The timelines, payment formulas and other details of value-based purchasing are much on the minds of health care executives as they assess this imminent reimbursement program and react to the rule creating it. For governance leaders, however, the impact goes way beyond the calculated effect on revenues over the next several years.

Impact at the outset? Not a lot: It can mean earning or losing about one percent of Medicare revenues starting late next year, two percent by 2017. But the impact on how providers approach the business of health care? That's a whole different story.

From Volume to Value

Mandated by the Affordable Care Act, the Medicare value-based purchasing program marks the beginning of a long goodbye to health care's volume-based business model. Accordingly, it will require a different set of leadership priorities and actions to change the shared practices, behaviors and beliefs—the culture—of a health care institution.

"We've got to switch the culture from the focus on volume—where the first thing we ask is the daily census because that equates to volume, which equates to payment—to a focus on value," says Richard Bankowitz, M.D., chief medical officer of Premier, an alliance of hospital organizations. "And that's going to require a specific focus on leadership skills, it's going to require change-management skills, it's going to require that we have physician engagement in a way that maybe we haven't had before."

Those leadership skills are crucial, he says, to attend to a growing body of performance measures that will impact payment. Such metrics have been part of the quality picture since 2003, when Medicare began requiring hospitals to report performance on a gradually expanding set in return for a slightly larger payment update. It's been typical for hospitals to hone processes metric by metric—say, mobilizing to ensure that suspected heart-attack patients are given aspirin on arrival. But that approach no longer may be viable.

"The world is really changing rapidly, and each year there seems to be another set of metrics introduced. So it's not really possible any longer to transform care by focusing on an individual metric," Bankowitz says. "You really have to design a system that's going to be nimble, be a learning organization and be able to adapt rapidly to change."

That's not the only challenge. Regulations for value-based purchasing call for 30 percent of performance scores to be based on results of a survey on patients' experience of care. Results of that survey have been reported since 2007. But now hospitals will be at financial risk for the results.

"The kind of process improvement you need to engage in to improve the patient's experience of care is very different from improving the clinical process," says Susan Edgman-Levitan, executive director of the John D. Stoeckle Center for Primary Care Innovation at Massachusetts General Hospital in Boston. "[It] requires the engagement of every single person in your organization."

To position an organization for this shift in expectations, practitioners of value-based approaches advise trustees to begin reshaping health care operations, including:

  • Forging an enlightened approach to hiring employees, supporting them and allocating sufficient resources for them to effect change clinically and stay keenly aware of the patient experience.
  • Developing a data-driven culture, to create constant awareness of performance as well as to make sure the best information is given to clinicians as they make decisions.
  • Envisioning care more broadly, including planning for the competencies and partnerships to cover post-acute care, stronger ties with primary-care doctors and "pre-primary care."

The significance of holding hospitals financially accountable for aspects of the patient-experience survey, called the Hospital Consumer Assessment of Healthcare Providers and Systems, or HCAHPS, is that it nudges physicians and others who walk the units to focus personally on a patient's illness instead of treating an impersonal disease, says Trent Haywood, M.D., chief medical officer of health care alliance VHA. That means seeing someone as more than the "total hip" on the fourth floor.

A common approach among leaders is to "think about their hospital much like a factory model, and people even talk about patient throughput—they just want to get patients through their factory as quickly as possible," Haywood says. "One of the things you're going to have to stop to do is actually understand what the patient is valuing and what their particular needs are."

Whose Job Is It?

There's more to gain from the patient-experience emphasis than earning scores, says Edgman-Levitan. "Improving patient experience of care is the key to becoming a high-performing organization," she says. If a provider is doing well from patients' perspectives, it's "a great place to work," usually financially sound and delivering high-quality care.

Employees' work experience bears directly on patients. "If you aren't taking care of your employees and your clinicians and giving them the resources—it's not just money but it's training, it's putting systems into place to support their doing a good job—there's no way that you're going to provide a positive patient experience," she says.

