"The Ronan Report" provides insight about the activities at the Western Maryland Health System in Cumberland, Maryland, and about the changes taking place in healthcare today from a CEO's perspective.

Thursday, May 16, 2013

Pay for Performance

Last evening, we had an excellent meeting with the President's Clinical Quality Council.  The single agenda item was creating a pay for performance methodology for physicians who partner with WMHS to improve the care of patients enrolled in our Congestive Heart Failure (CHF) Clinic, our Center for Diabetes Management and our soon-to-be on line Chronic Obstructive Pulmonary Disease (COPD) Clinic.
In fiscal year 2012, WMHS treated 2,207 patients with a primary and secondary diagnosis of CHF for a total cost of $28.8 million.  Of those 2,207 patients, 300 had three or more inpatient stays accounting for nearly 30% of that almost $29 million.  For that same period, we treated 11,400 with either a primary or secondary diagnosis for Diabetes with nearly $50 million in costs.  Four hundred of those patients had three or more inpatient stays, accounting for more than 30% of the cost.  Lastly, we treated 3,603 patients with COPD; costing us $33 million in cost during FY'12.  Three hundred of those patients had three or more inpatient stays and accounted for 37% of the cost. 

Of these three groups of patients, 1036 have been identified as frequent users (great than 3 hospitalizations in a year).  From that group, 578 patients have at least two and some with three of these conditions.  Our goal is to better manage these patients jointly between the Health System's care coordination initiatives and the participating primary care physicians.  We are anticipating saving millions of dollars and the pay-for-performance (P4P) program  will allow us to share some of that savings with the physicians since in many cases their incentives for payment and ours are misaligned.  Primary care physicians are still paid on a volume basis, while WMHS is paid on a value basis. 
Focusing on patients with chronic conditions such as Diabetes, CHF and COPD has it challenges, but the reward for the patient, the physician and the health system could be monumental. The Council decided to move forward with the P4P program as quickly as possible since there is so much at stake.

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