Looking forward – October 2019

David B. Hoyt, MD, FACS

The American College of Surgeons (ACS) and the Harvard School of Business (HBS) Institute for Strategy and Competitiveness have collaborated to develop ACS THRIVE (Transforming Health Care Resources to Increase Value and Efficiency). This partnership started in January when the authors all participated in an HBS course arranged by Dr. Opelka.

Two audiences learned about this initiative prior to the ACS Quality and Safety Conference, July 19–22, 2019. On July 18, we briefed congressional staff on Capitol Hill on the purpose and goals of this collaborative initiative, and July 19, we described the proposal to conference attendees. Details about the latter are provided in the Quality and Safety Conference news story of this issue. In this column, we provide a broad overview of what was discussed during the Capitol Hill program.

Speakers at the briefing included all three authors of this column; Mary Witkowski, MD, MBA, fellow, HBS Institute for Strategy and Competitiveness; Robert Kaplan, MS, PhD, senior fellow and Marvin Brower Professor of Leadership Development, emeritus, HBS; and Bruce Hall, MD, PhD, MBA, FACS, vice-president and chief quality officer, BJC Healthcare, St. Louis, MO, and consulting director, ACS National Surgical Quality Improvement Program (ACS NSQIP®).

Better outcomes equal less spending

Most stakeholders, including the government, which is the nation’s largest health insurer, agree that the current health care system is challenged on a number of levels. Health care delivery approaches reflect legacy/historical organizational structures, management practices, and payment models. Similarly, although medical science has advanced rapidly, service delivery organizational practices have failed to evolve. Furthermore, health care delivery has become an extremely complex and fragmented enterprise with multiple stakeholders pursuing multiple goals, including improved patient experience, safety, efficacy, access, cost, research, and training.

Many thought leaders have suggested that many of these issues can be addressed by moving to a value-based health care system—one that is patient-centric, delivered by teams, focused on quality, and reduces unnecessary costs.

The College’s role

While the College’s role in the collaboration is to define quality for particular condition or procedure, HBS offers a formula for determining the reasonable and equitable cost for all services appropriate to a surgical episode of care.

Whereas value is defined as the sum of quality divided by cost, we explained to the congressional staff the ACS’ track record of improving outcomes with its four-point model for developing Quality Programs: set standards backed by research; ensure that health care facilities have the right infrastructure (staffing, specialty mix, equipment, and checklists); apply rigorous data from medical charts and postdischarge tracking; and verify through external peer review. We noted that when hospitals measure outcomes using ACS NSQIP, they can lower costs and improve quality of care. In fact, 82 percent of ACS NSQIP-participating hospitals have decreased complications and 66 percent have experienced decreased mortality. Both complications and mortality take a toll financially on our patients, our institutions, and the entire health care system—not to mention the emotional repercussions for our patients and colleagues.

ACS THRIVE’s model for achieving value-based health care would apply many of the concepts outlined in the ACS Red Book—Optimal Resources for Surgical Quality and Safety—including the provision of integrated, multidisciplinary patient care, data collection and analysis, performance improvement, transparency, and accountability. It incorporates these principles into the science of economics, calling for measurement and reduction of health care costs and the development of payments for integrated, successful patient outcomes. This is where the HBS takes center stage.

HBS’s role

While the College’s role in the collaboration is to define quality for particular conditions or procedures, HBS offers a formula for determining the reasonable and equitable cost for all services appropriate to a surgical episode of care.

HBS has found that when heath care is organized around medical conditions, or integrated practice units (IPUs) comprised of all health care professionals and facilities involved in every stage of patient care—from diagnosis to postdischarge care—cancer patients, for example, have better outcomes.

In addition to establishing IPUs, HBS calls for applying time-driven, activity-based costing (TDABC) to health care. TDABC involves three steps: (1) study and map processes across the entire episode of care; (2) calculate the capacity cost rate for resources used in the process; and (3) use capacity cost rate and process times to compute total cost.

The ACS and HBS maintain that the best reimbursement mechanism for a value-based health care system is bundled payment. Under the bundled payment model, a single risk-adjusted payment covers all of the care required to treat a patient’s medical condition, contingent on achieving good condition-specific outcomes and at a price that provides a fair margin of return for delivering effective and efficient care.

Looking forward

So, what will ACS THRIVE mean for patients, clinicians, and payors? Patients can anticipate a better understanding of the surgical care they receive and how it will affect their quality of life; few, if any, out-of-network billings; and improved access to the care they need. Clinicians will have the opportunity to work in a culture of excellence with integrated teams, review reliable episode-specific quality metrics, receive risk-adjusted and actionable data for performance improvement, get a clearer picture of the total costs of care, play a leadership role in reducing wasteful services, and experience fewer administrative burdens. Payors will enjoy the benefits of cost predictability, efficient processes, and a healthier population.

It was an honor to have the opportunity to present the ACS THRIVE vision for establishing a value-based health care system to congressional staff. Our proposal was well received, and we anticipate that we have opened a few minds and doors on Capitol Hill. We look forward to working with members of Congress and ultimately government agencies to help patients, surgeons, and the health care system not just survive, but thrive.

If you have comments or suggestions about this or other issues, please send them to Dr. Hoyt at lookingforward@facs.org.

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