The CMS and insurers developing pay-for-performance programs need to take note: Top hospital performance is made, not born! The results of this year’s research on the efficiency of 100 Top Hospitals designees vs. their peers clearly demonstrate that very high performance takes years to achieve—especially when efficiency and quality are high simultaneously.
These findings are instructive for all payers, and it is essential that rewards for consistent, multiyear improvement play a critical role in any pay-for-performance plan.
For 14 consecutive years, the 100 Top Hospitals award winners, as a group, have consistently had fewer full-time equivalents per discharge and lower costs, yet they cared for significantly higher volumes of much sicker patients and had much better clinical outcomes when compared with their peers. This year, our research for the annual 100 Top supplement was aimed at understanding why the 100 Top Hospitals are so much more efficient and determining which functional areas have lower staffing than peer hospitals. The results showed that 100 Top Hospitals have fewer FTEs across the whole organization—not in just a few departments.
Common sense suggests that having fewer FTEs across the board while providing higher-quality care can result from only one thing: better internal systems for delivering care. Better internal systems mean well-constructed processes, adherence to standards, superior teamwork, fewer mistakes and less waste. This level of efficiency cannot be achieved by a simple 10% cutback in staffing or a mandate to measure a handful of metrics for a year. Better internal systems take years to build. And better internal systems are the tangible results of leadership openly committed to the long journey of building a culture of performance improvement.
The 100 Top Hospitals benchmark award winners are not selected for high quality alone or for high financial performance alone. Rather, these hospitals must have the highest composite score based on nine equally weighted measures that reflect clinical outcomes, care processes, patient safety, efficiency, financial stability and responsiveness to consumers. The 100 Top Hospitals did not achieve this high level of balanced organizationwide performance overnight. They did it the old-fashioned way—they earned it through years of focused effort and by building on each new level of performance achieved.
Permanent improvement in the quality and efficiency of care is a national goal, and pay-for-performance is a tool to encourage achievement of that goal. To create incentives for better, more cost-effective care, it would be shortsighted to fail to provide incentives for those hospitals that are on the journey and making the greatest strides to improve, regardless of where they started.
Researchers John Griffith, Jeffrey Alexander and David Foster demonstrated in a 2006 study that a five-year composite rate of consistent hospitalwide improvement can effectively reflect the progress of the hospital industry as well as individual facilities. The development of these underlying methodologies make it possible to identify hospitals that improve significantly faster and more consistently than peers and to build pay-for-performance systems to reward them for it. These new measurement tools also create the opportunity for payer and provider collaboration and sharing of objective cross-sectional and longitudinal information on quality and efficiency to build the most effective incentives.
Thomson Healthcare, which is the new home of the Solucient 100 Top Hospitals programs, has broken new ground by bringing Michigan payers and hospitals together to jointly review the same hospital performance data to build partnerships for the future. This kind of collaboration—combined with a focus on incentives for real improvement—holds the promise for achieving much better healthcare in far more communities than a focus solely on the highest performance. We hope payer/provider collaboration is a harbinger for the industry.
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