CHAPTER 5
Using Adaptive and Disruptive ChangeStrategies to Create an Integrated Delivery System:
MontefioreMedical Center’sExperience
Peter Lazes, Ph.D.
Director, Healthcare Transformation Project
ILR School
Cornell University
16 E. 34st Street, 4th Floor
New York, NY 10016
212-340-2811
Liana Katz
Research Assistant
Healthcare Transformation Project
ILR School
Cornell University
16 E. 34st Street, 4th Floor
New York, NY 10016
212-340-2812
Maria Figueroa
Director
Labor and Industry Research
ILR School
Cornell University
16 E. 34st Street, 4th Floor
New York, NY 10016
212-340-2877
ArunKarpur, M.D.
Epidemiologist
Employment and Disability Institute
ILR School
Cornell University
310 Dolgen Hall
Ithaca, NY 14853
607-254-6376
Abstract
Purpose: This chapter explores the use of adaptive and disruptive change strategies to create an integrated healthcare delivery system that is both economically sustainable and patient-centered.
Design/Methodology: This case study of Montefiore Medical Center is based on a year of research which included focus-group interviews; individual interviews with executives, front-line staff, and union leaders; site-visits; analysis of internal data;, and a literature review.
Findings: Montefiore Medical Center is using both adaptive and disruptive strategies to develop an integrated delivery system driven by capitated payments from health insurance companies, a focus on primary care and chronic disease management programs, and community outreach. The growth of these delivery system components in conjunction with Montefiore’s Care Management Corporation (to help manage the health plan contracts) has contributed to an affordable cost of care, improved clinical outcomes, and proactive patient and community engagement.
Originality and Value: There is a paucity of case studies describing how safety-net hospitals— and health systems in general—can integrate the services they provide to create a positive, seamless, and economical patient experience. The story of Montefiore Medical Center offers an overview of how healthcare infrastructure and payment methods can be transformed to align financial and clinical incentives and to better serve a patient population that largely depends on government health insurance.
Keywords: Integrated delivery systems, sustainable healthcare, safety-net hospitals
Paper Category: Case Study
“You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.”
Buckminister Fuller
Introduction
Excessive costs and relatively poor healthcare outcomes as compared with other industrialized nations are the unfortunate reality of healthcare in the United States today (Newbhard, 2009). Underlying this unfortunate situation is a fragmented system challenged by professional silos, state and federal budget deficits, misalignment of financial incentives to provide efficient care, inadequate sharing of information and inequitable distribution of resources. Additionally, the system is not adequately equipped to manage the large populations with chronic conditions that exist in the U.S.The complexity of healthcare organizations, which often contain multiple overlapping subsystems, adds to management challenges and discourages the innovations needed to deliver high quality, affordable healthcare (Begin, Zimmerman, & Dooley, 2003).
The combination of these factors results in duplication of procedures, medication errors, inadequate health education,and the lack of available chronic care management (Adelson, 2011). Even individuals who have the means to pay for carereceive services that are often uncoordinated, delayed, and more costly than necessary (Dr. Steve Safyer, CEO and President of Montefiore Medical Center, personal communication, December 2, 2010). In the present system, doctors are not always rewarded for keeping patients healthy. The prevailing fee-for-service model, in which providers are paid for each service they deliver, compounds these problems because it incentivizes doctors to perform multiple and often expensive procedures rather than focusing on preventive care.
There is an emerging consensus that the transformation of fragmented delivery systems into integrated delivery systems will reduce costs and improve healthcare outcomes.[1]The necessary components of an integrated delivery system includeteams ofproviders working together to provide primary care, health education, chronic care management, and access to behavioral health services (Rejean & Veil, 2004). A high-functioning integrated delivery system linksthese elements so that patients have access to a seamless continuum of services that address the full range of their health needs. These systems, when effectively structured and well managed, improve care coordination, access to services, and communication between providers of care.
Fortunately, there are provisions of the Patient Protection and Affordable Care Act (ACA) signed into law in March of 2010 that are designed to promote incentives to focus delivery systems on primary care, chronic disease management programs, increased access to behavioral health professionals, and payment models other than fee-for-service (Rejean & Veil, 2004). Even if the ACA or some of its constituent parts are determined to be unconstitutional by the U.S. Supreme Court, as is currently a possibility, changes in Medicare and Medicaid reimbursements have also been established to incentivize health systems to integrate their services.
Many sections of the ACA focuses on the development of payment reform methodologies such as capitation which support the functions and goals of an integrated delivery system. Capitation refers to a model in which health insurance companies or federal and state health care programs (e.g. Medicare and Medicaid) pay providers an annual premium per patient to cover all of the healthcare services that the patient receives. This payment model encourages providers to prioritize holistic wellness for their patients rather than episodic treatment (Porter, 2010). The economic rationale behind this approach is that the decreased need for hospitalizations and expensive treatments potentially averted by a focus on primary and preventive care will lower overall healthcare costs.[2]
For most healthcare systems, the shift from a fragmented, fee-for-service system to an integrated, capitated model of care necessitates radical changes in their structure. Many of these changes require significant financial investments. In particular, resources are needed to shift the locus of where patients receive the majority of their care from inpatient to outpatient settings, placing emphasis on primary and preventative care. This transformation may not have an immediate payoff and may in fact result in an initial loss of revenue. To take the leap from fragmentation to integration takes strong leadership, organizational commitments of funds and staff, and a readiness to transform and optimize multiple areas of a system.
