Clinical Integration

The key to improving quality and reducing cost in health care

By Jonathan Nelson

The American health care industry is under tremendous pressure to lower medical costs, and as long as the economy continues to sputter, that pressure will increase rapidly. Shortly after stepping down as head of the Centers for Medicare and Medicaid Services, Don Berwick, M.D., delivered a visionary speech at an Institute for Healthcare Improvement conference in which he said our nation is at a crossroad.

“The care we have simply cannot be sustained. It will not work for health care to chew ever more deeply into our common purse. If it does, our schools will fail, our roads will fail, our competitiveness will fail. Wages will continue to lag, and, paradoxically, so will our health. The choice is stark: chop or improve.”

By “chop,” Berwick meant arbitrary reductions in fees for medical services, the threat of which seems nearer with every Congressional deadline to avert drastic Medicare cuts. And by “improve,” he alluded to the idea that by focusing on quality improvement, care delivery would have to become more efficient and costs would necessarily decline. He and his colleagues have estimated that each year, more than $1 trillion—about a third of our total cost of production in the health care industry—is waste attributable to the inefficiencies of our fragmented and antiquated delivery system.

The concept of reducing cost by improving quality is at the heart of the lean production principles that have revolutionized many other industries, and by standardizing processes and establishing shared baselines to reduce variation in care delivery, Intermountain Healthcare in Utah and Idaho has become one of the most successful systems in the country at improving quality and reducing costs. For example, by implementing a protocol designed to reduce elective labor inductions, the system significantly reduced unplanned surgical deliveries and neonatal intensive care admissions. System administrators estimate this one protocol reduces health care costs in Utah by $50 million a year. Today, Intermountain manages 60 clinical processes in this manner, making up almost 80 percent of the system’s clinical activities.

There are several model systems around the country exhibiting positive results in quality improvement and cost reduction, but most have been pursuing these goals for several years. A health system needs a solid infrastructure of information technology, physician leadership, administrative governance, and quality measurement to support such coordination across inpatient and outpatient care delivery. To even begin establishing protocols to achieve best practices, measuring results, making improvements to the protocols, and reducing process variation, participating physicians must be clinically integrated with their regional health system.

It’s not that difficult to imagine implementing a clinical integration program in a health system where all the physicians are employed, but the vast majority of family physicians in Texas practice independently. Even so, the movement toward clinical integration is gaining momentum, and groups of independent physicians in several Texas communities are joining in.

Clinical integration has been around much longer than this latest round of health system reform, but because of its relation to accountable care organizations, the concept has become newly fashionable among health policy wonks. To understand what’s meant by the phrase these days, you have to distinguish between clinical integration as a legal construct and clinical integration as a practical concept to improve the quality of patient care.

Under most circumstances, a group of independent physicians can’t band together and negotiate jointly with health plans to set rates for services without violating antitrust law, but the Department of Justice and the Federal Trade Commission have held that a group of independent physicians that are either clinically or financially integrated can negotiate contracts as an organization in a so-called antitrust safety zone. Neither the DOJ nor the FTC wish to dictate how to achieve clinical integration, but a number of statements, rulings, and speeches serve to define the necessary components. Here’s what the agencies published in the most recent Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program:

“Clinical integration can be evidenced by the joint venture implementing an active and ongoing program to evaluate and modify practice patterns by the venture’s providers and to create a high degree of interdependence and cooperation among the providers to control costs and ensure quality.”

In a speech delivered at a health care antitrust conference in May 2010, Assistant Attorney General Christine Varney elaborated on the agencies’ position on clinical integration and accountable care:

“The U.S. population is aging, with the baby boomers once again transforming the demographic landscape as they reach 65. These changing demographics demand that we devise ways to treat even greater numbers of increasingly sick patients more efficiently and affordably. Unquestionably, that will lead to additional interest in integrating what most observers say is now a fragmented health care delivery system.

“There does not seem to be serious dispute that clinical integration and coordinated care have the potential to decrease costs and improve quality. The key is whether we can gain those benefits without sacrificing meaningful competition.

“The answer to that question is undoubtedly ‘yes.’”

In a fee-for-service payment environment, this legal safety zone for clinical integration programs is a powerful tool for independent physician associations, physician-hospital organizations, and accountable care organizations to negotiate contracts. Apart from the legal considerations however, the practical application of clinical integration is a key component of improved efficiency and measurable quality improvement in care delivery.

Houston is home to one of Texas’ most advanced integrated health care systems, Memorial Hermann. Christopher Lloyd is CEO of the Memorial Hermann Physician Network, MHMD, a 3,900-physician IPA affiliated with Memorial Hermann. He says the network launched its clinical integration—or CI—program about five years ago, and since then, the clinically integrated subset of MHMD has grown to about 2,600 physicians across a broad spectrum of specialties.

Physicians in the CI program sign an agreement to practice evidence-based medicine as defined by standards set by their peers, to share their clinical data transparently, and to use standardized clinical protocols, order sets, and processes. “When they sign that agreement with us, they’ve agreed to participate in the processes and mechanisms that allow them to have an impact on those processes, and on the standardization of treatment and the management of costs and quality,” Lloyd says.

When compared to their peers and to national benchmarks adjusted for severity, Lloyd says the CI doctors at MHMD perform remarkably well. The average length of stay for their hospital patients is 30 percent lower than their peers. He says complications occurring as a result of inpatient hospitalization for the CI group are 15 percent lower than their peers, their 30-day readmission rates are 4 percent lower, and the average charges for their patients are 33 percent lower.

The physicians establish and adjust the protocols and order sets themselves by participating in specialty-specific clinical program councils. “Really, what’s interesting about this model is that it is primarily comprised of independent physicians, and these independent physicians are functioning in leadership levels collaborating around care management principles when otherwise, they wouldn’t have to.

