sweet spot

As baseball teams across the country train for a new season, healthcare organ-
izations are in training for a new system of value-based payment. Much of
their efforts center on shifting from a value gap to a value potential, which
HFMA president and CEO Richard L. Clarke, DHA, FHFMA, describes as “a
state in which improvements in the quality of care outpace the costs of care,
where patients are engaged in improving their health, and where purchasers
reap the benefits of improvements in value.”
But many organizations are struggling with the question of where to focus their
resources and efforts in improving the quality and cost of care.
The fact that most healthcare organizations are in the early stages of adopting
value-based competencies was corroborated by participants at HFMA’s most
recent Thought Leadership Retreat, held this past October. An organization’s
progress toward a value-based business model often depends on its size: In
general, larger organizations with greater resources are the most likely to have
made significant strides toward developing the competencies needed to suc-
ceed under a value-based model, participants said.
“Although there is a lot of talk going on in the industry regarding ways to
improve quality and value, these discussions are taking place in silos,”
Kenneth Fisher, associate vice president and CFO, University of Iowa
Healthcare, Iowa City, Iowa, said at the retreat. “We have to come together in
these discussions to develop the competencies needed to succeed under a
value-based business model.”
AT A GLANCE
Healthcareexecutivesfromthreeleadingorganizations
offer these tips for driving sustainable improvements
in value:
> Focus on fewer initiatives, execute them, make sure
that the results are sustainable—then move on.
> Ensure that both clinical and operational experts take
part in discussions on ways to improve value through
care redesign and reengineering of processes
throughout the organization.
> Zero in on the elimination of adverse events through
evidence-based care for quick wins related to quality
and cost.
finding your organization’s sweet
spots for cost management
84 MARCH 2012 healthcare financial management
CASE STUDIES
Jeni Williams
Hospitals across the country are seeking the right combination of
evidence-based care, resources, technology, and staff to drive enhanced
value. Here, three organizations share their innovative approaches for
improving quality of care while reducing costs.
Learn more about the role healthcare ﬁnance professionals can play in quality
improvement—and view a graphic depicting Bellin Health’s project management
charter—at www.hfma.org/hfm.
03_HFM_March_March 2/17/12 3:57 PM Page 84

How can healthcare organizations find their sweet
spots in driving sustainable improvements in the
quality and cost of care—while making the most of
the resources available to them? Here, three inno-
vative healthcare organizations of various size,
type, and location share examples of ways they are
closing the “value gap” in health care.
Bellin Health: Small IDS Focuses Energy on
Improving Value
“Ifyoulookattheabilityofhealthcareorganizations
tosuccessfullyexecutetheirstrategies,you’llfind
thatouron-basepercentageisnotveryhigh,”says
PeteKnox,executivevicepresidentandchieflearn-
ingandinnovationofficerforBellinHealth,asmall,
integrateddeliverysystem(IDS)inGreenBay,Wis.
“We’rewoefullypooratexecution;wefailtoimple-
mentabout70percentofourstrategieseffectively.At
BellinHealth,westronglybelieveorganizationsneed
abusinessmodelthatwillhelpaligntheirstrategies
withtheactionsnecessarytoimprovevalue.”
In 2003, when Bellin Health saw a sizable reduction
in total volumes as measured by adjusted patient
days while costs escalated (see the exhibit below),
the organization intensified its efforts to improve
value by enhancing quality of care while reducing
costs and driving out waste and inefficiencies
throughout the system, says CFO Jim Dietsche.
In 2006, Bellin Health developed a process for
prioritizing improvement initiatives within the
organization. Every 120 days, Bellin’s senior lead-
ership team selects a handful of initiatives
designed to improve quality of care and efficiency;
engage staff, patients, and partners; grow revenue
and market share; and drive out waste and ineffi-
ciency. Then the system’s resources are focused on
achieving these goals through initiatives that cas-
cade down through individual service lines and
departments throughout the next 120-day period.
