How to Accelerate Board Member Learning in Health Care

(Originally published in Nasdaq’s MarketInsite and written by Gordon Clark, President and CEO of iProtean)

 

The volunteer board members of not-for-profit hospitals and health systems are smart, prominent and accomplished people drawn from the community. Yet, our research shows only 27 percent of hospital and health system board members feel they have the knowledge to be effective. Among new board members we estimate the figure is less than half of that. Why would that be?

 

In 2002, management guru Peter Drucker wrote, “Healthcare is the most difficult, chaotic, and complex industry to manage today.” Over the last 14 years it has become even more so. It is also, as healthcare attorney Monte Dube noted, “the most heavily regulated industry on earth.”

 

Into this maelstrom steps the new board member. To become an effective contributor, that new director will benefit from first developing a basic understanding of:

 

  • What it means to be a not-for-profit healthcare organization
  • How the mission drives the organization’s strategy
  • The organization’s strategic plan
  • Differing responsibilities of the board, management, and medical staff
  • The idiosyncrasies of hospital financial statements
  • The role of “payers”— government, commercial, and private
  • How hospitals finance capital expenditures
  • The medical staff/hospital dynamic and hospital/physician alignment
  • The distortion of traditional market forces that typically drive a business
  • Quality and patient safety oversight
  • How hospitals use information technology, including electronic health records
  • The role of federal and state regulators
  • The impact of the Affordable Care Act on hospital finances and quality
  • Consumerism, Population Health Management, and other topical issues
  • And so much more

 

No wonder the rule of thumb is it takes a new board member up to three years to be sufficiently knowledgeable about healthcare in general and the specifics of the organization in particular. What can be done to accelerate the learning process?

 

The first step is to recognize that effective boards are comprised of people with diverse backgrounds. Ideally, new board members are selected to complement the knowledge, skills, and life experiences of those already on the board, so that the board as a whole will be equipped to grapple with the complex issues facing today’s hospitals and health systems. The key is for a board to develop a common baseline of knowledge, without having a common set of blind spots.

 

Many organizations make the mistake of taking a one-size-fits-all approach to orienting new directors. Yet, each person is joining the board from a unique starting place. A new board member, for example, may have a strong clinical background and a deep understanding of quality and patient safety, but little to no experience with strategic planning or healthcare finance. A second one may possess outstanding business expertise, but has never before tried to apply it to the arcane world of healthcare. The strengths of others may be in the law, community relations or information technology. The areas of need for each new board member will be just as varied as their strengths.

 

Our view is that the most effective orientation programs assess a new board member’s knowledge level in each key aspect of the board’s responsibilities; and use it to develop an individualized orientation plan. Such a targeted approach helps the new board member more quickly become comfortable with the basics, which leads directly to more quickly becoming an effective contributor.

 

Another mistake organizations make is trying to complete the board orientation process all at once. It’s an understandable impulse, intended to bring a new board member up to speed as quickly as possible. Yet, for the new board member, such an approach is like drinking from a fire hose. Instead, remember to teach slow to learn fast. A series of short, focused sessions over at least a 90-day period will impart much more to your new director than a marathon data dump. To protect a board member’s time, it can make sense to schedule the sessions for immediately after a board or committee meeting. Doing so also presents the opportunity to tie the orientation session to the topics discussed at the meeting, anchoring the session with real world examples. It can also be helpful to have the board chair or committee chair participate in the orientation, along with the senior executives responsible for the functions under discussion.

 

The role of governance is an additional area that can receive insufficient attention during the board orientation process. Directors who become overly involved in operational issues, often with the best of intentions, may be a bane of management-board relations. Directors who misunderstand their roles and responsibilities can potentially also be a disruptive force and distract the board from proper execution of its duties. Recognizing that it’s easier to create an attitude than to change one, ensuring upfront that a new board member understands the role of governance, will be time well spent. Central topics to cover include the difference between management and governance, what makes a board effective and what constitutes a high-performance board culture.

 

Other ways to jump-start the education process for new board members include assigning a mentor to the new director, arranging brief one-on-one meetings with each member of the executive team, shadowing a physician or nurse or touring key facilities.

