Value-based care is the buzzword at HFMA's annual conference

LAS VEGAS—Modern Healthcare reporter Tara Bannow is attending the Healthcare Financial Management Association's annual conference in Las Vegas this week, an annual gathering of health system financial leaders and vendors who provide products for revenue cycle management, data analytics and other services. Here are some of the happening on the first day of the conference.

ProMedica CFO defends HCR ManorCare's performance

Toldeo, Ohio-based ProMedica turned a lot of heads in April when it announced plans to acquire bankrupt nursing home provider HCR ManorCare for about $1.4 billion.

Skilled-nursing operators, hampered by their heavy reliance on government payers, have seen a flurry of bankruptcies and sales in recent years. But ProMedica Chief Financial Officer Michael Browning defended HCR's performance in an interview Monday with Modern Healthcare. The real problem, he said, has been the provider's high lease payments under its landlord, real estate investment trust Quality Care Properties.

"HCR doesn't have an operating issue, they have a lease issue," he said.

Parallel to ProMedica's deal is the real estate investment trust Welltower's proposal to buy QCP. Under Welltower's lease, Browning said HCR would see a 60% reduction in rent.

If the deal is finalized, ProMedica would apply for not-for-profit status for HCR, a for-profit company, so that it would more closely mirror ProMedica's mission, Browning said. That's a "very complicated" process that involves the federal government ensuring HCR is meeting the requirements of not-for-profit providers, including providing charity care.

Such diversification beyond hospital operations should be a key strategy for any health system today, Browning said.

Earlier this year, ProMedica bought a minority interest in its main collection agency vendor, Credit Adjustments. The goal behind that deal was to help the company become more marketable to other potential health system clients, Browning said. He declined to say what percentage ownership stake ProMedica currently holds, but said the health system doesn't intend to increase its stake.

"We know they can do a better job, and we want to help them get there," he said.

As part of that deal, Credit Adjustments has said it plans to expand its operations to Toledo, adding 500 jobs in the area over the next three years, some of which will be housed on the third floor of ProMedica's Ebeid Institute.

Credit Adjustments is one of three collection agencies ProMedica works with.

Henry Ford deepens commitment to value-based payment

Detroit-based Henry Ford Health System, long involved in value-based payment arrangements with insurers, has deepened its foray into the pay-for-performance world with its new contract with Blue Cross and Blue Shield of Michigan that includes "meaningful" incentive payments for meeting certain quality measures.

Robin Damschroder, Henry Ford's interim CFO, told Modern Healthcare at the HFMA conference Monday that the insurer, which dominates the markets in Michigan and many other states, has released performance data that includes cost of care and has made that part of the health system's contract.

"So if you think about it, you're getting an incentive for performance-based risk versus what traditional insurance is: actuarial-based risk," she said.

Henry Ford has value-based arrangements with several payers. The health system has long been working to lower its internal costs so that it can accept lower rates from insurance carriers, Damschroder said. But the real question is whether insurers will then charge consumers less for those services. That requires market competition, however, she said.

"Whenever you're in a market that's more dominant by a payer, that doesn't always mean they give that back once the health system has reduced the cost," she said. "We may have lowered our cost and accepted a lower rate, but the insurance company needs to be the one to give that back to the consumer."

Like ProMedica, Henry Ford has also worked to diversify its service lines over the years. It owns one of the top five largest dialysis businesses in the country, Greenfield Health Systems. It also owns OptimEyes, an ophthalmology business.

Henry Ford is gearing up to formally announce a partnership with Wayne State University called Project Leapfrog. Top executives with both organizations have been discussing the partnership, which could include a variety of affiliation models, for more than 18 months.

Damschroder declined to provide an update on that project, citing a nondisclosure agreement, but said to expect a letter of intent shortly.

"We're working hard to get the letter of intent done," she said.

HFMA CEO touts value-based care, data analytics

Joseph Fifer, CEO of the Healthcare Financial Management Association, kicked off the day's activities Monday with a speech stressing the importance of value-based payment—but not just any value-based payment.

Many of today's contracts aren't actually lowering the total cost of care, he said, referencing a new study by the HFMA and others on the subject. He said that's because they don't include downside risk, and they don't give incentives to lower the total cost of care.

CFOs should accept innovative, value-based contracts even if it could take a bite out of their revenue, he said.

"If you invest, you're part of the solution, even if your fee-for-service revenue goes down," Fifer said. "But if you don't invest, someone else will. And the revenue could still go down. The CFOs of tomorrow will innovate, even if it reduces fee-for-service revenue."

CFOs also need to develop value-based payment strategies specific to their markets and organizations, he said. For example, including population health management in such contracts isn't right for every situation, he said.

The HFMA is working to help health systems better use data analytics, which Fifer said is crucial to lowering the cost of care. A September survey by the HFMA and Humana on 117 senior financial executives determined that poor data access and the inability to collect and manage data are among the most significant barriers to value-based care. More than half of respondents said real-time data access will be extremely important to their organization in the next three years.

In response, the HFMA and Kaufman Hall created the Financial Analytics Leadership Council, which will host its first meeting this week. The council will outline a series of programs over the second half of 2018 and into early 2019, Fifer said.

"Harnessing the power of data to make better decisions is one of their biggest concerns," he said.