“We focus all of our organizational support on
making improvements in these select areas
throughout that 120-day cycle,” Dietsche says.
“Every 120 days, we take another look at the tar-
gets, using short-term measures and long-range
measures to gauge our progress. If the new
hfma.org MARCH 2012 85
GROWTH COMPARED WITH COST: BELLIN HEALTH
2003 2004 2005 2006 2007 2008 2009 2010
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
Ϫ2.0%
Ϫ4.0%
Ϫ6.0%
Ϫ8.0%
Adjusted Patient Days Cost to Produce
03_HFM_March_March 2/17/12 10:47 AM Page 85

processes that were implemented are hardwired
and we get the results we expected from a project,
we determine that the project is complete and
move on to a new initiative. If the target for an ini-
tiative has not yet been achieved—for instance, if
we’ve experienced good results from the initiative,
but the results are not sustainable—that project
may undergo another 120-day cycle wherein we
can continue to devote organizational energy
toward achieving the goals we’ve set.”
Bellin calls its model of aligning and deploying
organizational energy toward performance
improvement its “high-performance healthcare
model.” “We need to make tough choices when it
comes to performance improvement initiatives. We
can’t do everything,” says Knox, who is also a senior
fellow for the Institute for Healthcare Improvement
and author of The Business of Health Care.
“Every organization has a limited amount of energy
and resources. Generally speaking, organizations
todayarefortunateiftheycandedicate2to3percent
of their capacity toward improvement and innova-
tion. So we have to make decisions: How do we use
that2to3percentofourcapacitywhenwehaveover-
whelming demands coming at us? It’s all about
execution: making decisions and aligning the
organization’s capacity with the actions that are
neededtoachieveourmissionandvisionandstrategy.”
The results include the following:
>Bellin Health’s cancer service line is now able to
treat patients within three days of diagnosis.
(This process had taken three weeks to a month.)
>The health system has not had an incidence of
ventilator-associated pneumonia in three years.
>The number of serious patient and employee
safety events has significantly decreased. (In
early January, the organization had gone 268 days
without a serious patient safety event.)
>Bellin Health’s bond rating has improved from a
BBB to an A status, and has been upgraded twice
from 2006 to 2011 by two ratings agencies.
CASE STUDIES
PLAN FOR IMPROVEMENT MODEL: BELLIN HEALTH
Action
Cycle
Innovation
“Poolof Ideas”OnTargetor
NotPriority
Hold
CurrentProcesses
Reliable/Predictable/Safe
“Pool ofGaps”
Quality
Control
Quality
Improvement
Strategic
Results
New
Performance
Strategic
Goals
Current
Performance
Monitor
Priority
Gate
Quality
Design
Portfolio
ofPriorities
Hold
for
Future
Spread Gate
Source: Pete Knox, Bellin Health.

“We’ve posted tremendous results in terms of
reducing cost and improving quality, and our uti-
lization is lower than what is seen nationally,”
Dietsche says. “And we’re receiving national
recognition for our efforts.”
The ultimate goal of Bellin’s high-performance
care model is to effect whole system change, rather
than incremental change. “To achieve real results,
an alignment has to occur within the organiza-
tion,” Knox says. “Our high-performance care
model creates a synergy within the organization
and the tremendous discipline and rhythm needed
to focus our resources to improve and innovate at a
faster rate.”
Avera: Multistate Rural Network Delivers
Virtual ED/ICU Care
One common challenge rural hospitals face is lim-
ited access to physician specialists: Small towns
have difficulty recruiting specialists; the cost of
sending specialists to rural locations for regular
visits—usually with a nurse or two in tow—adds up
quickly; and not all specialists are willing to make
the drive.
