Jhc march18

March 2018 • Vol.9 No.2

Stop

Making

Sense

Industry experts share their insights into recent headlines of acquisitions, mergers in healthcare.

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CONTENTS »» MARCH 2018

4 Fee-for-service still reigns 28 Colorectal Cancer But alternative payment methods Early detection is key are catching on 34 HEDIS updates address 8 Stop Making Sense transitions of care Opioid usage and telehealth are also key points The Journal of Healthcare Contracting is published bi-monthly

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The Journal of Healthcare Contracting (ISSN 1548-4165) is published bi-monthly by Share Moving Media, 1735 N. Brown Rd. Ste. 140, Lawrenceville, GA 30043-8153.

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The Journal of Healthcare Contracting | March 2018

3

TRENDS

The first section of the report focuses on the extent to which physicians are in practices that belong to medical homes and Medicare, Medicaid, and commercial accountable care organizations (ACOs), as well as how that participation varies across practice attributes and how it has changed over time. The second section examines practice involvement in various payment models such as fee-for-service (FFS) and alternative payment models, including pay-for-performance, bundled payments, shared savings, and capitation.

Medical homes and ACOs At the end of the first quarter of 2017, ACOs covered more than 10 percent of

Fee-for-service still reigns But alternative payment methods are catching on

the U.S. population. ACOs have steadily grown, with a 2.2 million increase in covered lives and a net increase of 92 ACOs from the end of the first quarter in 2016 through the same period in 2017.

In 2016: • 25.7 percent of physicians worked in practices that belonged to a

Fee-for-service may be on a decline, but it maintains a strong grip on physician practices, at least for now. At the same time, participation in accountable care organizations and medical homes is on the upswing.

Last fall, the American Medical Association’s Division of Economic and Health Policy Research released the results of its 2016 Physician Practice Benchmark Survey, which focuses on

medical home.

• 31.8 percent belonged to a Medicare ACO. • 20.9 percent belonged to a Medicaid ACO. • 31.7 percent belonged to a commercial ACO.

the practice arrangements and payment methodologies of

4

physicians who take care of patients for at least 20 hours per

Overall, 44 percent of physicians

week and who don’t work for the federal government. Bench-

were in practices that belonged to at

mark surveys had previously been conducted in 2012 and 2014.

least one type of ACO. Although earlier March 2018 | The Journal of Healthcare Contracting

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TRENDS

Payment Methods and Revenue Share Reported

by Physicians inShare 2016 Figure 6. Payment Methods and Revenue Reported by 14

90%

Physicians in 2016

83.6%

that received payment by at least one formance and bundled payments had

70.8%

the highest participation rates of the

60%

alternative models examined – approxi-

50% 40%

35.7%

mately 35 percent.

34.8%

30%

Despite participation in alternative

25.1%

20%

payment models, the results show that

16.7%

10%

6.5%

6.7%

8.8% 2.0%

0%

percent of physicians were in practices alternative payment model. Pay-for-per-

80% 70%

models was not uncommon. In fact, 59.1

Fee-for-Service

Pay-for-Performance

Capitation

Percentage of Physicians with any Payment from Method

Bundled Payments

Shared Savings

Share of Practice Revenue from Method

Source: Author's analysis of AMA 2016 Physician Practice Benchmark Survey.

Note: See Appendix Table 2 for distribution of yes, no and don't know responses across payment methods. The revenue shares across payment methods do not sum to 100% because of "don't know" responses.

AMA Economic and Health Policy Research, “Payment and Delivery in 2016: The Prevalence of Medical Homes, Accountable Care Organizations, and Payment Methods Reported by Physicians.

such models accounted for a relatively small share of revenue. On average, pay-for-performance and capitation made up close to 7 percent of practice revenue, while bundled payments accounted for almost 9 percent and

data on Medicaid and commercial ACO participation were not

shared shavings only 2 percent. Thus,

available, AMA found that participation in medical homes and

FFS dominated with the highest par-

Medicare ACOs was up slightly (by 2 to 3 percentage points)

ticipation rate as well as a much higher

from 2014. Despite the increase in participation, awareness

share of practice revenue at an average

about participation remained the same as in 2014. For both

of 70.8 percent.

medical homes and Medicare ACOs, about 25 percent of phy-

As with their participation in medical

sicians did not know whether their practice was part of that

homes and ACOs, some physicians were

particular model.

unaware of whether their practice re-

Payment methods

ceived revenue through certain payment models. While only 10.6 percent of phy-

The AMA study examined the percentage of physicians in

sicians were unaware of whether their

practices that received fee-for-service and/or alternative pay-

practice received payment through FFS,

ment models in 2016, trends in receiving payment from FFS

the level of unawareness about receiving

from 2012 to 2016, and whether receiving FFS or alternative

payment through alternative payment

models appeared to be related to participation in medical

models ranged from around 20 percent

homes and ACOs.

for pay-for-performance, capitation, and

Although FFS was the method reported most often by physicians (83.6 percent), receiving revenue through alternative

bundled payments, to almost 30 percent for shared savings.

Source: AMA Economic and Health Policy Research, “Payment and Delivery in 2016: The Prevalence of Medical Homes, Accountable Care Organizations, and Payment Methods Reported by Physicians,” https://www.ama-assn.org/ sites/default/files/media-browser/public/health-policy/prp-medical-home-aco-payment.pdf 6

March 2018 | The Journal of Healthcare Contracting

Editor’s note: On Feb. 21, after this article was written, Bon Secours Health System and Mercy Health announced their intent to merge.

The merger would create a system comprising 43 hospitals, 1,000 care sites, and 10 million patient encounters across seven states.

The title of the afore-mentioned 1984 Talking Heads movie comes to mind when trying to interpret this winter’s flurry of healthcarerelated announcements: • CVS Health to acquire Aetna (Dec 3).

• Advocate Health to merge with Aurora Health Care (Dec 4).

• UnitedHealth Group to acquire DaVita Medical Group (Dec 6).

• Dignity Health to merge with Catholic Health Initiatives (Dec 7).

• Ascension rumored to be talking merger with Providence St. Joseph (Dec 10).

• Humana Inc./Kindred at acquire Home Division of Kindred Healthcare (Dec 19).

8

March 2018 | The Journal of Healthcare Contracting

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STOP MAKING SENSE

What do these events mean for healthcare providers? For distributors

role of large health systems due to

and manufacturers of medical products and equipment?

their leverage as both insurer and physician provider.”