Trustees can start by refocusing human-resources policies "on hiring people who have the right aptitude to care about patients, to understand, to be empathetic, to be compassionate—whether they're delivering the food tray, they're a security guard, or the chief of your service," she says. "You can train people to do almost anything. But if they don't have that basic personality that is interested in kindness, compassion and empathy, there is almost nothing you can do to give them that."

Among staff, "the critical people who are going to help you improve your HCAHPS scores are your nurses," Edgman-Levitan says, "because nurse communication and responsiveness of staff (two of the eight experience measures for value-based purchasing) are the two biggest drivers of whether the patient is willing to recommend the hospital or give a high score on the zero-to-10 scale."

Nurses also are key to vigilant monitoring, at the bedside and elsewhere in the hospital, of activities established hospitalwide to improve clinical metrics, which will focus in federal fiscal 2013 on responding to heart problems, treating and curbing pneumonia, preventing infections in the hospital and improving surgical care. In fiscal 2014, providers additionally will be accountable for death rates associated with heart and pneumonia care 30 days after admission, not just during the hospital stay, and for patient-safety indicators that rely on the whole hospital operation's staying alert and informed.

A value culture is essential, says Bankowitz. "When we say 'creating a culture,' we mean that if you ask people in the institution whose job it is to focus on safety or whose job it is to focus on delivering high value, each person feels that it's his or her particular job to do that. They don't feel it's the job of, say, the chief quality officer or the CFO. People have internalized the desire to provide high-value care."

The communication, coordination and information demands of meeting these value-based challenges require hospitals to develop a data-driven culture, says Haywood. "It's a knowledge-based game … it's about who has the knowledge and can quickly diffuse it throughout their organization," he says.

IT to Support Improvements

A solid health information technology investment is critical to value-based purchasing, not just to keep track of performance activities, but also to drive clinical improvement, says Nancy Foster, the American Hospital Association's vice president for quality and patient safety policy.

"Quality-measure data collection will be important, but less important than the proper decision-support system built into the electronic health record," so the clinician is reminded about effective treatments, test results and other information, Foster says. These prompts have been extremely effective in better managing patients' care. "Those are the kinds of things I would hope that hospital leaders and trustees are thinking about as they invest in information technology. How do we make that time the physician has with the patient in the room most effective?" she adds.

The board listened at Tenet Healthcare Corp., a 49-hospital system in 12 states. It launched a $620 million IT project, "the investment that's required to put in the caliber and completeness of the clinical systems that we need to deliver care the way we want to, and with the kind of information that we want," says Elizabeth Johnson, vice president of applied clinical informatics.

What they want are tools to drive the quality improvements essential for value-based purchasing and other concurrent performance-based reimbursement instruments working their way into the health care business model, she says. "We need clinical data to do that right. While we're taking care of patients, we're making business arrangements that need to have clinical data to drive those arrangements."

Tenet's board "has a fiduciary responsibility to make sure we're doing the right things to get us to the outcomes," she explains. Though the board sees the investment as the right thing to do for patients, it's also "responsible for making sure our hospitals are places that will be there for the long term."

The impact of the IT infusion—clinical documentation of all types at the point of care, computerized provider order entry, evidence-based guidance—will be felt in the daily clinical routine as well as in efforts to understand broadly the care provided and how to deliver it according to the new expectations, Johnson says. For instance, accountability for longer-term mortality rates and patient conditions after discharge will increase the importance of managing multiple settings for care and preventing readmissions, she says.

Envisioning care outside the hospital will be a priority for everyone from chairman of the board to bedside caregiver, experts say. "It's a shift in perspective for people to really think about, 'How do I help this patient manage the disease once out of the hospital on that path of growing to be a healthier human being?' " says the AHA's Foster.

Traditional business models have focused on relationships with physician practices because of their importance in admitting patients to the hospital, but now the relationship will have to be bi-directional—the same physicians who admit and make rounds are key to resuming stewardship of discharged patients, coordinating and monitoring follow-up actions that equate to or produce quality care.

John Morrissey is a freelance writer in Mount Prospect, Ill.

An Investment in 'Pre-primary Care'

Short-Term Planning, Long-Term Goals