BY: ALAN M. ZUCKERMAN and TRACY K. JOHNSON
Dr. Zuckerman is director and Ms. Johnson is manager, Health Strategies
& Solutions, Inc., Philadelphia. This is the fourth in a series of articles
on revenue growth that will appear in Health Progress.
Fourth in a Series Examining Revenue Growth Strategies in a Difficult Health
Care Market
This fourth installment of our series on revenue enhancement strategies discusses
the continuum of care in terms of patient care settings and service lines. Identifying
gaps in the service continuum or capacity constraints can reveal new opportunities
to improve patient care and develop and enhance revenues.
The premise that health care organizations need to provide or have access to
all components in the continuum of care — including inpatient, outpatient,
subacute, and long-term care — has not always been validated by market success
in recent years. The value of a full-service provider that offers seamless and
efficient care is being tested by Medicare reimbursement changes,1 past
failures in vertical integration,2 and an apparent retreat from full
capitation. However, many reasons to consider planning within the continuum
of care framework still exist.
Filling gaps in the continuum is a growth strategy to the extent that it:
- Creates new service capabilities and potential revenue streams
- Provides a new portal of entry into the rest of the continuum
- Amplifies the resources and capabilities of existing areas of the continuum
and improves the cost-effectiveness of providing services
- Increases control over a greater part of the health care market
- Enhances seamless care in the most appropriate setting
- Reduces bottlenecks and increases patient satisfaction
A review of current services provided along the continuum, especially within
existing product lines, may identify new opportunities for some health care
organizations.
The two kinds of continuum examined here include the patient care continuum
and the clinical service line continuum. These are potentially overlapping frameworks,
but each approach offers some unique aspects to help health care organizations
most easily identify gaps in the range of services they provide. Once gaps are
identified, each potential opportunity needs to be evaluated to determine its
strategic fit and its potential to support the organization's mission and
improve its financial performance. Several potential opportunities for revenue
and service enhancement within the continuum are described below.
Patient Care Continuum
Figure 1 presents the continuum of care for five key patient
settings — pre-entry, acute, subacute, outpatient, and home care — and
a representative sample of services for each. By applying an organization's
existing services to this framework, gaps in the continuum can be identified
for potential development. This analysis can be augmented by reviewing patient
referral and discharge information to determine the frequency with which patients
are referred to other settings for care or services and if any problems arise
in this referral because of a lack of available providers, capacity, or processes
for facilitating the transition.
Pre-entry One frequently overlooked stage of the continuum is pre-entry
or "pre-provider" services, which link patients to the health care
system and provide entry into the rest of the continuum. Adequate emergency
medical services systems, transportation for seniors, links with long-term care
facilities, and community outreach and education are some of the ways to link
potential patients with the provider. Although usually not revenue generators
themselves, such services build relationships and improve access to and use
of inpatient and outpatient services in the longer term.
Another example of pre-entry services is web technology, which has led to the
creation of a new key marketing tool and portal to health care services, particularly
for those looking for information and quick access to services. The ability
to easily connect patients or potential patients to the services they need by
providing online scheduling of appointments, disease management protocols, secure
medical record data, and referrals to physicians or other health care services
is becoming increasingly important.3
Acute Most hospitals provide critical care and telemetry as part of
the acute care continuum but do not always have enough capacity to meet today's
standard of care and the increasing level of acuity found in many hospitals.
As discussed in a previous article in this series ("Increasing Market Share,"
Health Progress, May-June 2001, pp. 28-33), full critical care units
can lead to reduced admission levels if the lack of available intensive care
unit beds triggers an increase in the incidence of diversion from the emergency
department. Assuming intensive care unit beds are being appropriately used,
increasing critical care or telemetry bed capacity can lead to reduced incidence
of diversion from the emergency department and, therefore, increased admissions
and revenues.
For the acute care segment of the continuum, a service gap for some health
care organizations is the care for medically complex patients who need a higher
level of care than skilled nursing, but require care for a much longer period
of time than most acute patients. The long-term acute care hospital has been
recognized by Medicare regulations as a provider of specialized acute care services
for patients with an average length of stay of 25 days or longer. The long-term
acute care hospital provides the opportunity to better manage medically complex
patients who would otherwise incur unreimbursed costs in the traditional hospital
inpatient setting. The availability of a long-term acute care hospital can lead
to significant reduction in Medicare lengths of stay and patient care costs
for the referring hospital as well as free up scarce resources such as critical
care beds and staff.