 

Many years ago a turnaround specialist famously commented that he had never seen a hospital failure that couldn’t be traced back to bad governance. Good governance requires engaged and knowledgeable directors focused on the right issues. There is no better place to start than ensuring new board members quickly become effective, so the organization has a full board of contributors. As noted by Matthew Healy, VP, Head of Governance, Nasdaq Corporate Solutions, “Educated and informed boards help organizations improve governance and increase efficiency and transparency by making more informed decisions, reducing risks and creating organizational opportunities. Ultimately, better prepared directors can provide your healthcare institution better governance.”

 

“Nasdaq’s Board and Leadership Solutions have a unique collaboration with iProtean, an e-learning company that provides online governance education and information to hospital directors. Bringing over 50 years of combined experience in healthcare governance information and education, the iProtean leadership team understands the specific needs of hospital and health system board members. The company is committed to helping directors make a meaningful difference in their communities.” (MarketInsite, Nasdaq, January 25, 2017)

 

ABOUT NASDAQ CORPORATE SOLUTIONS

Nasdaq Corporate Solutions helps organizations manage and master the two-way flow of information with their audiences. Around the globe, market leaders rely upon our unmatched suite of advanced technology, analytics and consultative services to maximize the value of their work—from investor relations and corporate governance to public relations and communications.

 

Nasdaq Corporate Solutions – MeetX and Directors Desk

 

Intuitive Board Portal Software for Public, Private, and Non-Profit Boards

Nasdaq Corporate Solutions’ MeetX and Directors Desk can help streamline meeting processes, which, in turn, may accelerate decision-making and strengthen governance. Used by public, private and non-profit organizations worldwide, including over half of the Fortune 500, MeetX and Directors Desk combine functionality with security features, ease-of-use and mobility.

 

 

 

iProtean subscribers, the advanced Quality course, Driving a Sustained Culture of Quality, What Works, What Doesn’t, featuring Larry McEvoy, M.D., and Stephen Beeson, M.D., is in your library. As always, Drs. McEvoy and Beeson take a cutting-edge view of the board’s role in overseeing quality—beyond the traditional processes and structures where boards customarily focus their oversight responsibilities.

 

And coming soon: an advanced Mission & Strategy course, When the Dust Settles, featuring Marian Jennings and Dan Grauman.

 

 

For a complete list of iProtean courses, click here.

 

 

For more information about iProtean, click here.

An Update on Cybersecurity

Modern Healthcare recently released a report on “cyberdefense,” and because this is a timely topic of interest to our subscribers, we present excerpts from the report below. A link to the full article appears at the end of this blog/newsletter.

 

“Cybersecurity platforms that employ advanced technologies like artificial intelligence, machine learning and predictive analytics are being marketed to providers, who have lagged behind other industries in protecting critical data. If deployed correctly, the technology has significant potential to help healthcare cybersecurity leaders, who are overwhelmed by cybersecurity threats but unable to hire enough staffers to adequately respond, healthcare cybersecurity experts say.

 

“Cyberattacks have steadily increased in the past few years, with HHS reporting 106 hacking incidents in 2016, nearly double the year before and over 20 times more attacks than were discovered in 2010. Hackers are hungry for personal information like addresses, Social Security numbers and credit card numbers. They also want medical records, which are immensely valuable because they allow identity thieves to create a more convincing profile of a stolen identity.

 

“Protective technologies entering the market work through algorithms. Artificial intelligence generally refers to the ability of computers to perform tasks that normally require human intelligence, often involving the autonomous use of algorithms by a computer to analyze activity. Predictive analytics software feeds available data through algorithms and modeling to make predictions about what may occur to a network. Machine learning is the ability of computers to improve their analytical accuracy and capabilities by learning from data and activity.

 

“Vendors . . . are harnessing these technologies to create cybersecurity platforms that make sense of unusual activities, bring them to the attention of cybersecurity professionals and help them triage the threats. Some systems can be programmed to automatically block those threats.

 

“Data breaches are the most immediate cybersecurity worry for healthcare organizations. Nothing less than patient privacy, data access, ransomware cash and even the institution’s reputation could be put in play through slipshod data security practices.
“But looming over America’s hospitals and medical practices is a potentially deadlier threat: hackers or blackmailers taking over web-connected medical devices and threatening to inflict patient harm.