The Journal of Healthcare Contracting couldn’t make sense of it all, so we

Insurers such as UnitedHealth

asked the following experts and observers to try to do so for us…and

“have not built up a large asset

our readers:

base of hospitals and operating

• Mark Dixon, president, The Mark Dixon Group LLC, Edina, Minnesota.

room suites that need to be filled

• Ted Almon, chairman, Claflin Co, Warwick, Rhode Island.

to make them profitable,” says

• Blair Childs, senior vice president of public affairs, Premier Inc.

Dixon. “Thus, they are asset-light

• John Pritchard, publisher, Journal of Healthcare Contracting.

in comparison to large IDNs. And,

• Tom Charland, founder and chief executive officer, Merchant

they are the insurer, so they pre-

Medicine, a management consulting firm (who shared an article

sumably can direct more of their

from the company’s January 2018 “January ConvUrgentCare®

appropriate patient volume to

Market Report.”)

those physicians and contracted

• Melinda Hatton, general counsel, American Hospital Association.

(or leakage is lower).”

The ‘asset-light provider’ “The CVS/Aetna agreement is all about consumerism and redefining

Chaotic

where care will be delivered in a more convenient way and at a lower

“Certainly, this level of consolida-

cost,” says Mark Dixon. “Much of healthcare is organized around doctors

tion in all segments of the indus-

and hospitals, and this transaction will appeal to younger consumers

try is unprecedented, and it is tak-

and redefine where people receive their care.”

ing place not only among players

The United/DaVita deal is “another very fascinating merger,” he adds. United/Optum has quietly hired 30,000 physicians over the past several years in the U.S., he points out. “This acquisition doubles that and dramatically increases their provider footprint. This has the potential of also redefining insurers as asset-light providers. They can purchase, on a fee-for-service basis, the hospitals and other expensive services as they need them. It has the potential to lower costs and also redefine/possibly diminish the 10

facilities. Thus, keepage is higher

“This has the potential of also redefining insurers as asset-light providers. They can purchase, on a feefor-service basis, the hospitals and other expensive services as they need them.”

– Mark Dixon

in various segments of the vast industry, but across some seemingly significant barriers, and between players of all sizes and types,” notes Ted Almon, chairman of Claflin Co. “It certainly defies any simplistic analyses of singular changes in the market. In fact, while individual deals all have apparent rationales behind them, collectively, the activity could best be described as chaotic.”

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STOP MAKING SENSE

and all this activity,” says Almon. “There is no doubt that profound un-

the traditional model? With

certainty over the direction of health policy in the country has provided

the seemingly endless assault

much of the energy driving the merger mania. Some of it may be a per-

of Amazon, could one imagine

ceived opportunity to set policy direction in the seeming void that ex-

that CVS plans for the day when

ists, but that much of it arises out of fear seems at least as likely. In the

their prime real estate locations

final analysis, a single question still looms: Are the new and much larger

could be used for something

players who arise from the combinations going to be more capable of

more profitable than selling pa-

integrating and organizing healthcare in a new and possibly more ef-

per towels and greeting cards?

ficient way, thus possibly creating some savings opportunities? Or are

For now, we will just have to wait

they merely going to create pricing leverage over a payment system no

and see.”

longer capable of contracting around them, possibly driving up costs

Closer to the patient

even further?

The CVS/Aetna combination is worth watching, continues Almon.

“Certainly, it is the vertical aspect of the deal – CVS being a giant pharmacy retail chain, Aetna a health insurance company – that is most interesting. In wake of the failed Aetna/Humana merger (attempted in February 2017), such business combinations have historically not drawn much regulatory attention.

But what is the strategy behind the deal? Where is the potential synergy? One must take a pretty highlevel perspective to guess where this combination is going. Remember that CVS voluntarily exited the presumably

12

profitable

business

In the final analysis, a single question still looms: Are the new and much larger players who arise from the combinations going to be more capable of integrating and organizing healthcare in a new and possibly more efficient way?”

“The CVS/Aetna deal and other

– Ted Almon

and population health is here to

mega deals are all sending a clear message: A new form of healthcare competition is emerging, and providers need to take note,” says Blair Childs, Premier Inc. “The CVS/Aetna merger is based on the belief that the combined company will be able to disrupt the system with a retail, pharmacy and e-enabled high-value provider network.

“These mergers and acquisitions are being driven by a need for scale and vertical integration.

Healthcare leaders see that the movement to value-based care

of selling tobacco products over a

stay in the public sector, and pri-

year ago, announcing its intention to become a ‘healthcare company.’

vate companies are now getting

Assuming this move follows on that, and combining it with the com-

on board. Companies are seeking

pany’s industry-leading 1,100 MinuteClinic locations in its stores, could

to 1) find more cost-effective, con-

a whole new model of delivering care be the vision?

venient and high-quality ways to

“Or how about a health plan that integrates the retail clinics into

manage a population, 2) organize

its primary care coverage, avoiding some more expensive sites in

high-value providers networks, March 2018 | The Journal of Healthcare Contracting

STOP MAKING SENSE

and 3) attract, engage and retain their patient population. All of these

The supply chain implications

companies are trying to get closer to the patient, a position hospitals al-

of such mergers are fascinating,

ready enjoy.

says Pritchard. As they come to-

“Health systems are also seeking scale and vertical integration, and

gether, IDN leaders have to make

are increasingly partnering with private payers and other health sys-

big decisions: Will one of the

tems to continue to develop high-value provider and financing net-

system’s supply chain processes

works. These will be organized and run by competing health systems,

prevail? If so, whose? Will they

insurers, physicians, and retail establishments.

run autonomously for a period of

“To ultimately succeed, healthcare leaders need to, above all else,

time? How long? And then what?

excel at using data to cost-effectively manage a population, and

“The other question I would

create systems to attract and engage patients and consumers,” says

ask is, ‘Who is all this good for?’” he says. “Is it the shareholder?

“The CVS/Aetna merger is based on the belief that the combined company will be able to disrupt the system with a retail, pharmacy and e-enabled high-value provider network.”

– Blair Childs

The patient? The payer? As the healthcare systems, in particular, merge, will their larger footprints allow them to scale up worldclass healthcare? I’d like to think so, but that may be tough to do for a period of time.”