Strategies for Creating Change and Integrating Care
Before discussing the case study illustrating the emergence of an integrated delivery system, it is important to examine two theoretical frameworks used to create innovation and improvements in complex healthcare systems: disruptive innovation and adaptive change.
Disruptive innovation, as described by Christensen, Grossman, and Hwang, is the more transformative of the two approaches (2009). It involves a fundamental restructuring of an organization, engendering breakthroughs from a high degree of front-line staff and multi-stakeholder involvement, and extensive experimentation. This innovative process enables organizations to create new systems of care, products or services. As a result of this robust engagement of multiple stakeholders new and distinct systems are created, rendering prior activities obsolete (Rae-Deupree, 2009). For example, to successfully transform outpatient clinics to provide comprehensive primary care services (referred to later in this chapter as the development of Patient-Centered Medical Homes) requires a disruptive change approach because new methods for treating patients, providing services, and structuring relationships between practitioners need to be developed.
The approach of adaptive change, on the other hand, is based on incremental changes that optimize current processes or services by improving efficiencies and eliminating and waste. The use of the adaptive change approach can be instrumental in standardizing new processes and procedures that were initially created by a disruptive change approach. An example of an effective use of the adaptive change approach is the improvement of the care treatment protocol for patients with diabetes or congestive heart failure. In these situations what is needed is the optimization of best practices and adaption of these approaches to the specific needs of the relevant patient population.
As numerous healthcare systems are actively striving to integrate their services, it is becoming clear that, many will benefit from the use of both disruptive and adaptive approaches.
The following case study examines Montefiore Medical Center’s expansion and deepening of its activities to integrate its delivery system. It highlights the role of Montefiore’s Care Management Company (CMO) in this process. Montefiore’s use of both adaptive and disruptive interventions has allowed the delivery system to provide high quality, affordable care to residents of the Bronx and Westchester counties in New York. What is particularly remarkable about Montefiore’s journey is that the medical center serves an exceptionally economically challenged community.
Montefiore’s Experience
A Note on Methodology
Research for this report was compiled over an eleven month period from January to November 2011. Information was gathered by group and individual phone calls, on-site interviews of Montefiore and CMO staff, and access to internal CMO reports.
We interviewed a wide range of personnel at Montefiore and the CMO, from front-line staff members to union representatives to executives. In total, we interviewed 38 individuals in 14 telephonic and on-site conversations. Of the 38 people interviewed, 7 were clinical staff members, 2 were department managers or supervisors, 5 were union representatives or executives, 12 were organizational executives and administrators, and 12 were clerical staff.
When we entered the editing phase of compiling this report, we contacted all those who had been instrumental in supplying us with access to information and/or had been quoted in the body of the manuscript. We incorporated feedback from these contacts into the final draft of the report. Their input and advice throughout this project has helped us get a candid picture of the activities at the CMO.
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Background Information: Montefiore Medical Center and the Bronx Community
The Bronx is home to one of the most challenging healthcare environments in the United States. Of the approximately 1.4 million residents of the Bronx, eighty percent identify as either Black or Hispanic and more than thirty percent subsist below the poverty line (Bronx, New York, n.d.). Bronx residents contend with disproportionately higher rates of chronic disease, such as diabetes and hypertension, than residents of other New York City boroughs and have higher mortality rates and generally poorer health outcomes typically associated with disadvantaged socioeconomic status. At Montefiore more than eighty percent of the 86,600 inpatient admissions in 2010 were covered by Medicare or Medicaid.
Montefiore Medical Center, the university hospital of the Albert Einstein College of Medicine, is comprised of three acute care hospitals, a children’s hospital, 21 community health centers, dozens of ambulatory and specialty clinics, a home care agency, rehabilitation facilities, substance abuse clinics and the largest school health program in the country.
Montefiore has a longstanding commitment to providing integrated, community-centered healthcare services that extends beyond the traditional purview of most academic medical centers. Its mission is “to heal, to teach, to discover and to advance the health of the communities [it] serve[s]” (About Us, n.d.). Since its founding in 1884 as a rehabilitation hospital serving the poor, Montefiore has modeled its service offerings and research agenda to respond to the needs of its communities in facing healthcare challenges, from the TB epidemic in the late 19th century, to high infant mortality rates in the 1960s and 1970s, to the HIV/AIDS epidemic in the 1980s.
