LVHN Endures Short-Term Losses for Long-Term Benefits of Population Health

by HCE Exchange on December 5, 2016

Brian-Nester-thumbBrian A. Nester, DO, President and Chief Executive Officer of Lehigh Valley Health Network in Allentown, Pennsylvania

Lehigh Valley Health Network in Allentown, Penn., first considered a value-based healthcare system in the late 1990s.

However, Brian A. Nester, DO, who has been with the organization since 1998 and president and chief executive officer since 2014, said the care-management infrastructure at the time lacked the necessary data and analytics platform to execute population-health strategies.

A little over a decade later, in 2011, the story in healthcare had changed drastically. The Affordable Care Act passed in 2010, and what had once seemed impossible was actively being presented as a future federal requirement for hospitals nationwide.

“When the ACA came out, we needed, as an organization, to decide whether we believed in value-based care or not,” Dr. Nester said. “The 20 pages in the Affordable Care Act around value-based reimbursement were the only real 20 pages we cared about. All the rest was mainly political and/or insurance-related that we would have very little control over.”

The most important strategic moment for the network came when each member of LVHN’s leadership team affirmed their belief in value-based care and the Triple Aim, Dr. Nester said.

It was also the easiest initiative to accept, he added.

“We had been talking about the value equation since 2000 where value equals quality over cost. So we already had been on that journey of Lean production and made investments to reduce harmful medication-error rates, which we got down to Six Sigma levels. We were early adopters in computerized physician order entry, barcoding, and product delivery of meds with pharmacy robots. We had been doing all the right things to improve quality, all of which require tremendous capital investments that you really don’t get a dime for. You just don’t get reimbursed for those things. We knew, however, that we would be remunerated down the road for delivering quality and value to our patients.”

Discovering gaps in the network

The first stage in LVHN’s journey to population health was to identify the three primary problems within the system that were holding it back.

Over the course of several conversations, the leadership team not only identified these problems, but also arrived at three key conclusions that would propel the population-health initiative.

First, they concluded that unjustifiable variations in care delivery were polluting their efforts to drive quality gains. Second, they agreed with the national consensus that tremendous waste existed within the system. And third, they endorsed the idea that quality care could indeed cost less.

At that point, Dr. Nester said, his team was all in. Value-based care would be the network’s goal, and planning began for a population-health infrastructure that would create the care-management and analytics platform necessary to achieve this goal.

However, the biggest challenge lay before them: connecting the network’s physicians with patients in a data-driven, evidence-based approach.

Identifying chronically ill, at-risk patients

In 2014, Lehigh Valley Health Network unveiled its ace in the hole for population health: a company known as Populytics.

Populytics is the network’s health analytics firm that uses the Optum One intelligent health management platform to identify the highest at-risk patients who are going to need the most care in the ensuing years, Dr. Nester said.

With claims data coming in from a half-dozen major commercial payers, including data on 32,000 Medicare beneficiaries in the Medicare Shared Savings Program, LVHN is able to supply its 700 employed physicians with an overwhelming amount of information on the patients they’re seeing. Populytics also serves as a road map that connects the network’s community care teams with these patients.

“When you put the claims data through the machine and you look at episode grouper diagnostics, you start to see groups of people who become risk-stratified clinically and financially; individuals who are on the way to a huge spend because they’re really not on a good clinical path,” Dr. Nester said. “You can identify them, give them better care, and keep them out of the hospital.”

Populytics’ effectiveness is in the outcomes. Over the last two years, LVHN has seen a 48 percent reduction in hospital admissions and a three percent reduction in ED utilization across multiple patient segments.

Fighting against revenue losses

LVHN’s biggest challenge, however, is not found in the implementation of a population-health infrastructure, but in the fact that it’s largely value-based in an industry that remains largely fee-based. As a result, LVHN’s revenues have taken “a shot in the foot,” Dr. Nester said.

“Conversion from fee-for-service to fee-for-value is a very dangerous chasm because as you start to reduce inpatient utilization with a view to the future where you’ll be rewarded for that, it’s revenue destruction today. We’re seeing tremendous declines in utilization.”

Still, the sloppiness in healthcare is undeniable, he said. Twenty percent of the people drive 80 percent of the cost, and five percent drive 40 to 50 percent of the cost. Of the 25,000 lives in LVHN’s health plan, 1.5 percent (or fewer than 400 people) consumed $30-plus million of the $110 million the network invested in care.

“You don’t have to fix the world,” Dr. Nester stated. “You just have to identify the needles in the haystack that truly are at prospective risk for bad outcomes. What we really want is to prevent people from having to go through all of that, so they can have better outcomes at a lower cost.”

In short, he said, population health is what the country needs, but not what it’s ready for.

Therefore, he advises other healthcare leaders to be incredibly cautious and purposeful about pursuing population health. LVHN took years to research it before committing fully to the initiative.

“It’s okay to be on the cutting edge,” Dr. Nester said, “but you don’t want to be on the bleeding edge.”

-by Pete Fernbaugh

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