1. Healthcare Operations Management © 2008 Health Administration Press. All rights reserved. 1

2. Chapter 3 Evidence-Based Medicine and Pay for Performance

3. Healthcare Operations Management © 2008 Health Administration Press. All rights reserved. 3 The Challenge of Medical Progress Medical progress –Laboratory experiments –Clinical trials –Translation to clinical practice However, translation to practice is poorly executed –Structural, motivational, economic barriers Result — widespread variation in practice and inconsistent quality

4. Healthcare Operations Management © 2008 Health Administration Press. All rights reserved. 4 Evidence-Based Medicine (EBM) The cure to wide variation in clinical practice: the consistent application of EBM Major tool: the clinical guideline (also known as a protocol) Institute of Medicine definition: “systematically developed statements to assist practitioner and patient decisions about appropriate health care for specific clinical circumstances” National Guideline Clearinghouse –4,000 guidelines –http://www.guideline.gov

5. Healthcare Operations Management © 2008 Health Administration Press. All rights reserved. 5 Resistance to Evidence-Based Medicine Disagreement on the science underlying a guideline Challenge to professional autonomy — “cookbook medicine” Lack of variation in treatment approaches decreases “natural” discoveries

6. Healthcare Operations Management © 2008 Health Administration Press. All rights reserved. 6 Custom and Standard Care All clinical care is a mix of custom and standardized care processes High-quality organizations –Master the art of custom care –Optimize the science and consistent delivery of standard care

7. Healthcare Operations Management © 2008 Health Administration Press. All rights reserved. 7 Custom Custom and Standard Health Care Separate and Select Standard Sorting Re-sorting Examples: Laser eye surgery Minute clinic Patients self-select Source: Bohmer, Richard. 2005. “Medicine’s Service Challenge: Blending Custom and Standard Care.” Healthcare Management Review Oct.–Dec.

8. Healthcare Operations Management © 2008 Health Administration Press. All rights reserved. 8 Custom Separate and Accommodate Standard Sorting Re-sorting Example: Duke Cardiology Clinic Patients sorted by protocol Nurse practitioners provide standard care Cardiologists provide custom care Every fourth visit, standard patients are evaluated by the nurse practitioner and physician

9. Healthcare Operations Management © 2008 Health Administration Press. All rights reserved. 9 Custom Modularize Standard Sorting Re-sorting Example: Andrews AFB Clinic Physician serves as architect—care designer Physician performs evaluation and creates plan Standard care provided by other organizations and departments Hypertension modules: weight control, diet, drug therapy, stress modification, surveillance

10. Healthcare Operations Management © 2008 Health Administration Press. All rights reserved. 10 Custom Integrated Standard Sorting Re-sorting Example: Intermountain Healthcare Identified 62 standard processes—90 percent of inpatients Standard processes built into emergency medical record Physician encouraged to override standard care as needed Overrides are recorded, analyzed, and used to improve standard process

11. Healthcare Operations Management © 2008 Health Administration Press. All rights reserved. 11 Financial Implications of EBM Savings in the system can be achieved by consistent, high-quality ambulatory care, which prevents unneeded hospital admissions AHRQ has identified a set of ambulatory care sensitive conditions, which are measured with prevention quality indicators (PQIs)

12. Healthcare Operations Management © 2008 Health Administration Press. All rights reserved. 12 Prevention Quality Indicators 1 Diabetes short-term complication admission rate 2 Perforated appendix admission rate 3 Diabetes long-term complication admission rate 4Chronic obstructive pulmonary disease admission rate 5 Hypertension admission rate 6 Congestive heart failure admission rate 7 Low birth weight 8 Dehydration admission rate 9 Bacterial pneumonia admission rate 10 Urinary tract infection admission rate 11 Angina admission without procedure 12 Uncontrolled diabetes admission rate 13 Adult asthma admission rate 14 Rate of lower-extremity amputation among patients with diabetes

13. Healthcare Operations Management © 2008 Health Administration Press. All rights reserved. 13 Strategies for Implementing EBM Case management Guidelines adopted by the group and available in the chart Feedback to physicians on the care they deliver compared to guideline-recommended care Disease registries to track patients with chronic conditions

14. Healthcare Operations Management © 2008 Health Administration Press. All rights reserved. 14 Strategies for Spreading the Use of EBM Public reporting Pay for performance Tiered systems of care

15. Healthcare Operations Management © 2008 Health Administration Press. All rights reserved. 15 Public Reporting CMS reporting –Hospitals –Long-term care –Medical groups Community-based systems

16. Healthcare Operations Management © 2008 Health Administration Press. All rights reserved. 16 Issues in Public Reporting Risk adjustment for “sicker patients” Patient compliance Measurement of individuals or clinics Use by general public to make buying decisions

17. Healthcare Operations Management © 2008 Health Administration Press. All rights reserved. 17 Strategic Issues for the Success of Public Reporting 1. Quality problems are real; quality can be improved 2. Quality reporting is standardized 3. Information is relevant to consumers and easy to understand 4. Dissemination is optimized 5. Quality improvement efforts by providers need to be rewarded

18. Healthcare Operations Management © 2008 Health Administration Press. All rights reserved. 18 Pay for Performance—Key Issues Goal: improved health outcomes and lowered costs through use of EBM How is pay for performance funded? –Another form of withholding –Savings on prevented inpatient care Reward top performance or improvement? Risk adjustment Administrative and other system improvement costs (electronic health record changes) Focus on compliant patients only Discourages care of complex patients

19. Healthcare Operations Management © 2008 Health Administration Press. All rights reserved. 19 Pay for Performance—Examples Bridges to Excellence –Diabetes –Cardiac care Integrated Healthcare Association— California CMS Premier Hospital Demonstration Project

20. Healthcare Operations Management © 2008 Health Administration Press. All rights reserved. 20 Tiering Buyer or health plan analyses providers and assigns them to a tier Tiering is based on cost, quality, or both Each tier has a differential price to the patient –Monthly premium cost –Deductible and co-pays

21. Healthcare Operations Management © 2008 Health Administration Press. All rights reserved. 21 Tiering Example: Minnesota Advantage TierIndividualFamily 1$30$60 2$100$200 3$280$560 4$500$1,000 Minnesota Advantage Health Plan Annual First-Dollar Deductible, 2006

22. Healthcare Operations Management © 2008 Health Administration Press. All rights reserved. 22 Tiering Example: Minnesota Advantage Number of Primary Care Clinics in Each Payment Tier for Minnesota Advantage, 2004 and 2006 2004 2006

23. Healthcare Operations Management © 2008 Health Administration Press. All rights reserved. 23 Summary The use of EBM is increasing It has been demonstrated that EBM can increase quality and decrease costs Efforts to increase the use of EBM include: –Public reporting –Pay for performance –Tiering

24. End of Chapter 3