
IMDA past president Tony Marmo of Martab Medical, Allendale, N.J., received the association’s Ernie Douglass Award. Named after IMDA co-founder Ernie Douglass, the award recognizes members who have gone above and beyond the call of duty serving IMDA, promoting specialty sales and marketing as well as excellence in their own companies.
Meanwhile, Northampton, Pa.-based Precision Medical, a manufacturer of specialty respiratory devices, received the Manufacturers Partnership Award at the 2014 Annual Conference and Manufacturers Forum.
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