Regulations require that a long-term acute care hospital be licensed as a separate
hospital with a separate board from the host hospital. Therefore, hospitals
frequently partner with specialized long-term acute care providers to lease
inpatient space for this unit as a "hospital-within-a-hospital." In
addition to lease revenues, long-term acute care providers often purchase treatment,
diagnostic, and support services from the host hospital.4
Subacute Changes in Medicare prospective payment system (PPS) reimbursements
and the Balanced Budget Act of 1997 have led to increased financial uncertainty
for many subacute services.5 Nevertheless, opportunities may exist
in subacute services as demand increases in response to improvements in emergency
medical care and technology, pressure to reduce acute care lengths of stay,
and population growth and aging.6 New strategies need to be developed
to address the reimbursement caps and documentation needs created by the rehabilitation
PPS,7 but most rehabilitation providers are anticipating improved
financial performance once the PPS is finally implemented.8
The continuum of care structure developed for rehabilitation services in the
mid-1990s by Covenant Healthcare System, Milwaukee, WI, has enabled their multihospital
system to adapt quickly to changes in the regulatory and reimbursement environment
and to enhance and reconfigure services throughout the continuum. All rehabilitation
and subacute services provided in the system — including four inpatient rehabilitation
units at four hospitals, two nursing homes, two freestanding subacute units,
several ambulatory rehabilitation sites, and home health — were brought under
a single management structure, Covenant Rehabilitation Services, Inc. This structure
includes a single group of physiatrists overseeing all patient care in the continuum
and a service line management team responsible for the integration of all services
across the system.
The continuum facilitates patient flow across all care sites, eliminates duplication,
and streamlines operations to ensure the provision of cost-effective care. The
close alignment of physician and management goals allows changes in patient
care protocols and service enhancements to be made very quickly throughout the
system. "Our management structure and the integration of our services into
one product line has allowed us to weather the regulatory and reimbursement
changes we have experienced across the acute, subacute, and ambulatory care
continuum in the last several years," said Tim Richman, regional vice president
for rehabilitation/oncology at Covenant.
Outpatient The development of accessible and convenient outpatient services,
as discussed in a previous article of this series ("Expanding Service Area,"
Health Progress, September-October 2001, pp. 19-21, 84), is important
as a potential revenue generator that can expand the service area, as well as:
- Build relationships with physicians, particularly joint ventures
- Redistribute patient volume from congested, inpatient-oriented facilities
- Support patients' transition from the acute care setting to a lower-cost
outpatient setting
Business plans for ambulatory development need to consider the impact of outpatient
PPS that, although intending to have a neutral effect on budgets, may result
in reductions in reimbursement levels for some services.9
Home Care Home care providers experienced significant financial hardship
and change under Medicare's interim payment system in the late 1990s. The
implementation of the prospective payment system in 2000 and changes in the
way home care services must be provided and documented will improve the financial
performance of these services, which continue to be an important component of
delivering needed care cost effectively.10,11
The boom in assisted living facilities has slowed in many markets but still
remains a potential source of revenue for some hospitals who partner or link
with these facilities to provide in-home services and, eventually, inpatient
and outpatient services.
Clinical Service Line Continuum
Another continuum that can be evaluated for service and revenue enhancement
opportunities is the clinical service line continuum. The service line continuum
includes the range of diagnostic and treatment services for a set of related
disorders, such as the clinical areas of cardiology, oncology, orthopedics,
and neurosciences. Figure 2 shows the treatment continuum and
modalities for two major service lines: cardiology and oncology. By looking
at the range of disorders and treatment modalities within a clinical service
line as well as new emerging technologies, gaps in service delivery and opportunities
for new service enhancement may be identified for development.
