Pennsylvania PHO chooses mission and cuts costs
Pennsylvania PHO chooses mission and cuts costs
Finding a true mission for a physician-hospital organization might be difficult. This is especially true now, at a time when hospitals and physician groups are merging into corporate entities that are nearly as complicated as any multi-national corporation.
How can the PHO's mission niche be carved out of the integrated delivery system's overall mission? Which tasks is the PHO best able to carry out?
JeffCare, a Philadelphia PHO that is part of the Jefferson Health Network, owned by the Jefferson Health System, was created with a clear mission: to unite physicians and the faculty at the Thomas Jefferson University Hospital for managed care activities, says Stanton N. Smullens, MD, president and medical director of the Jefferson Health Network and chief executive officer of JeffCare.
JeffCare's primary focus was to create a managed care organization that was a single signature organization and to unite the medical staff and hospital for full-risk managed care activities, Smullens says.
However, the PHO also educates providers about how to cut costs and eliminate waste.
"The idea is to reduce unnecessary care and to try to educate people to do things more efficiently," Smullens says.
Until February 1996, Thomas Jefferson University Hospital was part of the university. Then the hospital became part of the Jefferson Health System and the university was separated from it, although medical students still are trained at the hospital.
JeffCare's board consists of representatives from the hospital and the university's volunteer faculty and full-time faculty.
JeffCare serves as a contracting and medical management organization. It has not created its own product to sell and instead is focusing on obtaining full-risk contracts and contracting for other types of managed care products, using a messenger model.
"Physicians can't share rates or share fees unless they're together in a legal organization," Smullens says. "But in a full-risk environment, if you're sharing risk you can deal as a single contractor."
PHO acts as messenger in contracting
For non-risk contracts, the PHO acts as a messenger, offering rates to physicians and letting them say whether the rates are acceptable or not. "It's set up so they're not sharing rate information with each other," Smullens adds.
So far, Jefferson Health Network on behalf of JeffCare has landed a full-risk commercial insurance contract for 40,000 covered lives with Aetna U.S. Healthcare in Bluebell, PA. The insurer pays a percentage of the premium to JeffCare, and the PHO's members provide the health services, Smullens says. Jefferson Health Network's other entity, Main Line Hospitals, holds a similar contract with Aetna U.S. Healthcare for 40,000 covered lives.
The PHO has taken several actions to improve its chances of success under risk contracts, including:
· Developing medical management infrastructure: The PHO has a case manager and a medical director who visit physician practices. "We have data about the costs they have, and we try to find the outliers, where there seems to be an excessive amount of costs," Smullens says.
The PHO engages in utilization management and disease management education for both providers and patients.
Case managers are assigned to various physician groups. JeffCare has about 200 primary care physicians and more than 600 specialists. So far, there are three case managers.
· Giving incentives to physicians: The PHO's primary care physicians have full-risk, capitation contracts, and all patients are directed through a primary care physician. They're paid a fixed amount per member per month.
Specialists still are paid on a fee-for-service basis, but they have an incentive to keep costs down because if there's a surplus in the PHO's capitation income, then they receive a share of the surplus, Smullens says.
· Distributing profiling data: JeffCare sends physicians a one-page report on various quality indicators, strictly for educational purposes, Smullens says.
Reports may include cost data about hospital length of stay, emergency department visits, and specialty services.
Using data to change practice patterns
"We've looked at kidney removals and community-acquired infections, like pneumonia," Smullens says. "We've also looked at stroke outcomes in length of stay and costs, and in outpatient care we looked at congestive heart failure re-admit rates."
Each report is separated by group practice, but has no data for individual physicians within a practice. Eventually, the PHO also will collect physician-specific data.
· Encouraging physicians to make cost-effective changes: One quality report showed that one physician group's dermatology costs were extremely high, Smullens recalls.
The PHO examined the costs and found that the group was using a dermatologist who brought patients back more often than average. "It appeared as though they needed to tighten up their referral mechanism for dermatologists," Smullens says.
The PHO advised the physician group of the higher costs. The result was that the group told the dermatologist that he could only have a patient return if the primary care physician approved the extra visit. Also, one of the physicians in the group received some additional training in dermatology so she could handle simple cases in her office.
In another report, one physician group had considerably higher endoscopy costs than another.
The difference was that the high-cost group was referring its endoscopy patients to the hospital, and the group with lower costs was referring patients to a physician who did the procedure in his office.
"We first talked with the hospital administrator about the hospital's rate structure to see if that could be modified," Smullens says. The hospital agreed to give them a better rate.
Then the PHO asked the physician group that had been referring to the hospital to see if the physician to whom they referred patients could do some procedures in an office setting.
The PHO's report showed that the patients' outcomes were the same regardless of whether the procedure was done in the hospital or in the office, so safety was not an issue, Smullens says.
The high-cost physician group ultimately decided to use the hospital's outpatient surgery center.
"By studying the data you can come up with practice patterns that people always took for granted and never thought about much," Smullens says.
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