Delivering on the Health System Value Promise: Are We There Yet?

One of the key strategic questions facing hospitals and physician groups today is whether to be part of a health care system. Across the industry, the ongoing flurry of merger and acquisition activity keeps health care providers evaluating if this strategy is the right one for them. With increasing financial pressures from declining reimbursement, escalating costs, growing capital needs, and vacant inpatient capacity, hospitals and physician groups continue to look to scale as a way to achieve efficiencies and maintain their margins.

In 2016, the Vizient Research Institute set out to assess health system formation and the value health systems deliver not just to themselves but to those they serve. Implicit in most health systems’ value propositions, and specifically with market-facing communications expressing “the right care at the right place at the right time,” is the expectation of consistency.

“Two clinically similar patients who present at different hospitals within the same health system should expect similar experiences,” said Erika Johnson, MHSA, vice president, strategic research, Vizient Research Institute. “Intrasystem reliability is a core component of the health system value proposition.”

In this groundbreaking study, the Research Institute assessed categories of discretionary utilization across 200 multihospital health systems to see if wide variation in use rates was observed. The categories included post-acute care (PAC) utilization following a lower joint replacement, the use of advanced imaging in the ER for back pain, repeat imaging within 90 days for the same non-cancer diagnosis, fewer than three days of hospice before a cancer patient's death, and ICU utilization within the last 30 days of a cancer patient’s life. Health systems that are effective in standardizing care processes and reducing avoidable utilization would be expected to exhibit far lower intrasystem variation across these categories of service.

During the original study, which assessed hospital performance between 2012 and 2014, significant variation in utilization between health systems and even more variation within an individual health system was observed. Across most of the areas assessed, utilization rates at one hospital were oftentimes three to four times higher than other hospitals within the same system. Though the reasons for building multihospital health systems were well-intended, most health systems have been falling short in delivering on their value promise. “The original study served as a call to action to health systems that we can and must do better in providing consistent patient care across the enterprise,” said Johnson.

So are we there yet? Given the continued interest in forming and expanding health systems across the country, the Research Institute recently revisited the original study findings to see if health systems have moved the needle. Utilization across the same categories of service were assessed between 2015 and 2017 for the same set of health systems. The results were a bit disappointing, though not surprising.

Unfortunately, not much progress has been made to deliver on our value proposition as health systems. Nearly all health systems studied showed a decrease in PAC utilization and the majority of health systems saw a narrowing of their intrasystem variation for this category of service. This was to be expected based on the introduction of bundled payments for joint replacements that now includes financial responsibility by the hospital or health system for PAC expenses. In the other four areas, however, variation within health systems largely increased or stayed the same across most of the health systems studied.

“There were a few health systems for which we observed a decrease in intrasystem variation across four or more of the categories between the original study period and the new study period,” said Johnson. “Additional research is underway to understand if there were any purposeful interventions by the health systems that attributed to the decrease and these additional insights will be included in the full study findings when they are released later this year.”

Forming a system and operating like a system is a journey and one that most health systems still appear to be on. Delivering the right care at the right place at the right time largely remains an unmet promise. In order for a health system to deliver on the value promise, they must focus on reducing variations in care within their health system so they can deliver a high quality, consistent patient experience across the enterprise.

To learn more about the Vizient Research Institute or how Vizient can assist your organization in reducing variations in care, contact us today.