Cardiology The cardiology service line continues to expand with advances
in technology leading to new medical and surgical treatment modalities. Large
open-heart surgery programs are exploring new techniques, including "beating
heart" procedures that do not use the heart-lung machine. As interventional
cardiology becomes safer, some community hospitals are expanding their cardiovascular
service lines by initiating invasive cardiology treatment modalities, including
open-heart surgery. However, although population growth and aging will continue
to fuel the need for surgery, improved stenting techniques and pharmaceutical
interventions to reduce restenosis are shifting treatment to angioplasty and
catheterization procedures, areas that usually generate significant contribution
margin for hospitals.
Advances in technology and improvements in patient safety also are stimulating
interest in and acceptance of primary angioplasty to treat acute myocardial
infarction. These procedures are performed on an emergency basis at more than
100 hospitals without open-heart surgery programs. The ability to offer primary
angioplasty may provide an opportunity for community hospitals to expand cardiology
treatment options. This service does, however, require around-the-clock availability,
significant investment in training catheterization laboratory and emergency
department staff, and the development of systems to monitor quality of care
and outcomes.
A good example of a new service that can leverage a hospital's open-heart
surgery capabilities is an emergency department — based chest pain unit.
Designed to quickly assess whether a patient is having a heart attack, a chest
pain unit can reduce diagnostic and treatment time and lead to reduced complications
and better outcomes for the patient. Proposed new reimbursement policies for
patients with chest pain seen in the emergency department should also support
the financial viability of this program.
The chest pain unit at St. Joseph Medical Center in Towson, MD, treats an average
of 175 patients per month. Of these, 15 to 20 percent (approximately 350 patients
per year) receive catheterization and, in many cases, surgery. The dedicated
staff and treatment protocols allow a patient who is having a heart attack to
be examined, prepared for surgery, and sent to the operating room in less than
an hour. This approach reduces the damage to the heart, leads to fewer postoperative
complications and reduced lengths of stay, and yields better outcomes. Aggressively
marketed to the community, this unit has contributed to a 3 percent increase
in cardiology admissions, catheterization procedures, and open-heart surgery
procedures over the past two years.
At the other end of the continuum, the ongoing long-term needs of patients
with congestive heart failure and the high level of resources needed to treat
admitted patients have led to increased interest in the development of heart
failure management programs. These programs are designed to closely monitor
patients and more consistently provide dietary and therapeutic interventions.
When successful, they improve the overall care and health status of patients
and reduce readmissions and lengths of stay. Although not a major revenue-generator,
a congestive heart failure program improves the quality of life for many patients
with cardiac disease and indirectly increases revenues.
St. Joseph Medical Center recently opened a heart failure program, staffed
by a nurse practitioner, that markets to local primary care physicians and cardiologists
and provides a resource for their patients who need education and counseling
about diet, weight, and lifestyle issues. The nurse practitioner also works
with the physicians to manage the care of admitted patients with heart failure
by educating patients and facilitating their treatment plans. This program expedites
patients' return to the community and reduces overall length of stay. In
addition to the cost savings and improved financial performance generated by
minimizing the resources needed to treat these patients, the program generates
revenues from the counseling sessions held by the nurse practitioner and increased
referrals from primary care physicians.
Oncology The traditional range of cancer treatment services includes
surgery, medical oncology (for chemotherapy treatment), and radiation therapy.
Technological advances in radiation therapy and a change in Medicare reimbursement
are helping to support the growth of intensity-modulated radiation therapy,
which allows radiation therapists to more accurately pinpoint and treat tumors
while sparing healthy tissue.12
Demand for and interest in access to clinical protocols and multidisciplinary
disease site-specific care (e.g., breast, prostate) to support improved quality
of care are increasing. Restructuring functional treatment areas along disease
categories with centers that bring specialists and clinical support personnel
together to treat the patient in a coordinated way improves patient satisfaction
and creates greater visibility for the service.
Breast care centers are an example of how services can be organized along the
continuum to improve patient care and the delivery of services. Public awareness
combined with population growth will lead to continued increases in demand for
breast cancer screening and early detection. Breast care centers provide breast
screening, diagnostic tests, and other related services in a coordinated fashion
to minimize wait time for test results and to support a multidisciplinary approach
to patient care. In addition to improved quality and customer satisfaction,
breast care centers can enhance competitive positioning in a retail-oriented
ambulatory care market, improve access to a growing population of perimenopausal
and postmenopausal women, increase use of related service lines (e.g., women's
health and oncology), and boost overall financial performance.
