Premier’s Chris Murphy on the Critical Success Factors Involved in Bundled-Payment Contracting

Jan. 9, 2021
Chris Murphy, who supervises the bundled-payment contracting collaborative at Premier Inc., shares his perspectives on the clinical, financial, and operational strategies that are key to success in that important area

Success with bundled-payment contracting has proven to be a challenge for the leaders of many patient care organizations nationwide; yet it is also an area of huge opportunity for hospital and health system leaders, as they consider how and in which service line areas to move forward into value-based contracting.

And some health systems are documenting real progress in this area, and pioneering in ways that others can follow. In that regard, last month, senior executives at the Charlotte-based Premier Inc. named the Bethlehem, Pa.-based St. Luke’s University Health Network, a fully integrated, nationally recognized health network serving Pennsylvania and New Jersey, the winner of Premier’s 2020 Richard A. Norling Premier Alliance Excellence Award.

A press release published on December 7 noted that “Premier presented the annual award to St. Luke’s for exemplifying the highest level of industry innovation and advancements in delivering high-quality, cost-effective care. The St. Luke’s system – which includes 12 hospitals, more than 1,900 physicians and providers, and a regional medical school campus – leverages Premier’s performance improvement infrastructure and strategic supply chain services. In using Premier’s data, technology, supply chain services and expertise, St. Luke’s has consistently achieved top decile performance for quality and efficiency,” the press release noted. “As a member of Premier’s bundled payment collaborative, St. Luke’s has been a top performer in generating positive savings, realizing more than $1 million in savings year over year. Additionally, through its partnership with Premier, St. Luke’s is leveraging innovative predictive analytics technology to improve maternal health, prospectively identifying women at risk for pre-eclampsia, postpartum hemorrhage and pre-mature birth with a high level of accuracy.” The alliance also noted that “St. Luke’s was selected from Premier’s nationwide alliance of more than 4,100 U.S. hospitals and 200,000 other provider organizations.”

In a statement contained in the press release, Premier CEO Susan DeVore stated that “St. Luke’s has been a leader in accelerating innovative breakthroughs that enhance the lives of the more than 80,000 patients across its communities. St. Luke’s has a deep commitment to high-quality care delivery, and its approach to teaching, research and collaboration has created new standards of care for both Premier members and the healthcare industry overall,” DeVore said. “Premier’s 34-year partnership with St. Luke’s is exceptionally valued, and we are honored to recognize them with the 2020 Premier Alliance Excellence Award.”

“At St. Luke’s, we’re focused on caring for the sick and injured, improving the overall health of our communities and educating our healthcare professionals,” said Donna Sabol, senior vice president and chief quality officer at St. Luke’s, in accepting the award for her organization. “Our partnership with Premier has allowed us to generate innovative new concepts that foster patient-centered care and better educate our providers and communities. This award is a true testament to the steps St. Luke’s has taken to achieve true excellence as one connected health system.”

In the first article in this two-part series, Healthcare Innovation Editor-in-Chief Mark Hagland interviewed Donna Sabol, R.N., the senior vice president and chief quality officer at St. Luke’s. In accepting the award on behalf of the health system, Sabol was quoted in the Dec. 7 press release as stating that ““At St. Luke’s, we’re focused on caring for the sick and injured, improving the overall health of our communities and educating our healthcare professionals,” said Donna Sabol, senior vice president and chief quality officer at St. Luke’s, in accepting the award for her organization. “Our partnership with Premier has allowed us to generate innovative new concepts that foster patient-centered care and better educate our providers and communities. This award is a true testament to the steps St. Luke’s has taken to achieve true excellence as one connected health system.”

Earlier this month, Hagland interviewed Chris Murphy, principal for Strategy, Innovation, and Population Health at Premier. Below are excerpts from that interview.

Tell me about your role? How would you describe it?

Probably the easiest way to describe it is that I’m what’s called a “dedicated partner” for the relationships with health systems, and in this case, specifically around bundled payments. I’ve been here now for about five-and-a-half years.

How long has the bundled payments collaborative been operating at Premier?

That dates back to about 2011, when that program began.

As Donna Sabol told me, she and her colleagues have focused strongly on optimizing their post-acute provider network, and have also focused strongly on intensively leveraging data to continuously improve clinical and operational performance. Do those seem to you also like the critical success factors in their innovative work so far?

I would agree, yes; and there’s a third element, too. So the first thing is, in a bundled payment program, much like the BPCI Advanced Program [Bundled Payments for Care Improvement Advanced Program] they’re engaged in now, the cost savings really sits in the post-acute sphere. It’s not really in the inpatient core area, it’s in SNF, inpatient rehab, etc. That’s the primary area they need to focus on in order to be under the target price that CMS pays them in the program. So they’ve effectively reached out on behalf of all their hospitals and discussed that methodology with all of those post-acute care providers. And a further challenge came from the fact that they owned some of their SNFs. So they also had to look closely at the penalty from CMS if they continuous used that service, and more importantly, from a CFO standpoint, they had to make sure that their owned SNFs were high-performing SNFs; and is that truly the level of care that a patient needs to go to, post-discharge. Every organization has to look at how they’ll manage the revenue stream expected from the SNF or inpatient rehab, to optimize length of stay.

So it’s a continuous improvement process inside a relationship, then, correct?

