IHI Expedition Expedition: Preparing Care Teams for Bundled Payments - PDF document

4/21/2015 April 21, 2015 Begins at 1:00 PM ET IHI Expedition Expedition: Preparing Care Teams for Bundled Payments Session 3: Collecting Data Using Activity-Based Costing Nick Bassett, MBA Trisha Frick, MS, RN Lucy Savitz, PhD, MBA Molly Bogan, MA Today’s Host 2 Akiera Gilbert Project Office Assistant Institute for Healthcare Improvement 1

4/21/2015 3 Phone Connection (Preferred) To join by phone : 1) Click on the “Participants” and “Chat” icons in the top right hand side of your screen. 2) Click the button on the right hand side of the screen. 3) A pop-up box will appear with the option “I will call in.” Click that option. 4) Please dial the phone number , the event number and your attendee ID to connect correctly . 4 WebEx Quick Reference • Please use chat to “ All Participants ” for questions Raise your hand • For technology issues only, please chat to “ Host ” Select Chat recipient Enter Text 2

4/21/2015 Chat 5 Name and the Organization you represent Example: Sam Jones, Midwest Health Please send your message to All Participants 5 6 Expedition Director Molly Bogan, MA Director Institute for Healthcare Improvement 3

4/21/2015 7 Expedition Objectives At the end of this Expedition, participants will be able to: Describe the benefit of transitioning to a value-based purchasing model Understand and apply activity-based cost accounting methodology to at least one care process Demonstrate examples of how to engage stakeholders in building a bundle Describe how to customize care team redesign to deliver optimum care under value-based purchasing Today’s Agenda 8  Introductions  Session 2 Action Period Assignment Debrief  Collecting Data Using Activity-Based Costing  Action Period Assignment  Closing 4

4/21/2015 9 Expedition Sessions Session 1: Volume to Value; Describe the benefit of transitioning Value- Based Purchasing Lead Faculty: Lucy Savitz & Trisha Frick Session 2: Getting Started with Building a Care Bundle Lead Faculty: Trisha Frick & Nick Bassett Session 3: Collecting Data Using Activity-based Costing Lead Faculty: Nick Bassett & Lucy Savitz Session 4: Engaging Stakeholders in Bundle Design Lead Faculty: Trisha Frick & Nick Bassett Session 5: Care Team Redesign Lead Faculty: Trisha Frick & Nick Bassett Session 6: Case Study: CMS Bundled Payments for Care Improvement Experience Lead Faculty: Trisha Frick & Kathy Luther 10 Action Period Assignment Debrief • What population or episode of care did you identify? • What did you find from the flowchart out at least one sub-process in the episode selected? • Did you assemble your team? • Share with others using the chat to All Participants 5

4/21/2015 Chat 11 Please chat in the population or procedure you chose to test a bundled design & what criteria you used to select it. Please send your message to All Participants 11 12 Faculty Nick Bassett, MBA Trisha Frick, MS, RN Lucy Savitz, PhD, MBA Healthcare Assistant Director of Director of Research and Transformation Manager Managed Care Education Intermountain Johns Hopkins Intermountain Healthcare Healthcare HealthCare LLC Salt Lake City, Utah Salt Lake City, Utah Glen Burnie, Maryland 6

4/21/2015 IHI Faculty Lucy Savitz, PhD Nick Bassett, MBA Disclosure Statements The content of this presentation does not relate to any product of a commercial entity and the presenters, therefore, have no ethical conflicts or relationships to report. ~Lucy Savitz ~Nick Bassett 7

4/21/2015 Now that you’ve developed your Process Map… A cost tracking system is essential Presentation Overview Activity Based Costing Building a Bundle and Reporting Performance Quality & Service Monitoring 8

4/21/2015 Activity Based Costing • Flowchart out the process • Look for meaningful segments • Obtain the necessary information Basics in Capturing Bundle Costs • Assemble a team of all those knowledgeable about the process — including finance, quality, and clinical staff • Flow chart out the process • Identify meaningful segments (e.g., pre-op prep; wheels in to wheels out of OR) • Determine “good enough” expectations for cost – Estimates (pre-op prep may be time x avg salary) – Observation (wheels in to wheels out of OR) 9

