October 5, 2016
By Jacqueline Belliveau

How Value-Based Reimbursement Affects Physician Productivity

A healthcare consultant advises organizations to align patient experience and physician productivity goals to succeed under value-based reimbursement.

As payers push for more value-based reimbursement adoption, many healthcare organizations are wondering how to restructure physician productivity strategies to meet the unique requirements of performance-based payments.

But the key to success may be to incorporate patient experience into physician productivity goals in order to boost a healthcare organization’s bottom line, Cathryn Connolley, MHA, managing partner at SystemCare Health, recently told

“The shift from volume-based care to value-based care has most healthcare systems scrambling to find efficiencies and marry them to customer expectations,” Connolley said. “Incremental productivity gains that come from old school hospital improvement efforts in productivity and revenue cycle help, but aren’t enough to allow for success in the new value-based world.”

A Congressional Budget Office report from September expressed similar concerns. Researchers found that hospitals would need to develop new strategies to increase productivity by 0.5 to one percent each year to maintain profitability under the Affordable Care Act. However, a Health Care Financing Review study cited in the report showed that hospitals experienced 0.3 to 0.6 percent average annual productivity growth between 1996 and 2005.

Connolley, who worked as Vice President of Marketing Strategy and Operations at Geisinger Health before joining the healthcare consulting firm, explained that organizations should analyze value-based care metrics to start improving productivity. Physician productivity was traditionally defined using relative value units (RVUs), but value-based care introduced several other metrics, including patient satisfaction and access to care.

“With patient satisfaction having a tremendous impact on the reimbursement rates in the new value-based care model, access to care is a critical metric for productivity,” stated Connolley. “We find that more and more healthcare systems either currently or need to restructure their contracts to focus on a combination of productivity goals, like RVUs, patient satisfaction, and access to care.”

Under value-based reimbursement models, healthcare organizations should be monitoring various patient experience measures, such as how long it takes for a new patient to a provider, cancellation rates, and no-show percentages.

Connolley explained that healthcare organizations can use these metrics to reengineer physician productivity strategies to better align with patient expectations, such as getting the right care from the right provider at the right time. Better alignment may also help providers optimize productivity by matching them to the most appropriate patient case mix.

“At SystemCare, we provide hospital and healthcare systems with extensive data analysis and review to look at things like appointment templates, patient type, and diagnoses,” she stated. “We marry those things up to the strengths of the provider to ensure two things. Most importantly, number one, that the physician is seeking the right mix of patients so that their productivity grows rather than suffers. Number two, that patients are able to get access to the right care at the right time from the right provider. These two principles allow physicians to be productive by keeping them focused in the area of their expertise while increasing patient satisfaction scores, which is a key driver of the value-based reimbursement model.”

While healthcare organizations need to incorporate value-based reimbursement needs into physician productivity strategies, Connolley noted that it may be difficult for some organizations to break down the traditional barrier between healthcare business and care delivery.

“As healthcare delivery shifts towards value-based reimbursement, the patient care model and the business of healthcare absolutely need to be baked together into the strategic plan of an organization,” Connolley recommended. “They can’t be working in different siloes only coming together every quarter to be discussed as a 15-minute agenda item.”

At SystemCare Health, clients are introduced to a top-down strategic approach that brings together teams from recruitment, onboarding, credentialing, operations and scheduling, business strategy, and strategic marketing to help physicians meet productivity goals.

Connolley also stated that these teams need to collectively look at how strategic priorities, such as boosting physician productivity, are established and how they are communicated throughout the organization. The teams should appoint an executive champion to focus on sustainable physician productivity programs as well as align operations, strategic marketing, and physician relations teams to ensure continued focus on priority initiatives.

To further improve physician productivity, Connolley stated that healthcare organizations need to identify low-hanging fruit, such as keeping key referrals. Organizations should be tracking where referrals are coming from and if primary care referrals are staying in the healthcare system.

Smaller practices, however, may face more challenges with aligning physician productivity strategies with value-based reimbursement, Connolley pointed out. Many elect to merge with larger healthcare systems to manage the transition, but small groups can boost productivity to maximize value-based care reimbursements.

A September Health Affairs study reported that more providers are moving to larger group practices to gain access to more resources that are needed to implement value-based care models. The proportion of providers in practices of nine or fewer physicians decreased from 40.1 percent in 2013 to 35.3 percent in 2015, whereas the number of providers in large practices of 100 or more physicians jumped from 29.6 percent to 35.1 percent in the same time period.

To remain independent, Connolley advised small practice leaders to be more business-minded or seek help with managing the business component of healthcare.

“We know that some of these smaller practices are just working to keep the lights on, but in today’s environment, they need to take a step back and truly apply business principles to their practice,” she said. “In many of these private practices, it’s the doctors who are treating the patients, watching the books, and paying the bills. But by trade, physicians are scientists and they aren’t hardwired for business. Of course, some of them have their MBAs, but they are busy providing patient care.”

“With the way the landscape is moving, these organizations need to have somebody who really understands business and understands what is driving revenue,” she added. “That person needs to ask key business and patient care questions, like what are some of those operational challenges? Are there roadblocks to access to care? Are appointment templates working? Are doctors closing their charts in a timely manner for reimbursement from payers? All of these things come into play with whether a private practice is going to make it or not.”

Small practices should also identify someone to be the quarterback of business and patient experience models, Connolley suggested. The champion should be analyzing data, monitoring key success indictors, and improving access to care.

Connolley concluded by noting that healthcare organizations of all sizes face productivity inefficiencies, especially in light of value-based reimbursement. But organizations need to be open to changing their ways to succeed under new payment models.

“Just because they’ve been doing something the same way for years, it may not be the right way,” Connolley said.

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