It’s not uncommon for patients in small towns or
rural communities to put off receiving more spe-
cialized care until their health problems become
difficult for them to manage on their own, which is
partly why rural Americans are more likely to suf-
fer from chronic health conditions, heart prob-
lems, or cancer (O’Toole, M., “Healthcare Access
Lagging in Rural U.S.,” Reuters, July 27, 2011).
“Rural patients know that if they call an ambulance
in the middle of the night, they’ll wake up their
neighbor who is an EMT, so instead, they get in the
car and drive to the nearest hospital, where they
arrive unannounced,” says Deanna Larson, vice
president, quality initiatives and eCare for Avera,
based in Sioux Falls, S.D.“Some rural areas are
lucky to have more than one physician on staff, and
sometimes the nurses who are working in hospi-
tals late at night are the youngest on staff. When
you’re in an area where the next healthcare facility
is located 50 to 100 miles away, that puts a lot of
pressure on the physician and nurses who are
treating traumas, heart attacks, strokes, and other
criticalconditionswithoutthesupportofspecialists.”
In 2002, Avera, a network of hospitals, family care
practices, and specialty clinics located in South
Dakota, Minnesota, Iowa, and Nebraska, began to
address this problem through a telehealth initia-
tive that allowed specialists in intensive care and
emergency care to speak with physicians and
nurses in rural hospitals at the point of care, provid-
ing critical—and sometimes lifesaving—guidance.
“Telehealth allows us to take the medical expertise
of emergency department physicians, nurses, and
specialists and spread it across geography,” Larson
says. “It enables faster access to more specialized
care and helps in avoiding unnecessary transfers to
other medical facilities. When transfers are
needed, they are better transfers—patients are
taken to the facility where the right specialists are
available to treat them, and they’ve received care
that helps prepare them for a transfer and that can
aid in achieving better outcomes.”
Video consults are supported by special stetho-
scopes, otoscopes, and examination cameras. A
physician and a nurse are able to be accessed by
video at all times through the push of a button in
an ED room or inpatient room.
Today, Avera’s telehealth program includes the
ability for rural patients to access specialty consul-
tations via two-way video from their family physi-
cian’s office, with nearly 5,000 such consults
recorded in FY11. A telepharmacy service also
provides remote medication order review and
approval prior to the patient’s first dose.
Since Avera’s telehealth program was launched, the
organization has reduced length of stay by 25 per-
cent both in its intensive care units (ICUs) and in
other hospital units, Larson notes. She also says
more than 19,000 ICU transfers have been avoided
in the past seven years, resulting in an estimated
$30 million in savings to Avera. The avoidance of
serious safety events through use of this program
also improves quality of care while reducing risk
and costs (see the exhibit on page 88).
CASE STUDIES

For rural hospitals, the program has resulted in
improved documentation, decreased recruitment
costs, reduced medication errors, and improved
revenue due to their enhanced ability to care for
residents in their communities. For payers, the
benefits include a reduction in unnecessary trans-
fers to other facilities, decreased incidence of
duplicate diagnostic tests, and reduced travel
expenses for families of patients. For patients,
benefits include improved health outcomes, faster
service, and greater access to specialists.
“Thirty percent of patients claim they would not
receive services without e-consult. That’s a lot of
income,” Larson says. “We believe telehealth will
probably be the next boom in health care, particu-
larly in rural healthcare facilities.”
Partners HealthCare: Large Academic
Health System Redesigns Care Plans
In October 2010, Partners HealthCare in Boston
undertook an ambitious initiative to redesign care
plans for five clinical conditions throughout a
defined episode of care. The goal: to improve
patient outcomes while reducing readmissions and
utilization by 10 percent and unit costs by 5 percent.