With recent changes in mammography reimbursement rates, screening mammographies
by themselves will not generate much, if any, contribution margin. Rather, the
financial benefit of a breast care center largely comes from biopsies, surgical
cases, and other follow-up activities that result from the screenings. Many
breast care centers have realized margins of 10 percent or better. One large
center in the Southeast with 25,000 annual mammograms had a 15 percent margin
on breast center operations plus more than $1 million in net revenues from other
services for breast center patients.
An important area of the cancer continuum is hospice care. End-of-life and
palliative care that support the patient and the family during the last stages
of the patient's life is a particularly appropriate service for Catholic
health care organizations to offer. Although the Medicare hospice benefit has
capped the number of days in hospice care per beneficiary, it can be financially
beneficial with careful documentation and marketing to physicians. Health care
organizations can also partner with national hospice providers who will lease
vacated hospital space and purchase support services from the host hospital.
Alternative treatment and support modalities are being increasingly used to
support the cancer care continuum and improve quality of life for the patient.
An example of this type of service development to support the cancer continuum
of care is the lymphedema program developed at Mercy Health System of Maine
in Portland. Mercy's oncology program leadership developed this service
in 1996 to treat post breast surgery syndrome experienced by some patients after
surgery and radiation for breast cancer. Patients with post breast surgery syndrome
and lymphedema may have pain, swelling, limitation in range of motion, cosmetic
and functional impairment, and even chronic infection and skin breakdown. "This
program is about health maintenance, patient education, and improvement in post-cancer
treatment and the patient's quality of life," states Melinda Molin,
MD, breast surgeon and physician director of the lymphedema program.
Other cancer specialists, including radiation therapists and medical oncologists,
are increasingly referring patients to the program for follow-up care. The lymphedema
program also treats edema that arises from venous insufficiency, trauma, and
other conditions. Treatments, including wrapping, combined decongestive therapy,
manual lymphatic drainage, and rehabilitation, are generally covered by most
insurers and result in increased patient satisfaction and improved outcomes.
The lymphedema program currently receives 100 to 120 visits per month and will
be expanding its capacity in the near future because of the increasing demand
for services.
Many service line continuums can be evaluated in similar ways to identify potential
gaps in services and new market opportunities. By undertaking comprehensive
evaluations of existing services and developing or partnering with others to
enhance the continuum of care, health care organizations can improve patient
care while improving financial performance.
NOTES
- "Breaking the Chain: How New Medicare Changes Threaten Continuum of
Care," Hospital Case Management, October 1, 1998, vol. 6, pp.
189-191.
- S. Campbell, "Questioning the Integrated Vision," Health Care
Strategic Management, 1998, vol. 16, pp. 13-15.
- J. Goldsmith, "How Hospitals Should Be Using the Internet," Cor
Healthcare Market Strategist, 2001, vol. 2, p. 1.
- LTAC Resource Guide, NextCARE Hospitals, Inc.
- M. Rovinsky, "How IDSs Can Turn BBA Postacute Care Provisions to Their
Advantage," Healthcare Financial Management, 1999, vol. 53, pp.
31-33.
- "Case Managers Put a New Face on Subacute Care," Hospital Case
Management, 2000, vol. 8, pp. 145-148.
- "Ready? What to Expect from Rehabilitation PPS," Hospital Case
Management, March 1, 2001, vol.9, pp. 36-38.
- E. Lovern, "Give Us Our PPS!" Modern Healthcare, June 18,
2001, p. 24.
- V. Galloro, "Promise and Peril: Cancer Care," Modern Healthcare,
June 18, 2001, pp. 74-76.
- M. St. Pierre and W. A. Dombi, "Home Health PPS: New Payment System,
New Hope." Caring, 2000, vol. 19, pp. 6-11.
- G. W. Oldenquist, L. Scott, and T. E. Finucane, "Home Care: What a
Physician Needs to Know," Cleveland Clinic Journal of Medicine, 2001,
vol. 68, pp. 433-440.
- C. Becker, "Therapy on Target," Modern Healthcare, June
11, 2001, pp. 34, 38.