Retail clinics “One line of thought, highlighted by most articles on the subject, is

Childs. “It is important that Washington not impede the development

the prospect that Aetna and CVS

of this new era of competition through zealous antitrust regulation or

intend to leverage the Minute-

harmful policies.”

Clinic platform to deliver lowercost healthcare,” writes Charland

Who wins?

in his January report. “Two as-

The potential mergers among the six large IDNs (Dignity Health/Catho-

pects of the MinuteClinic foot-

lic Health Initiatives, Advocate Health Care/Aurora Health Care, and As-

print would indicate that this has

cension/Providence St. Joseph) bring to mind the question, How big is

nothing to do with the merger.

big enough? says John Pritchard of the Journal of Healthcare Contracting. “Whatever constitutes true scale must be ever-rising,” he says.

14

“First, CVS has more than 8,000 stores. Only 1,104 of them have a

But these IDNs aren’t pursuing scale in order to gain leverage and

MinuteClinic, and those are con-

purchasing clout, Pritchard says. That may be an unintended conse-

centrated in the largest 100 met-

quence, “but that’s not why they’re doing it. They are absolutely merg-

ro areas in the United States. It

ing to gain greater negotiating power vis a vis payers.”

will take a much greater footprint March 2018 | The Journal of Healthcare Contracting

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STOP MAKING SENSE

of MinuteClinic locations and a much wider scope of services to pull off

patients’ needs,” says Melinda

a full court press on lowering costs using this strategy.

Hatton, general counsel, Ameri-

“Second, there was no evidence of MinuteClinic expansion in 2017 to go along with this merger.

pitals aren’t alone: The decision

“What is more likely is that CVS Health is aiming to compete directly

by CVS to acquire health insurer

with UnitedHealth Group in terms of the integration of pharmacy and

Aetna is being defended on the

medical benefits.”

grounds that it will build a care

Regarding medical benefits integration, Charland suggests compar-

system closer to consumers that

ing the CVS/Aetna proposed merger with that of UnitedHealth Group

is more responsive to their needs.

and Da Vita Medical Group.

“This company (that is, UnitedHealth Group) has an insurance arm – United Healthcare – which looks a lot like Aetna; and a healthcare services arm – Optum– that has a [pharmacy benefit management provider] that looks a lot like CVS’ Caremark subsidiary. Optum also has a clinic/provider network that is significantly larger than

“Those same goals are driv-

“Health systems are absolutely merging to gain greater negotiating power vis a vis payers.”

–John Pritchard

what CVS has right now.

ing some hospitals and health systems to join together. According to a 2017 economic study from Charles River Associates, hospital mergers result in significant cost savings and appreciable quality improvements that cannot be replicated by looser affiliations. They can also expand the types of services available to patients and com-

“If we were to predict what happens from here, it would be that CVS

munities, and provide a stable

Health begins to expand its clinic and provider network well beyond

foundation on which to deliver

the retail clinic space, i.e. urgent care, primary care and specialty care

more comprehensive, coordinat-

expansion. The next big wave in healthcare will be the move to at-risk

ed, and convenient care. In some

payment models sold directly to employers and government.

communities, mergers may be

“CVS Health, Aetna, Optum and UnitedHealthcare are extremely

the only practical way to preserve

adept at selling to those channels. As their provider networks expand,

services and enhance quality. As

this will be a major threat to hospital systems across the country. These

hospitals and health systems re-

companies will nip away at the profitable ambulatory care services while

align to meet these goals, they

leaving hospitals with their not-so-profitable inpatient services. Notice

have been leaders in controlling

Optum is not acquiring hospitals!”

costs, with hospital price growth,

Hospitals and health systems are prepared

16

can Hospital Association. “Hos-

as measured by the Hospital Producer Price Index, just 1.2 per-

“Rapid changes in the healthcare field are leading many hospitals

cent in 2016, the second-slow-

and health systems to explore new ways to improve quality, reduce

est rate since 1998 and down

costs, and provide more convenient access to care to meet their

from 3.5 percent in 2007.”

March 2018 | The Journal of Healthcare Contracting

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STOP MAKING SENSE

Fast and furious The merger and acquisition announcements came fast and furious this winter.

December 3: CVS and Aetna. CVS Health and Aetna announced the execution of a definitive merger agreement under which CVS Health would acquire all outstanding shares of Aetna for a combination of cash and stock.

A “personalized healthcare experience” will be delivered by connecting Aetna’s provider network with greater consumer access through CVS Health, according to the two companies. This includes more than 9,700 CVS Pharmacy locations and 1,100 MinuteClinic walk-in clinics as well as further extensions into the community through Omnicare’s senior pharmacy solutions, Coram’s infusion services, and the more than 4,000 CVS Health nursing professionals providing in-clinic and homebased care across the nation.

December 4: Advocate Health Care and Aurora Health Care. Chicago-based Advocate and Milwaukee-based Aurora announced their intention to merge. The new organization would operate 27 hospitals, more than 500 sites of care, and employ more than 3,300 physicians and 70,000 associates and caregivers. (The deal was approved by the Federal Trade Commission in February.)

December 6: UnitedHealth Group and DaVita Medical Group. Optum, part of UnitedHealth Group, announced its intention to acquire DaVita Medical Group, one of the nation’s leading independent medical groups and a subsidiary of DaVita Inc., for approximately $4.9 billion in cash. DaVita Medical Group serves approximately 1.7 million patients per year through nearly 300 medical clinics, 35 urgent-care centers and six outpatient surgery centers.

“With medical groups in California, Colorado, Florida, Nevada, New Mexico and Washington,

18

DaVita Medical Group will expand the market reach of Optum’s strategic care delivery portfolio, including Surgical Care Affiliates, MedExpress and HouseCalls,” the companies said.

December 7: Dignity Health and Catholic Health Initiatives. Englewood, Colo.-based Dignity Health and San Francisco-based CHI announced their intention to merge, creating a system encompassing more than 700 care sites and 139 hospitals across 28 states.

December 10: Ascension and Providence St. Joseph. The Wall Street Journal reported that the two hospital systems were discussing a merger that would create an entity encompassing 191 hospitals in 27 states and annual revenue of $44.8 billion. Ascension operates across 22 states and the District of Columbia, including Texas and Washington, where Providence also operates. Providence also has hospitals in Alaska, California, Montana, New Mexico and Oregon. (No news from these two at press time.