 

“Healthcare cybersecurity professionals are sounding the alarm bells about a medical device industry that has lagged behind other industries in equipping their products with strong defenses against hacking. It’s a problem providers can’t avoid, even though they have limited staff to ensure that their medical device security is up-to-date and their networked data flow has adequate protections.” (“Building a Better Cyberdefense, Special Report: How to harness technology to protect your organization and patients from the latest cyberthreats,” Modern Healthcare, January 2017)

 

To read the full report, click here.

 

 

iProtean subscribers, the advanced Finance course, Driving a Sustained Culture of Quality, What Works, What Doesn’t, featuring Larry McEvoy, M.D., and Stephen Beeson, M.D., is in your library. As always, Drs. McEvoy and Beeson take a cutting-edge view of the board’s role in overseeing quality—beyond the traditional processes and structures where boards customarily focus their oversight responsibilities.

 

 

For a complete list of iProtean courses, click here.

 

 

For more information about iProtean, click here.

Uncompensated Care Reached Lowest Amount Since 2007

A recent American Hospital Association study reported that uncompensated care costs (UCC) in 2015 were the smallest share of hospital costs (4.2 percent of total expenses) in at least 25 years. The $35.7 billion in 2015 UCC was the lowest amount since 2007. (Uncompensated Hospital Care Cost Fact Sheet, American Hospital Association, December 2016)

 

The Obama administration estimated that the insurance coverage provisions of the Affordable Care Act (ACA) reduced hospital UCC by $7.4 billion in 2014. The coverage increase includes nearly 17 million additional enrollees in Medicaid or the Children’s Health Insurance Program since October 2013, and 8.8 million enrollees in the ACA marketplaces since open enrollment for 2017 started November 1. (“Uncompensated Care Falls to Lowest Level in 25 Years,” HFMA Weekly, January 13, 2017)

 

A recent report prepared for AHA estimated the ACA reduced hospital UCC among the newly insured by $14.6 billion in 2015. The annual UCC reduction was expected to reach $34.3 billion by 2026. (Estimating the Impact of Repealing the Affordable Care Act on Hospitals, Dobson/DaVanzo & Associates, December 6, 2016)

 

And a report from the Robert Wood Johnson Foundation (published by the Urban Institute) concluded ACA repeal—without replacement—would increase hospital UCC by nearly $25 billion in 2019. (The Impact on Health Care Providers of Partial ACA Repeal through Reconciliation, Robert Wood Johnson Foundation and the Urban Institute, January 2017)

 

The numbers are impressive, but tempered a bit by another AHA report noting that Medicare and Medicaid payments were $57.8 billion less than the costs of providing care to patients in 2015. The surge in losses appeared to be driven by Medicaid, where the shortfall increased 23 percent, from $13.2 billion in 2013 to $16.2 billion in 2015. Medicare underpayments increased 10 percent, to $41.6 billion. (Underpayment by Medicare and Medicaid Fact Sheet, American Hospital Association, December 2016)

 

Experts note that the ACA intended these shortfalls to be offset by the big drop in UCC and, in fact, the financial advantage was more concentrated in the 31 states that expanded Medicaid eligibility. UCC decreases in expansion states ($5.8 billion) greatly outstripped Medicaid losses ($0.9 billion). (“Uncompensated Care Falls to Lowest Level in 25 Years,” HFMA Weekly, January 13, 2017)

 

To read the various reports listed in this newsletter, please see below:

 

Uncompensated Hospital Care Cost Fact Sheet

 

Estimating the Impact of Repealing the Affordable Care Act on Hospitals 

 

The Impact on Health Care Providers of Partial ACA Repeal through Reconciliation

 

Underpayment by Medicare and Medicaid Fact Sheet

 

 

 

 

iProtean subscribers, the advanced Finance course, Driving a Sustained Culture of Quality, What Works, What Doesn’t, featuring Larry McEvoy, M.D., and Stephen Beeson, M.D., is in your library. As always, Drs. McEvoy and Beeson take a cutting-edge view of the board’s role in overseeing quality—beyond the traditional processes and structures where boards customarily focus their oversight responsibilities.