PartnersHealthCaretargetedfiveclinicalconditions
that were frequently experienced among the health
system’s Medicare and commercial payer popula-
tion, and then defined episodes of bundled care
related to each of these care targets:
>Acute myocardial infarction (AMI [heart
attack])—from three days prior to admission
through 30 days post-discharge
>Coronary artery bypass graft (CABG) procedure—
from 30 days prior to admission to 180 days
post-discharge
>Colon cancer—from biopsy with a positive cancer
diagnosis through 30 days post-colectomy
>Diabetes—for adult, nonpregnant patients with
Type 2 diabetes, one year of care management
from the date of service of the trigger/index
claim (ICD-coded professional claim)
>Stroke—for ischemic stroke, from hospital arrival
to 45 days after arrival; for transient ischemic
attack, from first medical presentation to 45 days
after arrival
“One of the conditions—diabetes—is a chronic
condition. The other target areas are acute ill-
nesses or procedures that involve an inpatient stay;
for these conditions, we asked the teams to design
a care plan that included care after discharge dur-
ing the recovery period,” says Elizabeth Mort, MD,
senior medical director for Partners and vice pres-
ident, quality and safety for Massachusetts General
Hospital.
“We’dworkedtoimprovequalityineachofthese
clinicalareasinthepast,”Mortsays.“Ourfocushad
beenonachievingprocessimprovements,suchas
improvingdoor-to-balloontimeforpatientswith
myocardialinfarction.Now,we’veaddedthechal-
lengeofcostreductionandextendedourworkfrom
theinpatientsettingtolonger,definedepisodesof
care.Indoingso,ourgoalistoimprovevalueby
enhancingqualityofcare,reducingadverseevents,
andpullingwasteoutofthesystem.Thisworkwas
designedtoprepareusforcaredeliveryaswemove
fromunfetteredfee-for-servicepaymentsystemsto
systemsinwhichproviderstakemorefinancialrisk.”
Condition-specific teams of clinicians focused on
redesigning care in each of the target areas by
developing a new process-of-care map for each
area. “For each condition, we gave the teams data
related to how much money we were spending on
these patients in a year, with the data sorted by area
of expense,” Mort says. “For example, we used a
AVOIDANCE OF SERIOUS SAFETY EVENTS BY TYPE,
AVERA HEALTH, APRIL 1, 2010-APRIL 30, 2011
CASE STUDIES
Dosing Issues
50%
Anticoagulation
Issues
26%
Allergy Issues
11%
Drug/Drug Interaction
4%
Inappropriate
Abbreviation
6%
Therapeutic
Duplication
Avoided
3%
03_HFM_March_March 2/17/12 3:57 PM Page 88

tool to review our commercial claims data for our
diabetes population—which consisted of about
4,000 patients—and looked at how much money
was spent on these patients for medications, inpa-
tient care, office visits, diagnostic tests, and more
in a single year. For conditions that required a
hospital stay, the largest area of expense was inpa-
tient care. For a population of patients with dia-
betes, the highest area of expense for a yearlong
period was related to drugs, by far.”
The teams narrowed the patient population for
each condition—for example, in the area of dia-
betes, focusing on adult patients with Type 2 dia-
betes, and for stroke, focusing on ischemic stroke
and transient ischemic attack—and then defined a
time period deemed appropriate for managing the
condition and the processes of care that should
occur during that period. In doing so, the teams
also looked at ways to improve value by developing
plans that ensured all evidence-based care was
delivered to increase the chances of achieving the
best clinical outcomes while avoiding adverse
events. The teams also identified their metrics for
reporting to Partners’ senior leadership team.
“The metric piece is really important: It gives us
some indication of whether the processes being
adhered to are resulting in improved value and
gives clinicians and managers a tool to guide
progress and hold parties accountable for
performance,” Mort says.
The exhibit below depicts some of the recommen-
dations made by Partners’ diabetes care redesign
team. For example, the team estimated that by
moving 30 percent of diabetes patients from all
brand-name medications to generic medications,
millions of dollars in pharmacy savings could be
achieved. Partners’ stroke care redesign team
determined that there are significant opportunities
to avoid costs related to unnecessary admissions for
low-risk patients with transient ischemic attacks.