However, in February, Ascension and Arlington Heights, Illinois-based Presence Health signed a definitive agreement for Presence Health to join Ascension and become part of AMITA Health, a joint venture of Ascension’s Alexian Brothers Health System and Adventist Midwest Health, part of Adventist Health System.)

December 19: Humana and Kindred Healthcare.

Humana Inc. announced it signed a definitive agreement to acquire a 40 percent minority interest in the Kindred at Home Division of Kindred Healthcare, Inc., said to be the nation’s largest home health provider and second largest hospice operator, for approximately $800 million. Currently, nearly 40,000 caregivers serve approximately 130,000 patients daily in Kindred at Home with annual revenues of approximately $2.5 billion.

March 2018 | The Journal of Healthcare Contracting

Guidance for the outpatient lab A good distributor representative can guide even the most seasoned outpatient-lab professionals Carolyn Blair has worked in a

Charles Powell, M.D., mean-

Despite all those combined

lab for about 40 years, first as a

while, has been practicing medi-

years of experience, Blair and

phlebotomist, then as a hema-

cine for 19 years, including 16

Powell still draw on the expertise

tology supervisor in the hospital

years in the Army and Navy. To-

and knowledge of their primary

setting, and today as laboratory

day, he is executive vice president

distributor – McKesson Medical-

manager of the Diagnostic Clinic

of clinical operations for Health-

Surgical – to help keep their labs

of Longview (Texas).

care Associates of Texas in Irving.

running efficiently.

The Journal of Healthcare Contracting | March 2018

Sponsored by McKesson Medical-Surgical

19

Diagnostic Clinic of Longview

its current chemistry analyzer –

Founded more than 35 years ago,

we’ve had in my 22 years here” –

DCOL is a multispecialty physi-

after visiting a user in Oklahoma.

cian group practice that includes

Staffing is a challenge for

18 locations, more than 90 phy-

DCOL, as it is for other labs, says

sicians and 30 mid-level provid-

Blair. Finding well-qualified peo-

ers. The majority of its lab work

ple takes time and effort. Add to

is performed in the central lab in

that the stress associated with

Longview, but outlying locations

running a lab today, with all the

have phlebotomy draw stations

required regulations, and provid-

and perform point-of-care test-

ing comprehensive training to

ing as needed. The lab performs

the staff.

which Blair describes as “the best

more than 1 million tests per year.

“That’s why, in the end, it’s im-

“Evan comes by once a week,”

portant find a good rep like Evan,”

says Blair, referring to McKesson

she says. “He’s kind of old school;

Medical-Surgical Account Man-

not many account managers come

ager Evan Stanley. “My chemistry

around once a week like he does.

tech sends orders on Monday;

We really depend on him, and it

Evan comes in on Wednesday,

takes a lot of stress off us, knowing

walks through the lab, and we let

we will receive what we ordered in

him know what is needed. Every-

a timely manner. Any time we have

thing is delivered on Thursday.

issues, I’ll ask him, ‘Have you heard

“Rarely is it not here on Thursday,” she adds.

of this before?’ or ‘Do you have a customer with this problem?’”

Stanley is quick to put Blair in

Stanley guides DCOL in choos-

touch with directors and techs

ing instruments. “That’s very im-

from labs that may be using a

portant to us, because we want

piece of equipment in which she

to keep our instruments for as

has an interest. “He is always tell-

long as possible” says Blair. “We

ing me what’s out there, and he

want to make sure we’re making

lets me be the judge,” she says.

the best decision for our needs.”

“He takes us to other labs and

He also helps the lab identify

gives us time to talk to the techs,

reliable service options when

to ask questions, to see how they

needed. “When you run the vol-

feel about it – and he doesn’t

ume of tests we do in a 12-hour

hover over us.” DCOL acquired

period, fast and efficient service

20

is very important. Evan helps us

will include a 60,000-square-foot

were OK businesspeople, but it

get any assistance we may need

facility housing an ambulatory sur-

was time to bring in some heavi-

regardless of what brand equip-

gery center and medical offices.

er guns,” in the form of private

ment we purchased.”

Healthcare Associates of Texas Healthcare Associates of Texas is on the move. Founded 26 years ago by two doctors and one office, HCAT now has 48 providers, and it intends to double that number by the end of 2018. This summer, HCAT will move into a new “mother ship,” a 95,000-squarefoot facility providing primary care and specialist services, imaging, laboratory, nerve conduction, urodynamic and sleep studies, and more. Phase II of the construction

“We grew to three locations on

equity firm Webster Capital. “Our

our own dime,” says Powell. “Then

concept is to grow by acquisition

we realized that, as doctors, we

and organic growth, and they will help us with both.”

McKesson helps HCAT maintain what Powell describes as “that very fine balance” between too much inventory on the shelves, and shortages, which can jeopardize patient care.

project, set to begin later in 2018,

Powell actually prefers the word “integration” to “acquisition” when speaking about new clinics. “We wouldn’t buy a practice if things weren’t already working,” he says.

“We like to step in and adopt those things that are working well, and bring in solutions of our own that can improve operations.”

One of those “solutions” is McKesson Medical-Surgical Account Manager Jonathan Poulin, who began servicing HCAT five and a half years ago.

21

“As we have grown, McKesson has made sure that Jonathan is the representative for the new facilities,” says Powell. “He visits the locations, reviews their practices, including what lab tests they do, and works on standardizing supplies and equipment through HCAT, which gives us economy of scale.” He also helps HCAT decide which tests formerly done in the facility or sent out to a reference lab may be performed more efficiently at HCAT’s central lab. “Doctors love it,” says Powell, referring to the central lab. “Turnaround

multiple diseases in an hour. Its GI

“Having accurate and comprehensive test results in one hour enables physicians to immediately prescribe treatment protocols that target the specific infections, rather than administering a wide-spectrum antibiotic, which may not be necessary.”

– Charles Powell, M.D.

times are faster, they have more

panel, for example, identifies 22 disease targets for bacterial, viral and parasitic gastroenteritis infections; its respiratory pathogen (RP) panel identifies 20 viral and bacterial respiratory pathogens.

