Oregon's CCO Transformation

In Oregon, healthcare reform will be centered around new Coordinated Care Organizations (CCO).  Much of this is still barely understood by providers, but in fact the implementation will begin this year.  To get a general overview of what the CCOs will encompass and their role in Medicaid, click here for a presentation put together by the Oregon Association of Hospitals and Healthcare Systems.

Healthcare Reform and Rehabilitation

This may be a cumbersome post, suitable only for those who care about such issues as healthcare policy and reform. And when you are reading, keep in mind that ultimately this only reflects my own opinion and viewpoint. Hopefully it’s food for thought.

So I’ll start with a poll: If you think that healthcare delivery is going to change in the next 6 years, raise your hand. [Waiting, counting.] If you didn’t raise your hand, and you think the health care systems will ultimately be about the same, with minor adjustments, raise your hand. [More waiting, more counting.]

I’m guessing that your vote falls along the lines of your political persuasions: If you believe that “ObamaCare” was an important step forward in providing healthcare to all, you probably feel that the country will continue—with minor adjustments—onward to full implementation of the healthcare reform law that was passed last year. You also feel that rationality will ultimately prevail and that the arbitrary system that we have now will change with the helping hand of government.

If you feel that “ObamaCare” is a bureaucratic takeover of healthcare, inevitably destined to include Death Panels to pull the plug on anybody over a certain age, you probably raised your hand for the second choice. You feel that rationality will ultimately prevail and that this excellent system that we’ve spent years designing in the U.S. of A. will continue to evolve without the heavy hand of government.

Reality, as usual, has little to do with political views. Here are some realities that impact this discussion:

• Healthcare costs are rising rapidly, taking an ever-larger portion of the Gross National Product and contributing to ever-increasing government deficits. This is unsustainable. Unsustainable means something will change. Fact.

• Payments from Medicare and Medicaid do not cover the cost of delivery of services. That means that the commercial insurers have to pay an ever-higher portion of total healthcare costs in order to make up for what the government does not pay. (“Cost-shifting.”) The insurance companies must then pass these increases on to the employers who ultimately pay for the coverage. Employers are unwilling to continue to absorb these increases; healthcare benefits costs are already causing major distress to their bottom lines. This means that something will change. Fact.

Given the two imperatives above, it’s our destiny that healthcare funding and delivery will change. The only real question is if it will be a deliberate, carefully crafted change, or will it be driven by politics (“special interests”) rather than facts, or will the system simply implode. Who of you votes for “carefully crafted” as the preferred route?? [Counting hands again.]

Years ago, Oregon tackled one of the overriding realities of healthcare: it must somehow be rationed. Prior to the reforms enacted here, the rationing happened by limiting the number of people who could be on the Medicaid rolls. When money ran out, they simply stopped letting people in to the system. After reform, the rationing occurred differently: more people qualified, but medical needs were ranked and some diagnoses and procedures were not funded. We see one of the results of that reform now in our outpatient therapies: PT for the “sprains and strains” diagnoses are not covered, but services related to stroke are covered. The rationale for this being that if we have to cut something, let’s cut something that will eventually usually get better without treatment. Carefully crafted. Fact-based.

We do not know what Washington is going to do in implementing (or not) the Healthcare Reform Act. But, once again, Oregon is moving ahead with its own reform, and will likely be far ahead of whatever our Congress and CMS come up with. Here is the future:

1. Payments from government payors to providers will be cut more.
2. Hospitals are likely to be made accountable for the costs of re-hospitalization and downstream care (e.g., home health and rehab services) up to a month post-discharge from the acute hospital.
3. It will be increasingly difficult, if not impossible, to cost-shift to commercial insurance.
4. A higher proportion of individuals will be covered by government-backed insurance.
5. This decrease in income will put a squeeze on providers to cut costs in order to survive. Some will not survive, at least in their current forms.
6. Hospitals and healthcare systems will operate based on a well known premise: Ultimately, cost is controlled by utilization patterns. And utilization is controlled by physicians.
7. The logical response to this fact is that physicians will increasingly be employed or otherwise aligned with the hospitals. Furthermore, services provided outside the hospital (SNF, IRFs, outpatient services) will also need to align with hospitals’ interests in order to receive referrals.
8. We are likely to see new configurations of healthcare systems. The catch-word of the moment is “medical home.” No single definition exists, and different methods have been used in different parts of the country. But what they focus on is utilization. Higher primary care utilization for patients who could avoid hospitalization (diabetics, heart failure, asthma, to name a few) and “smarter” utilization for those who do need hospitalization. The old-fashioned description is a case-management approach to medicine.

To get an idea of how this might work, check out Atul Gawande’s article about utilization in the January 17 New Yorker.  I especially liked this little vignette from the article; you can imagine how “rogues”—whether they be doctors or therapists—would be handled in a well-managed, rational, system:

[The physician] told me about a woman who had seen a cardiologist for chest pain [20 years] ago, when she was in her twenties. It was the result of a temporary, inflammatory condition, but he continued to have her see him for an examination and an electrocardiogram every three months, and a cardiac ultrasound every year. The results were always normal. After the [medical management] clinic doctors advised her to stop, the cardiologist called her at home to say that her health was at risk if she didn’t keep seeing him. She went back.

The clinic encountered similar troubles with some of the doctors who saw its hospitalized patients. One group of hospital-based internists was excellent, and coordinated its care plans with the clinic. But the others refused, resulting in longer stays and higher costs (and a fee for every visit, while the better group happened to be the only salaried one). When [this doctor in the article] arranged to direct the patients to the preferred doctors, the others retaliated, trolling the emergency department and persuading the patients to choose them instead.

“‘Rogues,’ we call them,” [this doctor] said. He and his colleagues tried warning the patients about the rogue doctors and contacting the E.R. staff to make sure they knew which doctors were preferred. “One time, we literally pinned a note to a patient, like he was Paddington Bear,” he said. They’ve ended up going to the hospital, and changing the doctors themselves when they have to. As the saying goes, one man’s cost is another man’s income.

And that last phrase is the heart of the matter. Our income, my income, all providers’ income, is someone else’s cost. My predication is that if we align ourselves with excellence in patient satisfaction, outcomes, and cost controls, then the rehab professions have a bright future. But nobody owes it to us. We become “preferred” by delivering results at the most reasonable cost compared to alternatives. Evidence will prevail over relationships and marketing.

In that same New Yorker article, Gawande describes the comments of a hospital CEO who had worked hard on the utilization issues. Under our current system, successful management of utilization means lower census and outpatient business—not exactly a sign of success for a hospital CEO. But that leader responded this way,

The Atlantic City economy, he said, could not sustain his health system’s perpetually rising costs. His hospital either fought the pressure to control costs and went down with the local economy or learned how to benefit from cost control.

And there are ways to benefit. At a minimum, a successful hospital could attract patients from competitors, cushioning it against a future in which people need hospitals less. Two decades ago, for instance, Denmark had more than a hundred and fifty hospitals for its five million people. The country then made changes to strengthen the quality and availability of outpatient primary-care services (including payments to encourage physicians to provide e-mail access, off-hours consultation, and nurse managers for complex care). Today, the number of hospitals has shrunk to seventy-one. Within five years, fewer than forty are expected to be required. A smart hospital might position itself to be one of the last ones standing.

Note re the Denmark comment: In Oregon, the bed ratio is 1.8/1,000 residents; in Denmark, it’s 3.5/1,000. For comparison, in Florida it’s 2.9/1,000 and in New York state it’s 3.1.   Nobody really knows how far we can go with reducing high-cost care,  but that's the journey we are on.