Delivering better outcomes and patient service reduces costs

Dr. Lee Sacks has been executive vice president and chief medical officer since 1997 of not-for-profit Advocate Health Care, the largest integrated delivery system in Illinois with 11 hospitals and more than 4,000 affiliated physicians. Sacks is also CEO of Advocate Physician Partners, which in 2004 formed a clinical integration program to improve clinical outcomes and lower costs. Participating physicians, including many independent doctors, report on more than 100 individual performance measures and focus on chronic disease care, health and wellness, efficiency, care coordination/patient safety and patient experience. Advocate also operates a Medicare accountable care organization under the Shared Savings Program. Sacks spoke with Modern Healthcare's Jessica Zigmond about the clinical integration program and the biggest challenges facing hospitals, including healthcare reform, Medicare cuts and the two-midnight rule.

Modern Healthcare: What would you identify as the greatest changes you've seen in healthcare since you became CMO at Advocate in 1997?

Dr. Lee Sacks: Several things have changed dramatically. One is the increased focus on safety, and that's going across the industry. We're not where we need to be, but we're certainly improving. I'd also say that we've gone from being provider-centric to patient-focused. And clearly, the importance of efficiency and managing costs has risen to new heights. Those are the three things that really jump out at me.

MH: Please talk about Advocate Physician Partners, of which you are CEO. What led Advocate to create the clinical integration program in 2004?

Sacks: Advocate Physician Partners is a clinically integrated network of 10 Advocate physician hospital organizations, two medical groups and a recent affiliation with a non-Advocate physician hospital organization. Initially, Advocate Physician Partners was focused on doing capitated HMO business, and at one point we had 400,000 lives. But as everybody knows, the market changed and the popularity of HMOs declined. Our market was always a PPO market with fee-for-service, and in a strategic planning event with our physicians, they really identified three things that they wanted the organization to focus on. One was assistance with information technology. Two was assistance in demonstrating the value they were creating for their non-HMO patients as they felt there was one standard of care. And three was assistance in contracting for the PPO networks. When you put those three things together, it really led us to focus on clinical integration and where we've gone over the last decade.

MH: What are some of the program's primary goals looking ahead?

Sacks: The program has evolved over time. While we've focused on prevention and chronic disease management in an era of value, we really have heightened the focus on efficiency measures, things like readmission, length of stay, reducing admissions that are potentially avoidable with chronic conditions as well as in-network care coordination since we have data from our payer partners that says when care remains within the Advocate network there's fewer readmissions and shorter length of stay and decreased costs.

MH: Given your leadership in these areas at Advocate, what characteristics have you found to be essential in working with hospitals and also in working with physicians and other clinicians?

Sacks: You need to be a good listener as a leader. You need to be able to communicate clearly. But at the end of the day, I find that leaders, whether on the physician side or the hospital side, will respond to good data and good evidence. And if there's a thorough discussion, they generally will come to the same conclusion, especially if you can frame it in terms of what's best for the patients that we serve.

MH: Providers say Medicare's Recovery Audit Contractor program comes at a huge cost and administrative burden to hospitals. How would you like to see the RAC program improved?

Sacks: Let's step back and recall the underpinnings of the program. There was the thought that there was a lot of inappropriate coding that led to excess payments, and I think the data would refute that. Our experience is that we win over three-quarters of the audits but it takes a huge administrative burden and a lot of time and uncertainty. I think industrywide, the percentages are almost as high as ours. So, is there a way to streamline and simplify and just focus on a handful of conditions where the outcomes are much different?

The other frustration has been that over time the number of audits seems to increase in spite of the fact that over three-quarters of them end up in our favor. The analogy I'd use is, if you're not catching a lot of fish, you throw in more fishing lines, and eventually, even though one out of seven or eight catch a fish, you're getting as many as you'd want. There's got to be a better way to do this because we've just added an incredible administrative burden.

MH: Similarly, what do you think the CMS could or should do with regard to the two-midnight rule that was included in the inpatient prospective payment rule for 2014?

Sacks: The two-midnight rule has been incredibly frustrating for clinicians, and I don't think that we've seen the impact on patients to any extent yet. That's going to grow. When patients are in a hospital under observation, they don't differentiate, and ultimately they find out that their benefits are different because it's Medicare Part B versus Part A or it doesn't count toward qualification for coverage in a skilled-nursing facility. This all goes back to the tendency toward shorter length of stay and Medicare's realization that paying a full DRG for short length of stay was an overpayment.

Let's back up and say rather than trying to be arbitrary, as the two-midnight rule is, can we make an adjustment in the overall DRG payment for shorter lengths of stay that would accomplish the goal but make it much simpler and acknowledge that if the care is given inside an acute-care facility, we don't need to differentiate between observation and admission and create all kinds of hoops that the physicians have to leap through and put the patients in the middle.

MH: You mentioned you haven't seen an effect yet on patients. Do you mean that once patients understand the impacts of this that they may not seek proper care?

Sacks: We occasionally get complaints from patients. Anecdotally, our physicians hear from their patients the surprise that when they are billed and file their insurance claims, that because it's processed under Part B when they're in observation, that they have a bigger out-of-pocket exposure as well as if they end up in a skilled-nursing facility, it doesn't help qualify them from meeting the three inpatient days that requires Medicare to pay. Ultimately, there's a lot of frustration there. I know some patients are raising it with their elected officials. I expect that to increase as the number of observation cases has gone up in double digits since the implementation of two-midnight rule.

MH: Moving on to the Affordable Care Act, what has been the greatest challenge Advocate has seen regarding the insurance exchanges, and what is Advocate doing to help consumers learn about the law's coverage options?

Sacks: Advocate was proactive, and every one of our hospitals has certified application counselors who've been available to meet with patients and help them in seeking coverage. Clearly, there's been a lot of frustration and confusion related to the rollout and the delays and changes. One of the premises of the Affordable Care Act was that there was going to be a significant increase in coverage, and as a result there would be an offset with decreased reimbursement to hospitals. The offset has taken place, and it's pretty clear there won't be the increase in coverage, at least not in this year, so it's creating financial pressures. We've already seen bad debt increase related to high deductibles, and our physicians are seeing the same thing. So in the short term at least, there are a lot of unintended consequences. We are all hopeful that in the long term it's going to lead to close to universal coverage and allow all Americans to have access to the healthcare that they need and deserve.

MH: Have you had a chance to read President Obama's proposed 2015 budget and is there something in the budget that stood out to you?

Sacks: The president has proposed reducing Medicare spending by over $400 billion, and that leads to about $350 billion that would come from healthcare providers. And specific to Advocate, we're the largest trainer of primary-care physicians in our state, and cuts to graduate medical education and into rural communities—we have one critical-access hospital in Eureka, Ill.—both of those could have significant consequences related to access to care over the long term. So we're hopeful that this is just a proposal. We know the politics in Washington. Hopefully, both Congress and the administration will be listening to the issues and figure out a middle ground that will preserve the important parts of our healthcare system as well as the education of the next generation of healthcare professionals.

MH: What is your advice to hospitals, particularly smaller ones that are eager to implement these reforms but are worried that continued payment cuts will hinder their efforts? Where should their priorities be?

Sacks: We found that if you focus on the triple aim, particularly providing safer, better outcomes with outstanding service, it's going to facilitate the reduction in costs because it eliminates complications, adverse events, etc., that all drive up costs. While clearly there's a lot of work that can be focused specifically on cost, if you focus on meeting the needs of the patients with efficiency, better outcomes and service, it will serve the organization well and help you survive these challenging times.