 

 

For a complete list of iProtean courses, click here.

 

 

For more information about iProtean, click here.

 

What’s In Store for Value-Based Reimbursement?

Both Democrats and Republicans recognize the overwhelming need to control healthcare expenses while maintaining and improving quality of care. Under the Obama administration, the Department of Health and Human Services (HHS) pledged that by 2018, half of traditional Medicare payments would be based on value-based payment models that incentivize high quality, low cost care as opposed to payments based upon volume.

 

Theoretically, value-based payment is a non-partisan issue. But, “ . . . the ways in which Republicans and Democrats seek to attain the goal of high quality and low cost care differ,” wrote Elizabeth Scarola and Gail E. Jankowski in a recent paper for the American Health Lawyers Association. (The New “Price” of U.S. Health Care: The Future of Value-based Reimbursement Under President-elect Trump and Tom Price, Executive Summary, AHLA, January, 2017)

 

Value-based Reimbursement

 

The CMS Innovation Center (CMMI) has been a key component in the implementation of President Obama’s Affordable Care Act (ACA). Its stated purpose is to innovate and test new payment models that would lower cost and improve quality for individuals who receive Medicare, Medicaid and Children’s Health Insurance Program (CHIP) benefits. Congress provides the Secretary of HHS with the authority to expand innovative payment models through rulemaking, including the ability to test these models on a national basis. Thus, the ACA allowed the Obama administration to test value-based reimbursement models via rulemaking.

 

Throughout President Obama’s term, CMMI has implemented several programs including Accountable Care Organizations and episode-based payment initiatives (i.e., bundled payments, gainsharing and comprehensive joint replacement programs). CMMI also plays a key role in the Quality Payment Program, created as part of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), through which clinicians may earn incentive payments by participating in Advanced Alternative Payment Models. Payment methodologies that qualify as Advanced Alternative Payment Models under MACRA are determined by CMMI.

 

Although most CMMI payment models under President Obama have been voluntary, several recent CMMI initiatives mandate participation. One such initiative is the Comprehensive Joint Replacement program, which required certain hospitals to share a single bundled payment to cover the cost of certain joint replacement procedures, including in-patient and post-operative care.

 

A similar mandatory project is set to take effect soon for certain cardiac care episodes. In both mandatory programs, hospitals are required to assume downside risk, which means they must pay Medicare if costs exceed a set threshold. The implementation of these mandatory value-based payment initiatives has sparked increased criticism of CMMI. Republicans have argued that HHS is overreaching its power by mandating these payment programs. (The New “Price” of U.S. Health Care: The Future of Value-based Reimbursement Under President-elect Trump and Tom Price, Executive Summary, AHLA, January, 2017)

 

Value-based Reimbursement Under President-elect Trump and Rep. Price

 

President-elect Donald Trump’s selection of Representative Tom Price (R-GA), an outspoken critic of CMMI, as his nominee for incoming HHS Secretary came on the heels of the CMS release of the much anticipated MACRA final rule, which, as part of its greater effort to advance CMS toward value-based payments, transitions Medicare away from a volume-based fee-for-service system to a value-based system.

 

Back in September, Price joined fellow GOP lawmakers to ask CMMI to “stop experimenting with Americans’ health, and cease all current and future planned mandatory initiatives . . . CMMI’s mandatory demonstrations could potentially

harm patients and providers because CMMI is making participation in the demonstrations mandatory, rather than voluntary, before we know how they will affect access to care, quality and outcomes. CMMI has overstepped its authority and there are real-life implications—both medical and constitutional. That’s why we’re demanding CMMI cease all current and future mandatory models.” (Letter from U.S. Congressmen Tom Price, MD, Charles W. Boustany, Jr., MD, and Erik Paulsen to Centers for Medicare & Medicaid Services Administrators Andrew Slavitt and Patrick Conway, MD, September 29, 2016),

 

In addition to Price, the American Hospital Association has noted its disapproval of CMS’s proposal regarding expanding mandatory bundled payment models. And throughout his campaign, President-elect Trump repeatedly pledged to repeal and replace the ACA.

