Healthcare Business News
Richard Umbdenstock
Richard Umbdenstock

For hospitals, a balancing act of reducing costs and improving care

Transition period: As reform changes set in, uncertainty and challenges are made clear

By Richard Umbdenstock
Posted: July 25, 2011 - 12:01 am ET

All of us in healthcare are straddling a roiling gulf of uncertainty as we transition between the disappearing past and a far different, but still uncertain, future.

Even before the Patient Protection and Affordable Care Act, hospitals were moving in the direction of more integrated healthcare, more at-risk funding and more public accountability. Now we are implementing new rules mandated by the reform law, even as some in Congress and the states seek to overturn it.

Hospitals rely heavily on government payments for Medicare and Medicaid, even as legislators at the federal and state levels look for every opportunity to cut funding to these vital programs.

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More and sicker patients

In the midst of this uncertainty, a few things are clear. Over the next few decades, the typical hospital patient will be older and will have multiple chronic medical conditions. At least in the near term, our members will see more patients who have put their healthcare on the back burner because of the economic recession.

And while we as a nation strive for consensus on how to address our very real budget problems, patients will continue to look for the care they need at a cost they can afford.

We can wring our hands or, preferably, we can roll up our sleeves and harness the strengths we have as the world's best patient-care providers while we reinvent ourselves as a true system, oriented toward health.

The first challenge for hospitals is counterintuitive: We want to keep patients, especially those with multiple chronic medical conditions, out of the hospital by making it easier for them to remain healthy.

A small percentage of patients, many of whom are uninsured and underinsured, represent a very high percentage of hospital costs. Helping these patients to improve their own health through collaborative approaches and good records practices can vastly improve the quality of their lives, and many hospitals are coordinating these kinds of efforts.

Other organizations are actively sharing comparative data to encourage practitioners to adhere to evidence-based management and therapies and are also stepping up their leadership of community-based health interventions.

We can't keep everyone out of the hospital, of course, but we can learn from hospitals that have simultaneously reduced utilization, cut costs and improved care and who have partnered with payers and purchasers to soften the changes in revenue.

Some are borrowing lessons from manufacturing to provide better care at lower cost and make optimal use of their staff and facilities. They now share the savings with purchasers and payers, progressing toward a system of accountable care while effectively managing system capacity.

Significant progress

Many are learning to better integrate independent physicians and other practitioners into their systems to improve care coordination. And most are making significant progress in adopting good science and effective practices to stamp out unnecessary infections, as evidenced by recent drops in central-line associated infections.

We also need to become as good at transitioning patients as we are at treating them, and there, too, the evolution toward achieving a safe and effective discharge to post-acute and community-based care for every patient is striking.

Many hospitals now begin educating patients about their post-hospital needs when they are admitted. Various methods are employed to make sure that discharge instructions are clear and easy to understand and to follow up with patients to make sure they are complying with those instructions.

Our priorities in the healthcare field are being tested.

Some say we can't afford to cover millions of uninsured Americans, but we say we must. We are being challenged to move from “pay-for-procedure” to “pay-for-performance,” and we are.

And we now understand more than ever that performance is both an art and a science—an art, supported more and more by systems science, that will move us from healing to health, and from volume to value, destinations on which we can all agree.

Richard Umbdenstock is president and CEO of the American Hospital Association.

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