lOMoARcPSD|34096219
Healthcare transformation a guide for
the hospital board member part 10
Healthcare - STEM (North Allegheny High School)
, lOMoARcPSD|34096219
Payment Reform • 73
TRANSFORMER
Reforming the payment system is not a panacea to improved
healthcare; however, it is necessary. The healthcare executive’s
approach to payment reform must include four major elements:
1. Assess: The current misaligned payment system needs to change.
It is imperative to assess where the current payment system falls short
or even has perverse incentives to “do the wrong thing.” Identify
areas where improved quality could negatively affect financial
health. Consider how your organization can mitigate these areas or
acknowledge them and continue forward with quality improvement.
2. Evaluate: With the glut of payment redesign programs, the organiza-
tion must evaluate the potential impact of different programs on the
financial bottom line. Through simulation of data or scenario plan-
ning, calculating how various programs will affect the organization
is useful in identifying opportunities for improvement.
3. Design and test: Considering the assessment and evaluation,
design payment reform models that reflect your improvement
opportuni- ties and priorities. It is important to recognize that no
perfect system can be designed; focus rather on developing a
system that is simple and easy to understand and set up to test
specific elements of pay- ment reform.
4. Learn: In today’s environment, payment reform can be considered
experimental. We do not know the best answer or have the clear
methods to get there. However, we can design multiple experiments
well so that we can learn and improve on them. A critical component
of payment reform design and implementation, learning is
essential in transformation.
BEST PRACTICES
The intersection of quality and cost is most evident in the Centers for
Medicare and Medicaid Services/Premier Hospital Quality Incentive
Demonstration project. More than 250 hospitals participated in this
national demonstration project in which hospitals received financial
Healthcare transformation a guide for
the hospital board member part 10
Healthcare - STEM (North Allegheny High School)
, lOMoARcPSD|34096219
Payment Reform • 73
TRANSFORMER
Reforming the payment system is not a panacea to improved
healthcare; however, it is necessary. The healthcare executive’s
approach to payment reform must include four major elements:
1. Assess: The current misaligned payment system needs to change.
It is imperative to assess where the current payment system falls short
or even has perverse incentives to “do the wrong thing.” Identify
areas where improved quality could negatively affect financial
health. Consider how your organization can mitigate these areas or
acknowledge them and continue forward with quality improvement.
2. Evaluate: With the glut of payment redesign programs, the organiza-
tion must evaluate the potential impact of different programs on the
financial bottom line. Through simulation of data or scenario plan-
ning, calculating how various programs will affect the organization
is useful in identifying opportunities for improvement.
3. Design and test: Considering the assessment and evaluation,
design payment reform models that reflect your improvement
opportuni- ties and priorities. It is important to recognize that no
perfect system can be designed; focus rather on developing a
system that is simple and easy to understand and set up to test
specific elements of pay- ment reform.
4. Learn: In today’s environment, payment reform can be considered
experimental. We do not know the best answer or have the clear
methods to get there. However, we can design multiple experiments
well so that we can learn and improve on them. A critical component
of payment reform design and implementation, learning is
essential in transformation.
BEST PRACTICES
The intersection of quality and cost is most evident in the Centers for
Medicare and Medicaid Services/Premier Hospital Quality Incentive
Demonstration project. More than 250 hospitals participated in this
national demonstration project in which hospitals received financial
