Building a Bridge Between Value and Volume

It’s time to talk about the V-word. Two of them actually: volume and value.

Since President Barack Obama enacted the Affordable Care Act in 2010, hospital executives have struggled to reconcile these two dueling priorities — in many ways, they represent the old and the new.

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There is volume, which is encouraged under the old fee-for-service model: the more patients who need MRIs, the more revenue that generates. And then there is value, which is what’s been emphasized under the Affordable Care Act: The more that hospitals and doctors are able to prevent illnesses and injuries from occurring — such as through community wellness initiatives or workplace yoga and meditation programs — the fewer people who are admitted or readmitted to hospitals, which is rewarded under the ACA.

“Volume defined us, it defined our success,” Sandra L. Fenwick, president and CEO of Boston Childrens Hospital, said Tuesday as part of a panel at the second annual U.S. News & World Report Hospital of Tomorrow conference. “We’re struggling now with how do we get the right payment, how do we have the right data and analytics, and how do we keep all of these things in front in terms of making the right kinds of investments.”

[READ: Can Hospitals Do Better at Reducing Readmissions?]

As fellow panelist Robert Pendelton, chief medical quality officer of University of Utah Health Care,, described, “It’s like going down the river with our feet in two canoes.”

The feeling, apparently, is far from unique. The discussion, which also featured J. Knox Singleton, CEO of Virginia-based Inova Health System, brought in a standing-room-only crowd.

Moderator Emad Rizk, president and CEO of Accretive Health, laid out six key thoughts from the discussion:

• Value is here to stay, so be prepared for how to find it. Boston Children’s Hospital achieved some savings by sending the doctors to the homes of high-risk patients, thereby reducing hugely expensive trips to intensive care units. “If we could intervene in the home, we could avoid enormous costs,” Fenwick said.


• Each health system developed its own value equation. According to Fenwick, that equation at Boston Children’s is “quality plus service plus innovation, divided by price.” At the University of Utah, Pendleton said, it’s “quality plus service divided by cost.” Rizk told the attendees there: “Figure out what that value equation is for your organization.”


• Make sure every component and constituency is aligned, That means ensuring satellite centers, nurses, physicians and the main acute-care hospitals are all talking with one another.


• Think about the financial back-end up front. Don’t calculate the costs only after something’s happened.


• Work with the payers. It may be possible to share data and reduce costs with certain insurers.


• Don’t understimate the massive administrative processes that need to happen to make all these changes.


• And finally: “Patient-first, quality first,” Rizk said.

“Fee-for-service is not falling off the planet,” Rizk concluded. “You’re just going to have variations of fee for service and variations of value. Definitely be proactive and be prepared.”

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