Montefiore’s approach to labor-management relations is equally progressive. In1959, 1199 SEIU United Healthcare Workers East (1199/SEIU) won an election to represent clerical, technical, service and maintenance workers at Montefiore’s hospitals and outpatient clinics. In the 60-plus years since, there has been a strong partnership between 1199 and Montefiore to improve patient care and make meaningful the work life of staff. The nurses at Montefiore are represented by the New York State Nurses Association (PRNewswire-US Newswire, 2007; American Rights At Work, 2007).
Expanding Montefiore’s Capacity to Integrate Care and the Development of the CMO
Since the early 1990s, there has been increased national attention to the rising costs of health care and the benefits of preventive care as a means of reducing costs. In response, large health insurance companies began to promote Health Maintenance Organizations (HMO) to defuse momentum toward expanded coverage through a government-sponsored system such as exists in many other countries. By covering more preventive services than traditional indemnity insurance policies, which only reimbursed beneficiaries every time they received care for a specific illness or condition, the HMO model held out the promise of lower overall health care costs and, therefore, lower premiums for both the employers who offered the insurance and the employees who paid part of the cost of coverage.
For Montefiore, which already served a large blue-collar population, including many government employees and large numbers of Medicare and Medicaid beneficiaries, the movement toward managed care presented an opportunity to solidify its patient base. The primary care emphasis of the managed care model also resonated with Montefiore’s community-oriented mission.
To help retain high quality physicians in the Bronx and to facilitate the establishment of contracts with various health plans, Montefiore formed two provider organizations in 1996. 1) The Montefiore Independent Practice Association (MIPA),comprising the medical center and its employed physicians and many of the private (also known as “voluntary physicians”) physician practices in the Bronx, most of whose practitioners maintain admitting privileges at its hospitals and 2) the Montefiore Behavioral Care Independent Practice Association (MBCIPA), comprising mental health and substance abuse practitioners.
To manage the health plan contracts, Montefiore established the Care Management Company (CMO) and University Behavioral Associates (UBA), a similar entity for behavioral health services. The eventual capitation contracts with health plans allowed the CMO and UBA to support the integration of Montefiore’s services and provide all or a specified set of services to the insurers' members for an agreed upon per member fee. If healthcare costs for capitated patients exceed the yearly payment, Montefiore is responsible for those expenses. While on the other hand, if proper medical management of these patients results in lower costs, the savings are reinvested into expanding Montefiore’s services.
Beginning in 1996, the CMO and UBA entered into a series of such contracts with health plans serving residents of the Bronx and lower Westchester county. Initially, the CMO signed capitation contracts for services to 40,000 members of Aetna, Oxford, NYL Care, US Healthcare, Blue Cross/Blue Shield, 1199 Professional Services Cap, United Healthcare and PHS health plans. An additional 100,000 capitated lives were added in 2000, through a contract with HIP (now known as EmblemHealth after a merger with Group Health Incorporated, another insurer originally formed to provide health insurance for government employees). Currently, the CMO and UBA have contracts that cover close to 150,000 members of health plans that offer Medicare, Medicaid and employer-funded (or commercial) insurance. These contracts generate $750 million annually in capitation payments.
Core Functions of the CMO
The core purpose of the CMO is to help manage the risk of capitated contracts and to assist with improving the coordination of care for patients. This assistance consists of care management and health education activities, a Contact Center (customer service department), strategic partnerships with Bronx community groups and the New York City Department of Health, and patient and claims data analysis. These functions have expanded over the last 16 years as the number of lives covered by capitated contracts has grown.
Throughout this evolution, a central set of practices has governed Montefiore’s approach to change. First and foremost, data, primarily gathered internally, but also from Medicare, Medicaid and medical and health services research performed at Montefiore and the Albert Einstein College of Medicine and elsewhere, informs practitioners with critical information about their patient populations. This data has been an essential resource for developing chronic disease management paradigms. Second, the deepening of community-based activities promotes health and wellness in the Bronx community (Berwick, 2008).
The value of the CMO’s resources is threefold: 1) Working with Montefiore’s hospitals, community health centers, and outpatient clinics its staff helps patients access a full range of healthcare services; 2) The CMO assists practitioners in aiding individuals manage their own health and enhances the coordination between hospital and post-hospital care; 3) the CMOleverages Montefiore's community contacts and involvement to provide access to social services that fall outside of the provision of clinical care but are necessary for achieving positive health outcomes for patients.
Innovative Business Model
Montefiore’s business model for creating and sustaining an integrated delivery system is based on securing contracts with health insurance plans for capitated payments, retaining salaried physicians, expanding access to primary and preventive health services, and providing comprehensive care management services for chronic care and behavioral health patients. The rationale behind this model is that by providing more preventive care and care management activities the need for hospitalizations can be reduced and therefore reduce costs and create a financially viable organization.
Montefiore has been careful to sign contracts with health insurance companies that can provide it with adequate information about their members and has terminated contracts with companies that are unable to do so. Obtaining comprehensive patient information has enabled Montefiore to have the appropriate data to target its care management and supportive care services to the specific patient populations that are most in need of the services.