Impact Insights

Focus on High Value, High Impact Optimization Areas to Drive Benefits Realization

Tonya Edwards

Two years ago, we reported that nearly 70% of health systems had failed to achieve the expected value from their EHR investments. In late 2015 Impact Advisors surveyed CIO members of the College of Healthcare Information Management Executives (CHIME), the preeminent professional organization for hospital CIOs and other senior healthcare IT leaders. In that survey CIOs reported that their primary focus was on meeting meaningful use and completing ICD-10 conversions, with a smaller emphasis on expanding population health and HIE capabilities. Just 19% of CIOs at that time responded that their health systems had a significant focus on EHR optimization.

Fast forward a couple of years and that story has changed. A new CHIME survey conducted by KPMG in January found that EMR optimization is now at the top of the list of CIO priorities for capital investment over the next three years.

The results speak to the fact that many health systems opted for implementing generic “foundation” or “model” systems in an effort to meet meaningful use requirements and subsequently found that this approach did not support achieving the expected return on investment. In response, early optimization efforts were reactionary, often more of a shot gun “fix everything” approach rather than a surgical, strategic approach.   What has become clear over these past few years is that to achieve benefits from EHR optimization, health systems must select high value optimization targets that align with organizational goals.  Success depends on focus, perhaps choosing just one or a small handful of optimization projects at a time.  It depends on selecting optimization opportunities in areas with strong leadership and operational readiness as well as ongoing change management efforts. Finally, it depends on measurement and continuous improvement.

Health systems can’t afford to spend money on optimization without a plan. They need to focus on identifying high value, high return optimization opportunities to drive benefits realization.  Thankfully (or perhaps regrettably) there are often plenty of high value opportunities to choose from.

For instance, let’s take a look at two high impact opportunities for many health systems. Becker’s Hospital Review reported in December 2016 that for fiscal year 2017, Medicare will reduce reimbursements for 769 of 3,313 hospitals due to poor performance in its hospital acquired conditions reduction program. These hospitals are estimated to lose approximately $430 million as a result of payment cuts. 463 of the 769 hospitals were also penalized in prior years.

In August 2016 CMS reported that in fiscal year 2017, 2,597 hospitals would have reduced reimbursement due to readmissions penalties. Under the Hospital Readmission Reduction Program (HRRP), CMS withholds up to three percent of regular reimbursements for hospitals if they have a higher-than-expected number of readmissions within 30 days of discharge for six conditions:

  • Chronic lung disease;
  • Coronary artery bypass graft surgery;
  • Heart attacks;
  • Heart failure;
  • Hip and knee replacements; and
  • Pneumonia.

If that weren’t bad enough, CMS doesn’t reimburse for those readmissions either, so poor performers are really doubly penalized. The number of penalized hospitals in fiscal year 2017—2,597—represents a decline from fiscal year 2016, when Medicare reduced reimbursements for 2,665 hospitals. However, according to a Kaiser Health News, CMS under HRRP will withhold $528 million in payments over the next year—an all-time high and an increase of about $108 million from FY 2016. The average penalty will increase from 0.61 percent in fiscal year 2016 to 0.73 percent in Fiscal year 2017. Forty-nine hospitals in fiscal year 2017 will receive the maximum three percent penalty.If these two areas are not high priorities for your health system, congratulations! You’ve already done some tough work, but it will require continuous improvement. How then should your health systems go about selecting new optimization targets?

Examining your current enhancement request list for the next optimization project is unlikely to generate a strategic optimization list. Start by measuring performance around those areas that are strategic priorities for the organization. The quadruple aim can be a great starting point, as it accounts for quality and cost as well as both patient and provider satisfaction. Talk to stakeholders to understand where the key pain points reside and understand readiness for change. Spend time observing in high impact areas like perioperative areas to understand primary barriers. Compile your results and assign a tangible financial or other value to the optimization opportunity. Then prioritize your findings. The result is a strategic optimization list that as implemented is highly likely to help your system realize benefits.

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