Development of Care Models - Value-Based Healthcare and Payment Models

By Julian D. “Bo” Bobbitt, Jr. and Grace E. Terrell, MD, MMM, CPE, FACP, FACPE
Published by Physician Leadership Journal, Vol.7, Issue 5 - American Association for Physician Leadership®

The real solution to improving cost and quality in the healthcare delivery system lies in designing care models that improve outcomes for patients. 

Excerpt from the best-selling new book, Value-Based Healthcare and Payment Models:  Including Frontline Strategies for 20 Clinical Subspecialties, published January, 2020.

Although well-designed payment reform will incentivize improved care, the core transformation must occur at the clinical level, not merely at the reimbursement level. The process for developing new models of care is a collaborative process requiring that clinicians and administrative leaders work together to develop and execute changes in clinical processes with high positive impact.

The care transformation process consists of four phases that can be implemented in an iterative fashion in order to accelerate change at the system level. The transformation process begins with strategy development, followed by re-contracting with payers to ensure appropriate financial alignment with care models developed and subsequently implemented.

The four phases for care model transformation are:

  1. Selecting the care models

    • Defining the clinical specialties and programs designed to drive cost and quality improvements.
    • Building the design and implementation roadmap.
  2. Designing care models one-by-one.

    • Assessing current fact base by care model, including specialty footprint, issues, and primary opportunities.
    • Partnering with clinical leadership through design sessions defining major activities, partnerships, and resources, etc., to develop optimal clinical care delivery
  3. Implementing planning and organizational change.

    • Partnering with office managers, clinical leadership, and corporate cost/quality leadership to build out new policies and procedures.
    • Building new payer relationships to increase risk-sharing.
    • Defining new technology and operational requirements to enable care models (e.g., reimbursement platforms, compensation models, reporting staff).
  4. Maintaining and continuously improving the care model.

    • Monitoring progress of implementation.
    • Supporting and driving organizational transformation in support of new clinical models.
    • Identifying opportunities for future phases of the clinical model design.

Phase 1: Selecting the Care Models

Care models can be prioritized based on the organization’s current capabilities and the likelihood of high-impact redesigned models of care will have on the total cost and quality of care. Criteria must include organizational expertise in currently delivering high-quality care in the area and the likelihood that a care model redesign will remain durable in the long term. Carefully modeling the likely impact of care model implementation on current fee-for-service business is a crucial planning step.

Expertise of strategic partners or even current competitors outside the organization can broaden the possibility for more comprehensive care model solutions. For example, a community oncology program may benefit from a strategic partnership with a comprehensive cancer center in order to incorporate broader capabilities into an oncology care model.

Understanding the speed with which a new model of care can be implemented and have impact and the magnitude of the impact is essential to prioritizing development of an institutional care model. With this knowledge, the design and implementation roadmap can be completed prior to designing individual care models one-by-one. Carefully modeling the likely impact of care model implementation on current fee-for-service business is an important additional planning step.

Phase 2: Designing Care Models One-by-One

The care model transformation begins with an assessment of the current state of care delivery. The patient population that will be served by the care model and the context for the care model implementation in both the market and the organization must be understood by defining and evaluating the patient population, assessing the patient population cost profile, evaluating market activity in the scope of the care model, and assessing existing practice and group resources and capabilities.

Practice readiness assessments, asset overviews, and patient demographics and footprints also should be assessed. Critical questions include who the patients in the system are (by geographic and demographic profile), what is available outside the physician/hospital system (community assets, competitors), and what the provider organization is currently doing (quality programs, practice pattern assessments). 

Once the assessment of the current state is completed (one to two weeks), then a one- to two-week timeframe is used to define what the problems are in the current clinical model and which of those problems have the greatest opportunities to be improved on. The feasibility of addressing these problems must be quantified in terms of cost of the problem and potential savings over time.

For example, hospital admissions for class IV heart failure patients cost on average $200,000 per patient per year. Implementing an improved care model for patients with this condition could have an impact in the millions of dollars, depending on the size of the population the system serves. 

After the issues have been adequately framed, a four-week period of time is used to define a new model of care in which patient care is addressed in a more integrated and holistic fashion, including defining the capabilities required to support the new models and defining the new roles created to implement and manage the new models. The specific services to be added to improve the quality and cost of care should be explicitly defined. 

Phase 3: Detailing Implementation Activity

The objectives of Phase 3 are to prepare to launch the care model and establish processes for future-state clinical operations by creating care model policies and procedures, preparing office space for clinic launch, hiring new staff based on care model needs, contracting with ancillary service providers, crafting care model marketing and communication, preparing information systems for new operations, and revising physician compensation if needed.

This phase may take up to 16 weeks to complete, due to the complexity of facility and human resources needs. However, once office workflows, policies and procedures, and compensation models are developed for one care model, standardization and customization with additional care models may be implemented more efficiently. Clinical workflow analyses, infrastructure build-out plans, and physician compensation changes cannot be implemented overnight, so rapid change process work must nonetheless consider basic change management principles in order to be successful, with carefully designed internal and external communication plans.

Phase 4: Measures and Continuous Improvement

The objectives of the fourth phase of care model transformation are to track the impact and outcomes of the redesigned model of care and use the classic techniques of continued quality improvement to create and implement the culture and processes for continuous improvement. Internal performance reporting and tracking of processes, people, vendors, and strategic partners will necessarily become part of the transformation efforts at the cultural level and will help facilitate year-over-year improvement in quality and cost.

Specifically measuring outcomes rather than simply assessing processes will be essential to performance improvement. Transparency is a cultural expectation that will accelerate effective performance management. 

SOURCE American Association for Physician Leadership®

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The award-winning Physician Leadership Journal is the voice of physician leadership. The PLJ  is a must-read for anyone in the business of medicine and is among American Association for Physician Leadership membership benefits. Published six times a year, each magazine issue includes a section of peer-submitted articles that focus on medical leadership and health care delivery. These articles have passed the critical appraisal of their editorial board of Certified Physician Executives from around the world. Articles in this section spotlight original research, operational interventions and findings, and discussions that orient readers to key topics in health care and physician leadership. 



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