Viewpoint

Care Variation Reduction Going Nowhere? Used Strategically, a HEIP Might Help

For organizations with a good strategy to reduce care variation, a hospital efficiency improvement program can provide the jolt of incentive that generates real improvement.

Laurie Golemi Norman, MSN, APRN
Optum Advisory Services

When mapping the concerns among health system C-suites over the past few years, efforts to reduce unwarranted care variation have remained near the top. The ongoing concern over this variation was reflected in the results from the Advisory Board’s latest Annual Health Care CEO Survey. Close to two thirds of respondents (62%) said sustainable cost control was their number one priority.

Care-variation reduction is not typical cost cutting by health care systems; it is organizations striking the right balance between upholding their mission of delivering quality care while keeping costs sustainable. Hospitals and physicians must work together to cut down on the use of common tests and procedures that may not have clear benefit for patients and should sometimes be avoided.

Laurie Golemi Norman

To make systemic improvements in care variation, organizations need to make changes at the level of clinical transformation. There are critical capabilities that organizations must address and tightly coordinate to scale out this change in an effective way. They should, for instance, have a governance-and-leadership model that incorporates a system-level clinical excellence entity and a redesign of standards of care. But many organizations struggle with another early stage of this type of initiative: aligning physicians with the goals of the organization.

A HEIP might help. HEIP stands for hospital efficiency improvement program, and it is pronounced so it rhymes with “yep”.

A HEIP is a legal contract outlining specific initiatives where physician-driven variance can be improved across specialties and departments. With a HEIP, physicians—either through physician practices or a clinically integrated network—agree to work collaboratively with other physicians and the health system toward clinical quality, efficiency, and cost reduction.

For example, HEIPs can focus on addressing settings of care, transitions of care, clinical efficiency, procedure management, or condition management. First-year HEIPs may target departments such as the operating room or cath lab, while other initiatives may focus on common procedures such as total joint replacement or spine surgeries. In return for working toward specified quality, efficiency, and cost initiatives, the hospital can then provide compensation within fair market value, based on participating physicians’ performance and the generation of shared savings. Depending on how performance progresses, the HEIP process can be replicated every 12 to 24 months with new or repeating initiatives, revalidated through a new estimate of fair market value.

HEIPs work to increase collaboration among physicians and are effective for instilling accountability in clinical staff. For example, a 200-bed hospital in the Midwest developed a HEIP for cardiovascular services after discovering $6.1 million in variation for costs of care across medical and interventional cardiology and cardiovascular, vascular, and thoracic surgery. The hospital instituted a fund with a potential payout of more than $12,000 for each of more than 20 providers that met quality, efficiency, and administrative objectives. Per-provider HEIP distributions range between $3,000 and $25,000, depending on the opportunity and number of providers included. The program enabled the hospital to optimize care processes, improve patient outcomes, and reduce cost of care for these populations.

Elsewhere, a three-hospital system on the West Coast recently launched a HEIP after measuring nearly $60 million of variance in costs of care for inpatient surgeries. The program is targeting improvement in metrics such as operating room efficiency, physician procedure card development and utilization, vendor consolidation, and standardized preoperative clearance and discharge planning. Shared savings payments for this system average around $55,000 per provider due to the significant physician-driven opportunity.

HEIPs won’t work for every organization, especially those looking to improve financial metrics that don’t hinge on physician involvement. But for many, particularly those with a good strategy to reduce care variation but limited success in motivating employed and independent providers, a HEIP can provide the jolt of incentive that generates real improvement.

Laurie Golemi Norman is vice president at Optum Advisory Services.

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