 

The authors noted a key question: How would repeal of the ACA affect the shift to value-based reimbursement? With Republican control of the presidency, House and Senate, the incoming Trump administration is likely to pursue solutions that decrease the role of the federal government in defining regulatory requirements and mandatory programs, and increase the role of the legislature, states and private sector. (The New “Price” of U.S. Health Care: The Future of Value-based Reimbursement Under President-elect Trump and Tom Price, Executive Summary, AHLA, January, 2017)

 

Some have speculated that President-elect Trump’s stated intention to “repeal and replace” the ACA, regardless of whether it comes to fruition, is unlikely to fully eliminate the American healthcare system’s steady movement toward value-based payment. However, it is undeniable that the ACA’s full repeal would effectively cripple many of the current value-based payment initiatives and mandatory programs, especially given that CMMI derives both its mission and funding from the ACA. (The New “Price” of U.S. Health Care: The Future of Value-based Reimbursement Under President-elect Trump and Tom Price, Executive Summary, AHLA, January, 2017)

 

As the transition from one administration to another approaches, health policy experts are making predictions. A fellow at the conservative American Enterprise Institute has observed that under the Obama administration there has been “a fundamental shift from Congress to the executive branch in the ability to set policies for some of our nation’s most important and costly public programs . . . I can’t imagine a Trump administration saying we want the bureaucrats to decide on the healthcare your grandmother is going to get . . . Anything that is that much of a marquee issue absolutely has to go through Congress.” (“GOP May Try to Hobble CMS Innovation Center,” Modern Healthcare, November 7, 2016 and Obamacare’s Test Kitchen For Payment Experiments Faces An Uncertain Future, NPR, November 30, 2016)

 

However, a policy executive at Premier projected that “calmer heads” would likely prevail when Trump assumes the presidency, and that “CMMI will in the end survive” in order to meet the need of a “mechanism to test and scale new models in fee-for-service Medicare.” (“Will value-based payment initiatives continue under Trump?” Modern Healthcare, November 11, 2016)

 

In early December, at a summit on population health strategy under the new administration, former HHS Secretary Michael Leavitt stated, “CMMI will be challenged, but the analytics it provides are important to maintain . . . we need to find the balance between provider readiness and the speed to change between providers and payers . . . the GOP is not in lockstep . . . the bottom line is we don’t know.” (Letter from Washington: The Path Forward for Value-based Care, Philips Wellcentive, December 5, 2016)

 

To date, it is certain that the shift from volume-based payment to value-based payment has taken considerable resources, not only on the part of government, but also on the part of providers. The future of value-based payment is unknown; but a full repeal of the ACA would have dramatic consequences. (The New “Price” of U.S. Health Care: The Future of Value-based Reimbursement Under President-elect Trump and Tom Price, Executive Summary, AHLA, January, 2017)

 

 

 

iProtean subscribers, the advanced Finance course, Driving a Sustained Culture of Quality, What Works, What Doesn’t, featuring Larry McEvoy, M.D., and Stephen Beeson, M.D., is in your library. As always, Drs. McEvoy and Beeson take a cutting-edge view of the board’s role in overseeing quality—beyond the traditional processes and structures where boards customarily focus their oversight responsibilities.

 

 

For a complete list of iProtean courses, click here.

 

 

For more information about iProtean, click here.

CMS Finalizes Bundled Payment Models

In the final days of 2016, CMS finalized new mandatory bundled payment models for cardiac and orthopedic care, set to launch this year. The final rule also made several modest adjustments to the existing Comprehensive Care for Joint Replacement (CJR) model (finalized in late 2015 and currently underway). The final rule is published in the January 3, 2017 Federal Register.

 

These models emphasize a push to shift Medicare from a volume- to value-based payment system that encourages care coordination and quality. (“CMS Finalizes New Bundled Payment, ACO Models,” AHLA Weekly, December 23, 2016)

 

The new payment models, and the updated CJR model, give clinicians the opportunity to qualify for a 5 percent incentive payment through the Advanced Alternative Payment Model (APM) path under the under the Quality Payment Program, which implements the Medicare Access and CHIP Reauthorization Act (MACRA), CMS said. (Advancing Care Coordination through Episode Payment Models (Cardiac and Orthopedic Bundled Payment Models) Final Rule (CMS-5519-F) and Medicare ACO Track 1+ Model, Fact Sheet, CMS.gov, December 20, 2016)

 

These models will reward hospitals that work together with physicians and other providers to avoid complications, prevent hospital readmissions, and speed recovery.

