Improving Clinical Quality Reduces Cost
(or How to Align your CMO, CNO, and CFO)
How well are your CMO, CNO, and CFO aligned in their goals for organizational performance? The Centers for Medicare & Medicaid Services’ (CMS) data clearly show that clinical quality, patient experience, and financial outcomes are interdependent…for better or worse. Start a conversation today with the data below.
Beginning in FY2015, CMS’ hospital reimbursement formula includes an “efficiency” domain—Medicare spending per beneficiary (MSPB)—weighted at 20 percent of the Value-Based Purchasing (VBP) reimbursement formula for hospitals, and increasing to 25 percent in FY2016 (the current performance period). (The MSPB measure assesses Medicare Part A and Part B payments for services provided to a Medicare beneficiary during a spending-per-beneficiary episode that spans from three days prior to an inpatient hospital admission through 30 days after discharge.)
By measuring cost of care through this measure, CMS hopes to increase the transparency of care for consumers and recognize hospitals that are providing high quality care at a lower cost to Medicare. It’s just one more indicator that it’s not enough for healthcare organizations to sustain performance. We must improve performance year over year to stay ahead of the curve.
The Good News
If your organization has been focused on hardwiring tools and tactics that improve patient experience, you may find they pay dividends in other domains CMS is measuring. It turns out, with a little number crunching, that hospitals who perform well on patient experience indicators—like HCAHPS Responsiveness or Overall rating of 9 or 10—also tend to perform well in clinical outcomes and lower spending per Medicare beneficiary.
(And conversely: Organizations who perform poorly on patient experience tend to perform poorly on clinical outcomes and spend more on Medicare beneficiaries.)
A consistently positive patient experience is an important indicator of a well-aligned organization…and a high performance culture is the foundation for achieving it. When it comes to financial impact, your organization’s HCAHPS data may well be a proxy for predicting your FY2015 and 2016 reimbursement based on all value-based performance metrics.
The Financial Case for Clinical Quality
Let’s take some examples and begin with quality. It’s widely established that adverse clinical events have a negative financial impact. Stage III and IV pressure ulcers cost an average of $43,180 per stay; vascular catheter-association infections average $103,027 per stay; and certain manifestations of poor control of blood sugar levels cost between $35,000 and $45,9891.
When we compare hospitals that patients rated in the top quartile for the HCAHPS responsiveness question, they experienced the lowest number of pressure ulcers (and they were highest in hospitals rated poorly for responsiveness.) This also holds true for infections and manifestations of poor glycemic control.
As noted earlier, CMS includes Medicare providers’ costs three days prior to admission to 30 days after discharge in its MSPB calculation. On average nationally, one percent of spending occurs pre-admission, 55 percent occurs during the hospital stay, and 44 percent occurs post-discharge.
It only makes sense then, that it’s critical to ensure alignment of and coordination between the chief medical officer (the person responsible for coordinating the quality of medical activities across the continuum of care) and the chief nursing officer (the individual responsible for clinical quality, patient experience, and efficiency of care during the hospitalization).
The Financial Case for Reducing Readmissions
Similarly, thirty-day hospital all cause unplanned readmissions are lower for hospitals that perform better within the HCAHPS discharge instructions domain…which is also true for heart attack readmissions, heart failure readmissions, and pneumonia readmissions.
Because 44 percent of the MSPB cost occurs post-discharge, important post-discharge spending differences among hospitals can occur. The data underscores the importance of limiting readmissions through strong discharge planning and transition of care practices.
Post-visit phone calls to patients can be highly effective in reducing unnecessary readmissions and also in capturing information to reduce costs for both patients and the organization. When a Texas organization analyzed post-visit call data in the orthopedic unit, for example, they learned that patients who were sent home with two specific high-cost medications were routinely not filling those prescriptions.
When the physicians reviewed the data, they immediately moved to prescribing a lower cost (but equally effective) medication. By using data to inform decisions, the nursing-provider partnership can have a powerful impact on reducing expense.
In short, strong financial outcomes from VBP reimbursement are a direct result of high clinical quality and a positive patient experience. Remember, margin follows mission: Delivering high quality care to patients is also good for your organization’s bottom line.
3 Ways to Reduce Medicare Spending Per Beneficiary (MSPB)
A fact: Hospitals whose patients rank them in the lowest quartile for HCAHPS overall rating of care experience 47 percent of MSPB post-discharge, while those ranked in the top quartile experience just 39 percent. Proactive and comprehensive discharge planning can reduce that.
But what about that 55 percent of MSPB spending mentioned earlier that occurs during the hospital stay? Here’s how to reduce both types of MSPB:
Streamline hospital-wide patient flow.
- Implement a hospital-wide flow committee.
- Improve discharge planning.
|Eliminates the domino effect through timely discharge for faster bed turnover and reduces delays in OR start times and medically unnecessary days.
Evaluate onboarding of new nurses.
- Ensure that new nurses whose shifts include nights and weekends have adequate precepting.
|Reduces likelihood of medication errors, miscommunication, and errors in judgment that can increase LOS and reduce quality of care.
Ensure a robust post-visit call program.
- Research2 shows that patients are more likely to fill their prescription, take as directed, and follow discharge instructions when they clearly understand medical instructions.
|Reduces likelihood of adverse drug reactions and unplanned readmissions within 30 days of discharge.
2JAMA Intern. Med. “Communication and Medication Refill Adherence: The Diabetes Study of Northern California.” Feb. 2013. 173(3):210-8.