That’s right. And I’ll illustrate a bit how that works. The bundled payment program is premised on a 90-day tail. So they’re measured on the cost that sits on the 90 days post-discharge. That’s why it’s so critical for post-acute care to be successful for them. With regard to the monthly claims that come from CMS [the federal Centers for Medicare & Medicaid Services], we at Premier get that information, and put it into our bundled payment intelligence platform, and if you’re a member of the collaborative, you get the data, and the collaborative, which is the education, support, and liaison-ing with CMS. That’s what differentiates what we do from what anyone else does.

In order to be successful in bundled payment contracting, we need to continuously look at our data. We refresh that data monthly. And I talk with the folks who work with Donna, and also talk with their finance leader. They look at it from a clinical and a financial perspective, both, and that’s their third prong. They have such a level of engagement, both from their frontline clinical staff, and from their c-suite executives. Those executives are looking at that data with me quarterly or semi-annually, to make sure they’re doing the right things.

St. Luke’s has chosen a unique approach, called the portfolio model. So what they do for one hospital in the program, they want to do for all the hospitals, so that each hospital in their system is approaching the program in the same way. So let’s just say they’ve got eight hospitals involved in orthopedics, they’ll choose the same model for all eight, not three or four. The challenge comes in when they’re looking at the post-acute care space, because those post-acute care providers in one area might be performing better than in another area.

Are clinician leaders at your member hospitals working with the post-acute leaders they’re contracted with, across your collaborative?

Yes, exactly. Historically, providers quite frankly didn’t care as to what things meant from a patient-centric perspective on the dollar side. And when you’re in the BPCI program, you get a target from CMS. For the winners in the program, CMS is paying out based on the quality metrics and cost savings. And St. Luke’s has been tremendous, because they’re looking at the data and using it, and working with their post-acute providers, and narrowing their networks to only those post-acute providers that are bringing value into the system.

For those organizations that only dabble in bundled payments or don’t see the value, it’s important to understand that if I’m an inpatient hospital, I only get to see how I’m performing on the inpatient side or in the post-acute facilities I own. CMS is offering what I call free data, so you can couple the inpatient and post-acute provider data, so you can see the post-acute facility data right away. And because CMS creates the initial target price, you can see how things have gotten better, worse, or stayed the same. So t’s a benefit to be in that program, because you’re getting cost data, and some of the quality metrics are based on cost. If you’re keeping patients for 95 days, you’re certainly not going to be a five-star SNF in the program.

What does the future look like in the next couple of years, around all of this?

We’ve heard from CMS specifically that at the end of the program, which is voluntary, by the way—a hospital can leave with a 90-day notice to CMS, we’re encouraging hospitals to stay in the program, because when this program sunsets at the end of 2023, we anticipate mandatory bundles becoming more prolific. There was the Comprehensive Care for Joint Replacement, which was mandatory, that was not a choice. We’ve heard directly from CMS that they plan on doing that program again. It was supposed to start on January 1, 2016, but started in April 2016. They most recently extended the last performance year, performance year 5, by nine months. So this was supposed to end at the end of 2020, but now, it’s been extended to September 2021. And they’ve implied that there could be a three-year extension, but that’s not been confirmed.

And CMS has just introduced something called Clinical Episode Service Line Groups into the current BPCI Advanced Program. Midway through this program, CMS did some analysis, and found that when organizations came into this voluntary program, hospitals were making choices that would allow them to beat the target price. So they were finding that the overall BPCI was not saving CMS as much money as they had anticipated, if not even losing money programmatically. And so on January 1, this just kicked off, they decided they would create these groups. So let’s say that my organization was contracted around CHF [congestive heart failure], and was only in that condition; now, I have to be in AMI [acute myocardial infarction—heart attack] and cardiac arrhythmia as well; I have no choice. So they lumped like conditions into eight groups. And you have to be in one of those eight groups and in all the conditions for that group. That was a huge, huge hiccup for many of the hospitals in this voluntary program. It made some organizations leave the program. But St. Luke’s decided, we’re not going to jump ship, we’re going to do the right thing, and do more education nd more outreach, and look at the data more closely, knowing mandatory bundles are coming.

So being in these programs is a great way to learn how to do value-based care delivery in general, then, right?

Yes; it’s a good opportunity in a non-mandatory environment, for learning. So that if for whatever reason you fail, you can get out. So this should be glide path for organizations to prepare for mandatory programs.

What would your advice be for what organizational leaders should be doing as they think about this in their own organizations?

I’ll selfishly point this back to Premier: although we drive our programs on data, we also drive them on education. We offer an educational component to this, where organizations can join our collaborative and learn ahead of time what these programs are requiring, and can be prepared for what will happen in the future. And value-based care is not going away, it’s becoming more prevalent. These value-based programs will help illustrate the necessity of becoming value-based, from a patient perspective. And we can help organizations with being prepared and ramping up.

What kind of advice would you like to share, around IT strategy, to support bundled-payment contracting work?

I think that it depends. There are organizations out there with a fairly robust IT organization. The difficult nature of the way that CMS provides this data in a value-based world is that it’s not very easily interpreted. There’s a lot of data that goes into a bundled payment. If you have a robust IT capability, that’s great; if not, there are organizations like Premier that can help to present data for you in a very digestible way. We pride ourselves on how well we can do that. We have something of a teach-you-to-fish model. We can help organizations to understand their clinical and financial data to help them with the program; and the IT components are very important.

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