As reimbursement shifts from a fee-for-service model towards the value-based payment model, maintaining high clinical quality will increasingly impact financial performance and reduce risk of brand impairment. According to a report from Moody’s Investors Service, healthcare organizations with better patient outcomes produce stronger operational margins.
The report suggested that hospitals with above-average value-based purchasing (VBP models) scores produced a median operating cash flow margin of 11.7%, compared to 8.6% for organizations with below-average VBP scores. The patient experience, which accounts for up to 30% of the VBP score, has a similar correlation.
The impact of health reform
With more money being injected into fraud and claims enforcement, hospitals and health systems will continue to face regulatory risk. Healthcare organizations will face large fines, penalties, and reputational damage from corrupt arrangements and inappropriate claims. Maintaining and improving clinical quality should be a primary focus. Successfully done and the rest will fall in place: patients who’ve experienced good outcomes will recommend you, your reputation will grow positively, and good reimbursement will follow thanks to pay for performance models.
Unlocking the keys to success
Hospitals and health systems that establish strong risk management and patient safety programs, improve the integrity and quality of documentation efforts, proactively review charts, and implement provider training and education, fare better in managing risk.
Key #1: Deliver consistent quality and cost effective patient care
Establish performance goals, quality improvement policies, and risk reduction procedures and measurement systems to ensure dependable results.
Key #2: Improve medical outcomes
This includes measuring, reporting, and comparing all outcomes based on similar medical conditions. By measuring, reporting and comparing health outcomes, leadership can properly evaluate the effectiveness of processes and procedures while identifying care gaps within the cycle of care.
Key #3: Increase patient engagement and patient education
If patients are not engaged with their providers, it makes delivery of proper care extremely difficult to attain. If patients aren’t educated on the importance of adhering to treatment plans, they are less likely to keep their end of the bargain with providers and caregivers.
Key #4: Proactively manage risk
Reduce avoidable errors which can become costly in terms of damage, discomfort, disability, or distress. Proactive programs charge risk managers to perform risk assessments to identify risks before problems occur. To maintain a low-risk environment, risk managers need to establish standardized processes throughout the entire organization which include provider and staff education along with process redundancies that ensure each step of the process is being completed timely and accurately.
Since risk managers cannot identify every risk within an organization, they will need to establish a non-punitive environment to implore everyone to feel comfortable in identifying possible risks along with informing leadership of those potential risks.
Key #5: Implement strong service recovery programs
Improve resolution of medical malpractice and negligence lawsuits. Having strategies to communicate well with patients and families when something does occur and having a disclosure of adverse events program all go a long way to reducing risk.
Challenges to quality and risk management program success lie in balancing the management of risk, both clinical and administrative, along with the quality of care. Clear and concise processes and procedures will help to ensure program success. Measuring data, reporting and comparing can help to evaluate the effectiveness of all processes and procedures while identifying care gaps. With the continuing paradigm shift to value-based care, it is imperative that hospitals and health systems employ efficient quality and risk management programs to safeguard an organization’s financial position.
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