“Not every patient needs that test, but using it in a responsible manner will improve patient care,” says Powell. “Having accurate and comprehensive test results in one hour enables physicians to immediately prescribe treatment protocols that target the specific infections, rather than administering a wide-spectrum antibiotic, which

control over their panels, and it’s

patient care. McKesson has also

seamless for the patients.”

played a key role in helping HCAT

For a growing physician prac-

McKesson helps HCAT maintain

upgrade its lab equipment. In July,

tice or health system, continuity in

what Powell describes as “that very

for example, they helped HCAT

the supply chain is critical. Carolyn

fine balance” between too much

implement the FilmArray system

Blair and Charles Powell believe

inventory on the shelves, and

from BioFire, a molecular labora-

they have found it, with help from

shortages, which can jeopardize

tory instrument that can identify

McKesson Medical-Surgical.

22

may not be necessary,” he says.

Help wanted Your outpatient labs need you.

As a supply chain executive, you may not be conversant with hematology, chemistry, immunoassays, analyzers, molecular testing, point-of-care testing or CLIA. You may not be familiar with the supplychain-related demands of the typical outpatient lab.

23

And yet, chances are, your

operational and financial efficien-

Purchasing efficiencies are also

health system has been actively

cies and delayed care to patients

sacrificed, as without a strong

acquiring

practices,

with lower quality outcomes.

formulary, the opportunity to ne-

surgery centers, urgent care cen-

Having a distribution partner

gotiate for best price tier from the

ters, even retail clinics, over the

who understands the complexi-

distributor or manufacturer may

past few years. And with each

ties encountered with acquisition

be missed.”

one comes a lab.

and consolidation and the ben-

Glass adds, “As health systems

efit of an integrated lab strategy

acquire more and more sites,

is essential to healthcare delivery

things can become increasingly

in today’s environment.

disorganized. There may be no

physician

standardization of products or

A key pillar

processes. You might find a hun-

“Laboratory is a key pillar to suc-

dred non-acute locations, each

cess with value-based-care pro-

one ordering from a different

grams from government and

vendor, ordering different tests,

private payers alike,” says Patrick

and employing different supply

Bowman, Director, Strategic Ac-

chain processes.”

counts, Lab, McKesson Medical-

Health system administrators

Surgical. “A significant amount of

– including supply chain execu-

Source: The Impact of Diagnostics on Healthcare Outcomes, Health Industry Distributors Association.

a health system’s revenue is based

tives – might assume (or hope?)

upon

pro-

all those non-acute operations

“Having lab testing close to the

grams, which essentially score an

are taking care of themselves,

point of the patient encounter

organization’s ability to achieve

Glass says. “And they are … but

with immediate results, diagnosis

certain benchmarks, many of

they might not be doing a very

and treatment in the non-acute

which require both a higher level

good job of it.”

space of the health system can be

of patient compliance and com-

an essential component in achiev-

pleted laboratory results.”

value-based-care

Point of care

Lack of control over those labs

Some healthcare systems opt to

satisfaction,”

can have negative operational, fi-

pull all testing out of the non-acute

says Lynn Glass, Vice President of

nancial and clinical consequences.

clinics and into a central lab, says

Strategic Accounts, Lab, McKes-

“Having multiple laboratory

Bowman. “I think the easy answer

son Medical-Surgical. ”Failure to

products that execute the same

for many is, ‘We have this hospital

fully integrate a lab strategy that

function can result in clinical inef-

lab that runs like a well-oiled ma-

addresses standardization, up-

ficiencies, as not all tests replicate

chine, so we can do our tests there

grade in product, and efficien-

the same result and range,” he

at a fraction of the cost.’”

cies impacts both supply chain

says. “This leads to both confu-

But doing so can lead to unac-

and patient care with decreased

sion and potential misdiagnosis.

ceptable delays getting results,

ing higher quality outcomes and increased

patient

24

making a diagnosis, and begin-

experience, and also addresses

ning treatment, he says. What’s

management of the chronic dis-

more, a high percentage of pa-

ease patient population.

tients – particularly those with chronic conditions – fail to comply

Supply chain’s role

with instructions to go to a central

Just as they must in the hospi-

lab for a test. That’s a problem, be-

tal, supply chain executives must

cause patient compliance and en-

work as part of a team to take

gagement are in direct correlation

control of the scattered non-

with better patient outcomes.

acute labs.

“It’s important to see the big

“Decisions on non-acute lab

picture, to have a strategy,” he

strategy should be made by com-

says. “Keep as close to the cli-

mittee, which will often include

nicians as possible those tests

representation from nursing staff,

whose results are needed quick-

medical leadership, supply chain,

ly,” even if the nominal cost of

finance and the laboratory direc-

running them at the central lab

tor or manager,” says Bowman. “A

might be less.

committee of this size and scope

Patient Satisfaction: Top Three Reasons a Provider Failed Expectations Unable to Get Laboratory Test Results in Same Visit / Appointment Wait Time to Receive Care Speed of Diagnosis

38%

38% 33%

33%

28%

28%

Source: 2016 HIDA Horizon Millennials As Healthcare Consumers

“It’s important to address and

is essential, because non-acute

provide healthcare in conjunction

laboratory testing can greatly

with value-based care,” adds Glass.

impact each of their respective

Utilizing point-of-care lab testing

areas of responsibility.”

provides immediate diagnosis,

A distributor with experience

treatment and a higher quality of

in the non-acute lab setting can

care. This will impact both reim-

help the team make sound deci-

bursement and the overall patient

sions. For example, McKesson can 25

help supply chain executives take control of the non-acute continuum through improved supply chain operations, stronger financial performance and building a clinical infrastructure that leads to better outcomes.

“A large hospital lab operates very differently than lab in the non-acute space of a health system,” says Glass. “A distributor with the capability of servicing

afford best contracting and pric-

An acute hospital lab is likely to have semi-trucks backing up to their dock and delivering supplies once a week. But the larger system might have 50 to 100 sites with ongoing needs for point-of-care lab supplies.

the large hospital may not have

ing. McKesson can sequester specific lots of reagents, supplies and controls, then deliver them to the non-acute sites as space allows.