4/21/2015 Activity Based Cost Accounting Cost accounting approach concerned with matching costs with activities (called cost drivers) that cause those costs. (1) products consume activities, (2) it is the activities (and not the products) that consume resources, (3) activities are the cost drivers, and (4) activities are not necessarily based on the volume of production. Instead of allocating costs to cost centers (such as manufacturing, marketing, finance) • Direct and indirect costs are allocated to activities such as processing an order, attending to a customer complaint, or setting up a machine. • Enables management to: – Better understand how and where the firm makes a margin/profit – Indicate where money is being spent – Located which areas have the greatest potential for cost reduction. Developed by professors Robert Kaplan and Robin Cooper of Harvard University in late 1980's. • Basic Concepts with Cost Accounting Systems • Direct costing – Lean observation – Time – motion studies on process of care (multi-sample average vs. optimal/ideal with minimal variation) – Episodic bundles (overall average or tiered pricing) • Complete costing – Accounting for both direct & indirect costs (allocation) 10

4/21/2015 Complete Costing Direct vs. Indirect Costs • Direct Costs – Expenses arising in unit where care is provided, directly arising from that care – Could reasonably appear on an itemized bill • Indirect Costs – Allocations of expenses from other (overhead) units – Central admin, food services, human resources, PR, etc.  a matter of judgment/choice for many items – e.g., floor space can be charged as rent (direct) or as a facility overhead allocation (indirect) – BUT all direct + indirect costs must cover all facility expenses Capturing Costs • Designing an effective system for capturing costs: – Requires comprehensive identification & collection of data – Must be practical – When is the cost data “good enough” – Determining when, where, & how to do this 22 11

4/21/2015 Structured Observation • Document activity start time, end time for all observed activities during a selected window of time/event period (e.g., OR procedure) – Staff involved – Number & duration of interruptions/down time – NB: This data can be used to identify improvement opportunities (i.e., excavating waste) • Assemble average salary information • Multiply time spent x average salary for each involved staff member; then sum • Observations can be done on paper or with newer, electronic applications Time Studies (structured observation) Example 12

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4/21/2015 Framework for Tracking the Cost of Waste • Savings from Enhanced Efficiency Recoverable Waste • Avoided Costs • Increased Productivity Change in Cost/Unit of Service • Supply Chain Management 15

4/21/2015 The Low Hanging Fruit • Supply Chain Organization • Better contract pricing • Standardization of supplies • Example with Joint Replacement • Disseminate Cost information • ProComp Example Building a Bundle • Important Considerations in the Bundle • Shared Decision Making • Risk Stratification • Key Stakeholders • The Concept of Baselines • Procedural Baseline • Cost Baseline (Budget) • Qualitative Baseline 16

4/21/2015 Shared Decision Making • Patient Education • Patient Preferences • Setting expectations for the episode of care Risk Stratification (Tiered Pricing) • Surgical Assessment Center • IM trained provider screening • Expectation setting for patients • Example with Implants • Patient Engagement 17

4/21/2015 IHA Bundled Episode Payment & Gainsharing Demonstration Lessons Learned • Ensure sufficient case volume • Consider including appropriateness determination • Find mutually acceptable methods for managing risk • Keep initial bundle definition simple • Use automated solution to administer payment • Change benefit design to steer patients to providers Developed by Kevin Bozic and M. Susan Ridgely “The IHA Bundled Episode Payment and Gainsharing Demonstration” Stakeholders’ Role in Bundled Payment Development • Clinical Oversight – Helping design how to do structured observations and identifying segments which make most sense to focus on • Admin/manager approval – Facilitate Access • SCO – Understands opportunities from vendor contracting perspective • Integrated Multidisciplinary Teams (finance/Quality/Admin/Clinical Teams) 18

4/21/2015 Building a Bundle • Important Considerations in the Bundle • Shared Decision Making • Risk Stratification • Key Stakeholders • The Concept of Baselines • Procedural Baseline • Cost Baseline (Budget) • Qualitative Baseline Procedural Baseline 19

4/21/2015 Cost Baseline Insert Relevant Cost Information 20

4/21/2015 Commitment to Quality & Service Outcomes • IP Quality • Service Measures • Patient Reported Measures IP Quality & Service Measures • LOS • HCAHPS • Hospital acquired infections • Avoidable readmissions and ED visits 21