Its AMI team is working toward reducing unwar-
ranted variation in cardiac catheterization lab pro-
cedures, echocardiograms, and use of intensive
care beds for low-risk patients. The team estimated
that readmissions after an AMI could be reduced if
Partners’ hospitals were to shore up the discharge
process by providing closer follow-up with
patients, including post-discharge phone calls and
a clinician visit within a week after discharge.
It’s too early to determine the total savings the
health system has achieved through this effort, Mort
says, but “we’ve made a lot of progress in just over a
year. We’re working incredibly hard, and it’s exhila-
rating, but also challenging. We’re making good
progress in getting decision support embedded in
our electronic medical records to remind
physicians to use generics when possible, and we’ve
piloted a transient ischemic attack clinic with very
promising results. The metrics in our value dash-
board are getting the attention of senior managers
and clinical leaders across the system, and our pay-
ment system has evolved over the past year.
“We’re investing in the resources needed to be
successfulinapopulationhealthmanagementworld,
REDESIGNING DIABETES CARE AT PARTNERS HEALTHCARE
CASE STUDIES
Team’s Recommendation
In accordance with established treatment guidelines,
patients who are unable to achieve glycemic control
ontwoormoreoralagentsshouldbemovedtoinsulin;
patients and physicians should have access to
resourcestofacilitateinsulininitiationandongoinguse.
Improved Value
> Cost: If Partners were to move 30% of patients
from all brand-name meds to generics, pharmacy
savings could reach multiple millions.
> Outcome: Improvement of HbA1c scores by
1%; reduced risk of microvascular adverse events
(kidney and eye) by 35% and of macrovascular
events by about 20%.
Patient-Centered Medical Home
> Care is proactively managed with decision support and clinical registries.
> Nonphysicians and electronic communication provide more flexible access points for patients .

which will require improved care coordination,
registry management, and increased emphasis on
working with our high-risk populations to improve
value,” she says.
Lessons Learned
There are a number of lessons learned that could
be applied by other healthcare organizations to
drive sustainable improvements in value.
Start small. “Focus on fewer initiatives, execute
them, make sure that the results are sustainable,
and then move on to the next initiative to improve
value,” says Dietsche of Bellin Health. “The prob-
lem that many organizations face is that they have
multiple projects going on at the same time, and at
some point, it becomes difficult to determine
where to allocate resources. It’s better to focus on
three or four initiatives related to improving value
at a time so that the organization doesn’t run into
constraints related to IT capabilities, resources, or
capital. Focus on a few things, do them very well,
and move on to the next project.”
Focus on reducing adverse events for significant wins.
“You can hit the sweet spot in improving value by
making sure you are avoiding adverse events
through the implementation of evidence-based
care practices,” Mort says. “For example, the
occurrence of a blood stream infection in the ICU
will increase a patient’s length of stay and increase
the cost of caring for that patient by up to $45,000.
When evidence-based protocols are followed to
prevent adverse events such as this, patients are
healthier and costs are reduced.”
Ensure that both clinical and operational experts take
part in discussions on ways to improve value through
care redesign, reengineering of processes, and more.
“It’s really important that when you design an ini-
tiative such as (care redesign), you have the right
disciplines at the table—not just clinical experts,
but also operational experts—helping to think
about the implementing of plans from the get-go,”
Mort says. For example, some of the biggest chal-
lenges Partners HealthCare has faced in imple-
menting its care redesign initiative have been
related to its ability to manage care costs continu-
ally across the continuum of care, to manage reg-
istry of patients (i.e., to track patients in the target
areas and maintain their information within a
database), and to ensure availability of accurate
data related to cost and utilization. These are
instances where involvement from IT and health-
care finance can make a difference in the long-
term success of an initiative—and hit home runs
related to value.
Jeni Williams is associate managing editor in HFMA’s
Westchester, Ill., office.
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CASE STUDIES

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