“We’re more than a distributor,” says Glass. The company’s strategic account teams, point-of-care specialists, lab equipment specialists, consultants and technology resources can help health systems implement solutions that drive increased revenues, operational and

the same level of expertise in the

knows how to pack and ship in

financial efficiency, and a higher

non-acute sites. Adds Bowman,

small quantities, while maintain-

quality of care to the patient with

“The delivery model is key in this

ing product integrity throughout

better clinical outcomes and higher

space. An acute hospital lab is

the chain.”

patient satisfaction.

likely to have semi-trucks back-

McKesson supply chain opera-

“It’s a matter of changing

ing up to their dock and deliver-

tions has a storage and delivery

the conversation, changing the

ing supplies once a week. But the

model that can efficiently provide

whole process by which lab ser-

larger system might have 50 to

cold chain storage and delivery,

vices are provided and collabo-

100 sites with ongoing needs for

lot track and trace, lot sequestra-

rating to determine a new strate-

point-of-care lab supplies. They

tion and shipments in low units of

gy that best serves their patients

need a vendor that can deliver in

measure, and additionally has re-

and provides the highest quality

vans to all those sites, and who

lationships with prime vendors to

in lab testing.”

26

The Future of Non-Acute Care – Is your supply chain ready to perform?

Laboratory

Imaging Center

Orthopedic

Urgent Care

Primary Care Practice

Long Term Care

Dialysis & Infusion

CHC Home Health Agency

Ambulatory Surgery Center

Home Medical Equipment

As care shifts to non-acute facilities*

85%

of patient visits happen beyond the hospital

To address the unique needs of non-acute care, your supply chain needs to deliver — and without your clinicians playing shipping manager in between seeing patients. With McKesson MedicalSurgical’s supply chain technology, you can return clinical hours to patient care, increasing productivity while controlling costs. From inventory management and automation to systems integration and contract management, take delivery of greater efficiency for your non-acute supply chain today.

Let McKesson Medical-Surgical help drive inefficiencies out of your supply chain.

Visit mms.mckesson.com or call 866.MCK.ANSWer. *Source: Health, United States, 2015. US Department of Health and Human Services, Centers for Disease Control and Prevention. © 2017 McKesson Medical-Surgical Inc. All rights reserved.

HEALTH FOCUS

Colorectal Cancer Early detection is key

Colorectal cancer is the second-leading cause of cancer

choice in colorectal cancer screening strat-

death in the United States, according to the U.S. Preventive Ser-

egies may increase screening uptake.

vices Task Force. In 2016, when the USPSTF issued its most re-

The benefit of early detection of and in-

cent set of screening recommendations, an estimated 134,000

tervention for colorectal cancer declines af-

persons were likely to be diagnosed with the disease, and about

ter age 75 years, says USPSTF. Among older

49,000 were expected to die from it.

adults who have been previously screened

Colorectal cancer is most frequently diagnosed among adults aged 65 to 74 years; the median age at death from colorectal cancer is 73 years.

The USPSTF found convincing evidence that screening for colorectal cancer in adults aged 50 to 75 years reduces colorectal cancer mortality. However, about one-third of eligible adults in the United States have never been screened for colorectal cancer. Offering 28

There is convincing evidence that colorectal cancer screening substantially reduces deaths from the disease among adults aged 50 to 75 years, and that not enough adults in the United States are using this effective preventive intervention.

for colorectal cancer, there is at best a moderate benefit to continuing screening during the ages of 76 to 85 years. However, adults in this age group who have never been screened for colorectal cancer are more likely to benefit than those who have been previously screened.

The time between detection and treatment of colorectal cancer and realization of a subsequent mortality benefit can be substantial. As such, the benefit of early detection of and intervention for colorectal cancer in adults 86 years and older is at most small.

March 2018 | The Journal of Healthcare Contracting

DEDICATION makes all the difference.

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TERUMO and SurGuard are trademarks owned by Terumo Corporation, Tokyo, Japan, and are registered with the U.S. Patent and Trademark Office. ©2017 Terumo Medical Corporation 11/17. All rights reserved. Accession TMP-0325-11152017. *Data on file. Terumo Medical Products, April 2016.

HEALTH FOCUS

Screening recommendations In June 2016, the U.S. Preventive Services Task Force

aged 50 to 75 years, and 2) not enough

updated its recommendations regarding colorectal cancer

adults in the United States are using this

screening. Eight years earlier, the USPSTF had recommended

effective preventive intervention.

screening with colonoscopy every 10 years, annual FIT, annual

Note that recommendations made by

high-sensitivity FOBT, or flexible sigmoidoscopy every five years

the U.S. Preventive Services Task Force

combined with high-sensitivity FOBT every three years.

are independent of the U.S. government.

In the current recommendation (below), instead of empha-

They should not be construed as an offi-

sizing specific screening approaches, the USPSTF chose to high-

cial position of the Agency for Healthcare

light the convincing evidence that 1) colorectal cancer screen-

Research and Quality or the U.S. Depart-

ing substantially reduces deaths from the disease among adults

ment of Health and Human Services.

Population

Recommendation

Grade

Adults aged 50 to 75 years

The USPSTF recommends screening for colorectal cancer starting at age 50 years and continuing until age 75 years.

A (There is a high certainty that the net benefit is substantial.)

Adults aged 76 to 85 years

The decision to screen for colorectal cancer in adults aged 76 to 85 years should be an individual one, taking into account the patient’s overall health and prior screening history.

• Adults in this age group who have never been screened for colorectal cancer are more likely to benefit.

C (The USPSTF recommends selectively offering or providing this service to individual patients based on professional judgment and patient preferences. There is at least moderate certainty that the net benefit is small.)

• Screening would be most appropriate among adults who 1) are healthy enough to undergo treatment if colorectal cancer is detected and 2) do not have comorbid conditions that would significantly limit their life expectancy.

Source: U.S. Preventive Services Task Force, June 2016 (https://www.uspreventiveservicestaskforce.org/ Page/Document/RecommendationStatementFinal/colorectal-cancer-screening2#tab) 30

March 2018 | The Journal of Healthcare Contracting

HEALTH FOCUS

Colorectal cancer screening strategies Screening Method

Frequencyb

Evidence of Efficacy

Other Considerations

gFOBT

Every year

High-sensitivity versions have Does not require bowel preparation, anesthesia, or transportation superior test performance characteristics than older tests. to and from the screening examination (test is performed at home)

FITc

Every year

Improved accuracy compared Does not require bowel preparation, anesthesia, or transportation with gFOBT. Can be done to and from the screening examiwith a single specimen nation (test is performed at home)

FIT-DNA

Every 1 or 3 yearsd

Specificity is lower than for FIT, resulting in more falsepositive results, more diagnostic colonoscopies, and more associated adverse events per screening test. Improved sensitivity compared with FIT per single screening test

Stool-Based Tests

There is insufficient evidence about appropriate longitudinal follow-up of abnormal findings after a negative diagnostic colonoscopy; may potentially lead to overly intensive surveillance due to provider and patient concerns over the genetic component of the test.