The announcement finalizes significant new policies that:

 

Improve cardiac careThree new payment models will support clinicians in providing care to patients who receive treatment for heart attacks, heart surgery to bypass blocked coronary arteries, or cardiac rehabilitation following a heart attack or heart surgery.

 

Improve orthopedic careOne new payment model will support clinicians in providing care to patients who receive surgery after a hip fracture, other than hip replacement. In addition, CMS is finalizing updates to the CJR Model, which began in April 2016.

 

Provides an Accountable Care Organization opportunity for small practicesThe new Medicare ACO Track 1+ Model will have more limited downside risk than Tracks 2 or 3 of the Medicare Shared Savings Program in order to encourage more practices, especially small practices, to advance to performance-based risk.

 

The intent of the bundled payment models is to further provider collaboration and sharing of best practices. In the CJR model, approximately 90 percent of hospitals participating in the model are fostering education, outreach, communication, and collaboration. These new models advance CMS’ goal of improving the efficiency and quality of care for Medicare beneficiaries and encourage hospitals, physicians and post-acute care providers to work together to improve the coordination of care from the initial hospitalization through recovery. (Advancing Care Coordination through Episode Payment Models (Cardiac and Orthopedic Bundled Payment Models) Final Rule (CMS-5519-F) and Medicare ACO Track 1+ Model, Fact Sheet, CMS.gov, December 20, 2016)

 

These models are being implemented by the CMS Innovation Center with participation by all hospitals in selected geographic areas in order to yield more generalizable results, and additional protections for small and rural providers. The models will be referred to as:

 

  • The Acute Myocardial Infarction (AMI) Model

 

  • The Coronary Artery Bypass Graft (CABG) Model

 

  • The Surgical Hip and Femur Fracture Treatment (SHFFT) Model

 

  • The Cardiac Rehabilitation (CR) Incentive Payment Model

 

 

Acute care hospitals in certain selected geographic areas will participate in retrospective episode-based payments for items and services that are related to AMI, CABG and SHFFT treatment and recovery, beginning with a hospitalization and extending for 90 days following hospital discharge.

 

The first performance period for the new episode payment models (the AMI, CABG, and SHFFT Models) and the Cardiac Rehabilitation Incentive Payment Model will begin on July 1, 2017. The duration of the models is until December 31, 2021.

 

The final rule also makes adjustments to the CJR (Model, allowing the model to qualify as an Advanced APM under the Quality Payment Program as well as aligning the model’s policies with the episode payment models around financial arrangements and beneficiary engagement incentives, compliance enforcement, appeals processes and beneficiary notifications.

 

ACO Track 1+ Model

 

CMS said the new Track 1+ Model is based on Track 1 of the Medicare Shared Savings Program (MSSP), with a maximum 50 percent shared savings rate, “but incorporates elements of Track 3.”

 

The new model will be open to MSSP Track 1 ACOs that are within their current agreement period, initial applicants to the MSSP and Track 1 ACOs renewing their agreement.

 

CMS said additional details on Track 1+ are forthcoming. (Advancing Care Coordination through Episode Payment Models (Cardiac and Orthopedic Bundled Payment Models) Final Rule (CMS-5519-F) and Medicare ACO Track 1+ Model, Fact Sheet, CMS.gov, December 20, 2016)

 

 

 

iProtean subscribers, the advanced Finance course, Driving a Sustained Culture of Quality, What Works, What Doesn’t, featuring Larry McEvoy, M.D., and Stephen Beeson, M.D., is in your library. As always, Drs. McEvoy and Beeson take a cutting-edge view of the board’s role in overseeing quality—beyond the traditional processes and structures where boards customarily focus their oversight responsibilities.

 

 

For a complete list of iProtean courses, click here.

 

 

For more information about iProtean, click here.