OHSU Intends to Track Effectiveness of CCOs

The work will be done by John McConnell, PhD, who now heads the Center for Health Systems Effectiveness
The Lund Report

December 19, 2012 – The newly created Center for Health Systems Effectiveness at Oregon Health & Science University intends to measure the effectiveness of coordinated care organizations under the leadership of John McConnell, PhD, who made a presentation at OHSU’s board meeting last week.

Opening with what he called “a speed-dating version of health economics 101,” McConnell said the five major drivers of spiraling costs in healthcare are: income, technological change (which can be tied to income – higher-income populations demand state-of-the-art care), fee-for-service payment systems, fragmentation (contributing to poor communication and redundant care between providers) and productivity differentials.

“Productivity differentials,” McConnell said, refers to the fact that goods – particularly manufactured goods, like cars – are comparatively less expensive now than they were a few decades ago, because automation has made them cheaper to produce. Services, on the other hand – including car repair, but also healthcare and higher education – can't easily be automated and so are eating up more and more of consumers' budgets.

Some of those factors can be controlled over the long run, and some (such as income and productivity differentials) will be incredibly difficult to address, he added.

The state's plan for healthcare transformation – which led to the creation of 15 coordinated care organizations that will be augmented by a $1.95 billion investment from Centers for Medicare & Medicaid Services – sets a relatively modest goal of lowering the upward trend by two percentage points, McConnell said. But the fact that the state will be held accountable – and will have to pay penalties if the experiment doesn't work – is without precedent.

“Nothing like this has ever been done in healthcare, where you set limits on spending,” McConnell said.

One of the major differences between CCOs and previous delivery models is that budgets will be more flexible, McConnell said, who mentioned a patient who was repeatedly hospitalized for heat exhaustion because she couldn't afford an air conditioner. A CCO could give her a voucher to purchase one thereby saving the money associated with ambulance rides and emergency room visits.

“I think that works as long as they've got some apparatus for tracking. What if that doesn't really help that person?” asked board member MardiLyn Saathof in response to the air conditioner example.

“That sounds like a good research question,” McConnell said, adding that his office intends to track whether cost-saving measures actually improve patient outcomes at the same time they cut costs. The dual eligible population (Medicare and Medicaid) will also be watched carefully, and OHSU also has a pending grant to study addiction care, he added.

President Dr. Joe Robertson, who called CCOs “innovation incubators,” said the hospital and outpatient clinics at OHSU will be in the unique position of serving patients from every CCO in the state, since more than 50 percent of the Medicaid patients the hospital already sees come from outside the Portland metro area.

“I'm actually hoping that some of these fail. I'm one of the few that's hoping for some to fail,” he said. If that occurs, he added, officials will be able to learn from those failures and apply the lessons to future decision making.

OHSU also reported $26 million in operating income so far this fiscal year – about $6.7 million above than the fiscal target set for the FY '13 budget according to a financial report presented by chief financial officer Lawrence Furnstahl.

He attributed the financial bump to increased patient activity, noting that outpatient admissions were 5% higher than the budget anticipated, and were 11 percent higher than during the same portion of the last fiscal year. Overall patient revenues, he said, are $17 million above budget.

In-patient admissions were up 4% during the first third of the fiscal year, where surgeries increased by 5%, Furnstahl said.

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