Direct Visualization Tests Colonoscopyc

Every 10 years

Requires less frequent screening.

Screening and diagnostic followup of positive results can be performed during the same examination.

CT colonographye

Every 5 years

There is insufficient evidence about the potential harms of associated extracolonic findings, which are common

Flexible sigmoidoscopy

Every 5 years

Flexible sigmoidoscopy with FITc

Flexible sigmoidoscopy every 10 years plus FIT every year

Modeling suggests it provides Test availability has declined in the United States less benefit than when combined with FIT or compared with other strategies Test availability has declined in the United States. Potentially attractive option for patients who want endoscopic screening but want to limit exposure to colonoscopy.

Abbreviations: FIT=fecal immunochemical test; FIT-DNA=multitargeted stool DNA test; gFOBT=guaiacbased fecal occult blood test.

Source: U.S. Preventive Services Task Force, June 2016 (https://www.uspreventiveservicestaskforce.org/ Page/Document/RecommendationStatementFinal/colorectal-cancer-screening2#tab) 32

March 2018 | The Journal of Healthcare Contracting

What’s ahead for FIT? Testing for novel protein biomarkers in stool finds sig-

from controls. By using a combination

nificantly more colorectal cancers (CRC) and advanced adeno-

of four novel protein biomarkers, in this

mas (precursors to cancer) compared to testing for hemoglobin

study the investigators found that they

alone, according to researchers from the Netherlands Cancer

were able to detect almost twice as

Institute and VU University Medical Center, and published in

many colorectal cancers and five times

Annals of Internal Medicine in November 2017.

as many advanced adenomas, com-

The proteins can be detected in a small sample of the fecal immunochemical test (FIT), which suggests that they can be applied in population screening.

pared to using hemoglobin alone.

According to the researchers, this new test has the potential to be easily inte-

The researchers sought to identify novel protein biomark-

grated into population-wide screening

ers in stool that could outperform or complement hemoglo-

programs upon successful clinical valida-

bin in detecting CRC and advanced adenomas. They used

tion. Because it uses the same technol-

mass spectrometry to search for proteins that were present in

ogy as the current standard stool-based

stool specimens from persons with CRC or advanced adeno-

test, few adjustments to the screening

mas, and which were virtually absent from stool specimens

program would be needed.

The Journal of Healthcare Contracting | March 2018

33

REGULATORY UPDATE

dimensions of care and service. Because so many plans collect HEDIS data, and because the measures are so specifically defined, HEDIS makes it possible to compare the performance of health plans on an “apples-to-apples” basis.

First established in the late 1980s, HEDIS measures address a broad range of health issues, such as persistence of beta-blocker treatment after a heart attack, controlling high blood pressure, comprehensive diabetes care and breast cancer screening.

Included in HEDIS is the CAHPS® 5.0 survey, which measures members’ satisfaction with their care in areas such as claims processing, customer service, and getting needed care quickly. “CAHPS” is

HEDIS updates address transitions of care Opioid usage and telehealth are also key points

an acronym for “Consumer Assessment of Healthcare Providers and Systems.”

Health plans use HEDIS results to see where they need to focus their improvement efforts. In addition, many health plans report HEDIS data to employers or use their results to make improvements in their quality of care and service. Employers, consultants, and consumers use HEDIS data, along with accreditation in-

Ensuring a smooth continuum of care for discharged

formation, to help them select the best

hospital patients, curbing opioid usage, and telehealth were all

health plan for their needs. Many plans

on the minds of the National Committee for Quality Assurance

commonly include HEDIS compliance

(NCQA), as it issued new technical specifications for the 2018

targets into payment contracts with pro-

edition of the Healthcare Effectiveness Data and Information

viders, reports America’s Health Insur-

Set, or HEDIS. The specifications include seven new measures,

ance Plans, or AHIP.

changes to several existing measures and two cross-cutting topics, which address issues across multiple measures.

HEDIS is a tool used by more than 90 percent of America’s health plans to measure providers’ performance on important 34

HEDIS results are included in Quality Compass, a web-based comparison tool that allows users to view plan results and benchmark information.

March 2018 | The Journal of Healthcare Contracting

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REGULATORY UPDATE

New measures

5. Use of opioids from multiple pro-

The newest additions to HEDIS are designed to address emerg-

viders. This measure assesses the rate

ing health needs and evolving processes in care delivery, ac-

of health plan members 18 years and

cording to NCQA.

older who receive opioids from multiple prescribers and multiple pharma-

1. Transitions of care. This measure is designed to improve care

cies. According to NCQA, high dosage,

coordination during care transitions for at-risk populations,

multiple prescribers and pharmacies

including older adults and other individuals with complex health

are all risk factors for dangerous over-

needs, according to NCQA. It assesses percentage of inpatient

dose and death.

discharges for Medicare members 18 years and older who had each of the following during the measurement year:

6. Depression screening and follow-up

• Notification of inpatient admission.

for adolescents and adults. This mea-

• Receipt of discharge information.

sure assesses the percentage of health

• Patient engagement after inpatient discharge.

plan members 12 years and older who

• Medication reconciliation post-discharge.

were screened for clinical depression and, if screened positive, received

2. F ollow-up after emergency department visit for people

follow-up care. It completes a set of

with high-risk multiple chronic conditions. This measure

three measures that address the needs

assesses the percentage of ED visits for Medicare members

of patients receiving care for depres-

18 years and older with multiple high-risk chronic condi-

sion: screening, ongoing monitoring,

tions and follow-up care within seven days of the ED visit.

and response to treatment.

This follow-up should ensure better coordination of diagnoses, medications and follow-up needs, says NCQA.

7. Unhealthy alcohol use screening and follow-up. This measure assesses the

3. Pneumococcal vaccination coverage for older adults. This

percentage of health plan members 18

measure assesses the percentage of health plan members

years and older who were screened for

65 years and older who received the recommended series of

unhealthy alcohol use and, if screened

pneumococcal vaccines: 13-valent pneumococcal conjugate

positive, received appropriate follow-up

vaccine and 23-valent pneumococcal polysaccharide vaccine.

care within two months.