“What we have found is that when we arm them with data and arm them with information, and provide them a forum to then focus and start managing across the clinical enterprise, the standards and protocols and order sets then become best practice, because they’re doing research about best practices across the country.”

About two years ago, Lloyd says leadership at MHMD realized that while they had become quite good at measuring and improving inpatient care delivery, they knew little about how care was delivered in the outpatient clinics of their primary care member physicians. So they held a summit and asked their independent primary care physician members if they thought clinical integration within primary care was important, what quality measures and performance standards they would suggest implementing, and what tools and resources they would need to participate.

“The physicians very clearly signaled to us, ‘We know it’s important, but we just have no idea how to get there.’” They said they needed new processes in their clinics to manage populations with chronic diseases, people to help implement those processes, and technology.

With that discussion, MHMD began creating a new program, Advanced Primary Care Practices, which announced its launch in July 2011. Advanced PCPs is a patient-centered medical home initiative designed to deliver comprehensive care by a team of physicians, nurses, and other caregivers working together to treat acute and chronic medical conditions and manage wellness programs.

Lloyd says 220 physicians signed an extension to their CI agreement with MHMD to participate in the program, agreeing to use a standardized set of clinical protocols and measurements set by their peers and to employ information technology that will allow MHMD to mine a series of outpatient indices. The IPA uses the data to compare Advanced PCPs to each other and to national benchmarks, then engages those practices that are falling short with additional support to help them achieve the group’s goals. 

“One of the most basic things is that you have to be able to report your quality measures as determined by your peers, which means you by and large have to be on an electronic medical record.” Lloyd says MHMD has been subsidizing the deployment of EMRs in their clinically integrated practices for the past four years.

Over the last two years, the physicians in the Advanced PCP initiative have set their own performance standards, designed their incentive program, upgraded and coordinated their information technology tools, and six of the practices are working with AAFP’s TransforMed to achieve NCQA certification as medical homes. “In this kind of structure, there is a tremendous amount of empowerment where they can say, ‘This is what my practice of medicine will look like, and this is the partner I want to be involved with to help me get there, and now I’ve got some clarity around how I’m going to get there,’” Lloyd says.

“I would suggest that the most important component of a program like this is allowing the physicians to sit in roles of leadership across their specialty, to have access to data and to be able to drive transformational change, and have the tools to impact the enterprise.”

In December, CMS announced that a partnership between Austin Regional Clinic and Seton Healthcare Family has been selected as one of 32 provider groups to participate in the Pioneer ACO program. A partnership between Tarrant County’s North Texas Specialty Physicians and Texas Health Resources was the only other Texas group to win selection for the pilot project. The new central Texas ACO will be called Seton Health Alliance.

“We’re building an entity that will have the infrastructure to excel at coordinated, high-quality, low-cost care while accepting multiple forms of value-based payments,” says Greg Sheff, M.D., president and chief medical officer of Seton Health Alliance. A family physician and TAFP member, Sheff also serves as medical director of care management and clinical integration for ARC, a multispecialty group of about 300 physicians.

“Obviously acute care and hospital care are incredibly important parts of the health care experience, so the more we integrate with that, the better for our patients,” Sheff says. “And it also brings capital and resources that allow us to build the IT and care management infrastructure to really look at populations in addition to individuals.”

To help create the new ACO, the alliance has enlisted the services of Health Directions, a Chicago-based health system consulting firm. Daniel Marino, president and CEO of Health Directions, says his favorite definition of clinical integration comes from the American Hospital Association: “Clinical integration facilitates the coordination of patient care across conditions, providers, settings, and time in order to achieve care that is safe, timely, effective, efficient, equitable, and patient-focused.”

Marino says to successfully implement a clinical integration program, the physicians involved have to lead the transition. “The cultural change is probably one of the biggest obstacles. You’ve got to get community physicians aligned with the hospital, and historically the interests and the objectives have always been a little bit different.” Collaboration and shared accountability across the entire organization is critical, as is the ability to collect, measure, and analyze clinical data. “At the end of the day, you’re doing this to create some value collectively for physicians and the hospital.”

Creating a clinically-integrated IPA, physician-hospital organization, or ACO are just a few ways communities can organize care to be more efficient and improve quality, and the rate of transition to value-based care as well as the various forms that may take will be different in each community. Clinical integration, as Sheff puts it, is one of the levers you can pull when you want to manage health. He says the imperative for family physicians today is not how to prepare for clinical integration, but rather how to get ready for change.

Whatever form this transition takes in communities across Texas, payers, employers, and patients are likely to demand to know that they’re getting the level of care they are paying for. The old business adage goes: “You can’t manage what you don’t measure,” so creating a culture of data collection, measurement, evaluation, and improvement is the logical first step. Programs like Bridges to Excellence and the various NCQA certifications present opportunities to prepare for tomorrow’s delivery system.

For physicians considering clinical integration for contracting purposes, Sheff says they can expect a positive return on their investment if done properly. “Especially for a small group, if they have the opportunity to join a clinically-integrated entity, they could see improvement in their reimbursement rates while having access to resources that help them improve the quality and efficiency of their patients’ care.”

When Marino speaks to physician groups, he tells them a storm is coming. Many metropolitan communities feel the pressure now, while in other regions, major changes to the way care is delivered and paid for may be years away.

“Physicians really don’t have to do anything,” he says, “but if they don’t do anything, they have to know that there’s going to be continued pressure to reduce their fee schedules, lower reimbursement from the payers, and most likely reduced compensation. If they want to position themselves for continued growth, position themselves to try to create value so they can negotiate higher rates, then they have to begin to make some change.”