HLTH 4530: Healthcare Economics From a Population Health Perspective
Value based purchasing is a payment model that offers financial incentives to healthcare providers and organizations when they meet certain performance measures. This model also penalizes healthcare providers for poor outcomes, medical errors, or increased costs. Managed Care Organizations (MCOs), Accountable Care Organizations (ACOs), and Bundled Payment Care Improvement (BPCI Advanced) are prospective value-based purchasing programs aimed at improving healthcare quality and reducing costs. Hospitals and physicians participate in these programs with the goal of getting the right care to the right patient at the right time.
In this Discussion, you will consider what happens with these systems as they relate to nursing home care. Nursing home administrators are facing a reduction in the demand for skilled nursing rehabilitation (SNF) beds, while physicians in an ACO or a gain-sharer in a BPCI program are looking at discharging patients with home care or outpatient resources to reduce cost. All these programs are affected by re-admission penalties.
Most businesses are constantly looking to reduce cost. In healthcare, often the necessity to reduce cost means a reduction in utilization. Consider how this compares to a retail market where reduced demand reduces cost by consumer choice. How much influence does the consumer have on the change in healthcare economics? Is it the payer (Medicare), the provider (the physician), or the patient?
Consider the following scenarios:
Scenario 1: You are a rehabilitation director in a nursing home. Your administrator has given you the directive that, to participate with a Medicare MCO and become a preferred provider for a hospital BPCI or comprehensive care for joint replacement (CJR) program, you need to reduce the length of stay for the short-term rehab patients from 20 days to 10 days for DRG 470: Total knee replacement. To compound the problem, you see that the usual 400 total knee patients you get annually has been reduced to 160 patients.
Scenario 2: You are the manager of a large orthopedic practice who participates in the BPCI program. Your practice does 400 total knee patients each year. Medicare has set pricing for a Total Knee Replacement patient at $28,415 per patient for a 90-day episode of care. Current practice is that all patients automatically go to a skilled nursing facility (SNF) for 20 days. Based on current research the goal is for 60% of your patients to go home with home care and those going to a SNF to stay for 10 days so the BPCI program will be profitable.
- Select one of the two scenarios to focus on for this Discussion.
- Reflect on the scenario, and consider redesign measures you might recommend. For example, consider length of stay, reducing readmissions, attracting new business, care redesign, patient satisfaction, and physician engagement.
Post a comprehensive response to the following:
- Describe at least three care redesign strategies you might recommend to the scenario.
- Justify why you selected these three care redesign strategies and explain how you would implement the redesign strategies you recommended.
- Be specific, and provide examples.
- Be sure to support your Discussion with a references within the last three years.
350 words minimum
Expert Solution Preview
Introduction: This assignment question pertains to the healthcare economics course and specifically focuses on value-based purchasing programs. The question presents two different scenarios where healthcare providers are expected to reduce their costs while still maintaining the quality of care for patients. The students are required to recommend care redesign strategies and justify their choices.
1) What is value-based purchasing and how does it aim to improve healthcare quality while reducing costs?
Answer: Value-based purchasing is a payment model that incentivizes healthcare providers to meet certain performance measures, such as improving healthcare quality and reducing costs. Providers who achieve these measures receive financial incentives, whereas those who do not are penalized. This payment model encourages hospitals and physicians to provide high-quality care to patients while also controlling costs. The focus is on ensuring that patients receive the right care at the right time, and that healthcare providers are held accountable for their performance.
2) How does reduced demand impact healthcare economics, and how does this compare to a retail market?
Answer: In healthcare, reduced demand typically results in a reduction in utilization. For example, if demand for skilled nursing rehabilitation (SNF) beds decreases, administrations may reduce the number of available beds to control costs. In a retail market, reduced demand often leads to a decrease in price due to consumer choice. However, in healthcare, patients are generally not in a position to choose how much care they receive, as their healthcare providers typically make these decisions. Therefore, the payer (such as Medicare), the provider (physician), and the patient all have varying levels of influence on healthcare economics.
3) How can healthcare providers redesign care to reduce costs and improve patient outcomes in the presented scenarios?
Answer: In Scenario 1, one care redesign strategy could be to implement a team-based approach to care, where different healthcare professionals work closely together to improve patient outcomes. This could involve developing care pathways that outline the various stages of treatment and the roles of different healthcare providers at each stage. Another strategy could be to invest in technology that enables providers to track patient progress and communicate with each other more effectively.
In Scenario 2, one care redesign strategy could be to invest in patient education programs that encourage patients to take an active role in their own care. This could involve providing patients with informational materials about their condition and treatment options, as well as tools to help them track their progress. Another strategy could be to develop partnerships with home health agencies or outpatient facilities to provide patients with alternatives to SNF care. This could involve ensuring that patients receive adequate follow-up care and support after leaving the hospital.