The measure is designed to track more closely to updated Practices (ACIP) The measure also uses electronic data, and

Changes to existing measures

will one day supplant the current survey-based metric.

1. Immunizations for adolescents.

guidance from the Advisory Committee on Immunization

NCQA revised the human papilloma-

36

4. Use of opioids at high dosage. This measure assesses the

virus (HPV) vaccine rate to align with

rate of health plan members 18 years and older who re-

the updated Advisory Committee on

ceive long-term opioids at high dosage (average morphine

Immunization Practices guidelines,

equivalent dose >120mg).

which now permit a two-dose, rather March 2018 | The Journal of Healthcare Contracting

than three-dose vaccination schedule for adolescents.

5. Plan all-cause readmissions. NCQA developed a strategy to extend the existing Plan All-Cause Readmission (PCR) measure to the Medicaid population, essentially becoming a

2. Breast cancer screening. NCQA added digital breast tomosynthesis

new measure for Medicaid. NCQA expects the measure will especially useful to states as they assess quality.

(DBT) to the list of acceptable tests for breast cancer screening.

Cross-cutting topics 1. Telehealth for behavioral health measures. Telehealth is an

3. Initiation and engagement of alco-

effective, efficient way of delivering healthcare, and is becom-

hol and other drug abuse or depen-

ing widely reimbursed by payers such as health plans, states

dence treatment. NCQA updated this

and CMS, says NCQA. That’s why NCQA introduced telehealth

measure to include medication-assist-

in seven behavioral health measures for HEDIS 2018.

ed treatment (MAT) as an appropriate treatment for people with alcohol and

2. Excluding members in institutional care settings. NCQA

opioid dependence. The measure also

is excluding Medicare members enrolled in Institutional

adds telehealth to treatment options.

Special Needs Plans (I-SNPs) or who live long-term in institu-

Additionally, alcohol, opioid and other

tional care settings from the following measures:

drug dependencies are added as sub-

• Breast cancer screening.

groups for reporting (rate stratifica-

• Colorectal cancer screening.

tion) and the engagement timeframe

• Osteoporosis management in women

is extended from 30 to 34 days.

who had a fracture.

• Controlling high blood pressure.

4. Identification of alcohol and other drug services. NCQA updated this

The listed HEDIS measures are appropriate for the age-de-

measure to include MAT as an appropri-

fined general population but not always for people who are

ate treatment for people with alcohol

frail or have mobility or other functional limitations, according

and opioid dependence, and report-

to NCQA.

ing of measure rates by alcohol, opioid and other drug dependence diagnosis

Transitions of care

as subgroups; and for more granular

Mary Barton, vice president performance measurement, NCQA,

reporting, it separates outpatient, ED

discussed the importance of the “Transitions of care” measure

and telehealth services. NCQA says the

during a video chat on the organization’s website.

measures will give providers, consumers

For the patient, the days and weeks following discharge can

and plans better insight regarding ac-

be a vulnerable time, she said. “We’re concerned about medi-

cess to treatment services, and add clini-

cal errors. Maybe the patient’s medications were changed in

cally useful information about utiliza-

the hospital; maybe tests had been ordered during the hospital

tion of services for those with substance

stay, but the results were incomplete by the time of discharge.

dependence diagnoses.

There is a lot of opportunity for things to get dropped.”

The Journal of Healthcare Contracting | March 2018

37

REGULATORY UPDATE

To ensure what Barton referred to as a “clear connection between sites of care,” NCQA will be measuring how frequently – or if – primary care physicians are notified of an inpatient admission of one of their patients. The organization will also measure how complete the patient’s information is on the dis-

“EDs are excellent at taking care of the first thing that brought the patient in. But they’re not necessarily trained or staffed to do the kind of in-depth communication that a primary care team should do.”

in Medicare who are over 65, who have multiple chronic conditions,” she said.

“They are vulnerable; they may be frail; they often have functional limitations; and when they go to the ED, they may experience a change in their medication, which needs to followed-up.”

Also, there may be a multifactorial set of events that led to that ED visit.

“EDs are excellent at taking care of the

charge record, so the next

first thing that brought the patient in,”

provider (primary care physician, long-term-care facility, etc.)

said Barton. “But they’re not necessar-

knows what has been done and what needs to be done.

ily trained or staffed to do the kind of

And finally, NCQA will measure how promptly the discharged

in-depth communication that a prima-

patient’s physician contacted him or her after discharge, to

ry care team should do.” For example,

make a follow-up appointment, if necessary. “We have to close

the patient may face socioeconomic

the loop on that patient’s care,” she said. After a hospital stay,

forces that led him or her to the ED,

with its steady stream of caregivers, a patient can feel alone. He

such as an eviction from their house

or she needs a primary care support team to guide him or her

or apartment.

through the next stage of recovery.

38

“We know there is a subset of patients

“We’re looking for evidence that an

Similarly, the measure “Follow-up after emergency depart-

ongoing care team took note of that ED

ment visit for people with multiple high-risk chronic conditions”

visit and circled that patient back to the

is designed to address the continuum of care, said Barton.

primary care setting.”

March 2018 | The Journal of Healthcare Contracting

Better, faster.

It’s what we want for patients.

What about your clinicians?

Connecting vital signs monitors to the EMR has been shown to: Y

Reduce errors caused by manual processes1

Y

Save clinicians time by removing manual documentation steps2

Y

Increase clinical time spent on value-added care3

40

1

Reduction in minutes of vital signs data latency in the EMR after connecting vital signs4

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1 CIN: Computers, Informatics, Nursing: Eliminating Errors in Vital Signs Documentation, FIELER, VICKIE K. PhD, RN, AOCN; JAGLOWSKI, THOMAS BSN, RN; RICHARDS, KAREN DNP, RN, NE-BC, 2013. The paper vital signs recording had an error rate of 18.75%.

2 JHIM FALL 2010 Volume 24:Number 4, Vital Time Savings: Evaluating the Use of an Automated Vital Signs Documentation System on a Medical/Surgical Unit 3 Going One Step Further at Scott & White Medical Center—Temple: Eliminating manual vital signs documentation to prioritize value-added care. 2017 Welch Allyn. www.welchallyn.com 4 CareAware® VitalsLink: Eliminating Data Latency & Manual Documentation at Naples Hospital. Prepared by Cerner, 2013. © 2017 Welch Allyn

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