Since 2006, Dr. David Bailey has served as president and CEO of the not-for-profit Nemours Foundation and the Nemours Children's Health System, an integrated pediatric health system with facilities in Delaware and Florida. Bailey, a pediatric gastroenterologist, previously served as chief operating office at Nemours. Last year, he was named to Modern Healthcare's list of the 50 Most Influential Physician Executives and Leaders for the first time. Modern Healthcare reporter Beth Kutscher spoke with Bailey about his system's innovations in treating children with asthma, preparedness for the shift to value-based payment, and conflict and collaboration with insurers. This is an edited transcript.
Modern Healthcare: What results have you seen from your three-year, $3.7 million CMS innovation grant to pilot a program to improve asthma care for children?
Dr. David Bailey: The grant allowed us to work on decreasing the incidence of children in Delaware going to the emergency room and being hospitalized for asthma-related complications. We started with their own primary-care practices and moved to a team-based approach. On the outpatient side, we added psychologists, care coordinators, community health workers and community health liaisons to work with these families. Most of the families were from challenging socio-economic groups that had difficulty accessing all the available resources. So we had our primary-care clinics become certified patient-centered medical homes. That is a mindset change from individualized care to a team-based approach.
Our self-monitoring indicates that our emergency room visits have decreased by at least 40%, hospitalizations have gone down by nearly 33%, and school attendance has improved. We are in the midst of an analysis to see how much savings there has been on the ER and inpatient side. Putting psychologists, social workers and care coordinators together does increase outpatient cost. We believe it's far outweighed by the savings on the inpatient side.
MH: What happens when the CMS grant funding ends in July?
Bailey: The CMS funding allowed us to make infrastructure changes that otherwise would have been difficult. There is cost involved in establishing a certified patient-centered medical home. When the grant runs out, our medical homes will continue to function. What may disappear will be the community health workers, who went into patients' homes to assess the home environment. Nemours will continue to fund the psychologists and care coordinators, and some of the community health workers will become care coordinators.
We also will maintain the community health liaisons. One of the big issues with children with asthma is the home, and so we've been working with public housing authorities around insect control, insulation and the amount of idling time of school buses around public housing and schools. So those liaisons will be maintained.
Part of the issue with this team-based approach is that funding through fee-for-service will not meet the cost of care. Fee-for-service is based on volume, and our volumes in the ER and with hospitalization are significantly decreased. So our overall revenue for these children will be diminished. Doing the right thing has a penalty in a fee-for-service environment.
MH: What infrastructure innovations would you like to see put in place in 2015 that could help move the healthcare system toward value-based payment?
Bailey: We need more of a focus on outcomes. The CMS and the national coordinator for health IT already have done a great deal in moving the health system toward an electronic health record. That enables understanding of what our outcomes truly are. That needs to continue to be pushed, and those systems need to talk to one another.
One also needs to understand cost. It is an extraordinarily rare health system that can tell you what it costs to care for a new patient with asthma. I can't tell you what that cost is at Nemours today. Hopefully, by the end of 2016, I will be able to tell you that because we are changing our cost accounting system from a transactional-based to an activity-based system that can tell us what our costs are on a per-patient as well as medical-condition point of view.
When value and outcomes become the focus as opposed to volume, you begin to see the infrastructure change. What are we delivering to each patient? For Nemours and most health systems, as we focus on outcomes and what those outcomes cost, the issue becomes how we can either drive the cost down or improve the outcomes. That's where the sweet spot is. It can be a hybrid of fee-for-service plus incentive based on satisfaction, outcomes, stewardship and utilization. There are lots of ways to do it. But the real change that needs to happen is moving from a volume-based reimbursement system to one truly focused on outcomes for children and families.
MH: Is there resistance from providers because fee-for-service is what they're most comfortable with?
Bailey: I think that's true. It's also true for payers. Unfortunately, most providers and payers have an adversarial relationship. That relationship has got to become more collaborative. It doesn't need to be cozy. But there has to be a focus on outcomes for families. What makes this hard is the mindset change of thinking of payers as collaborators in improving outcomes. Providers themselves aren't ready in terms of their cost accounting system and in terms of their ability to actually pull outcomes out of their data. And the payers aren't quite ready either. That makes it a difficult transition, but one that I am confident will begin to pick up steam.
