Task: Planning in Health Organizations

For the exclusive use of A. Williams, 2022. W16190 PLEASANT BLUFFS: LAUNCHING A HOME-BASED HOSPITAL PROGRAM Laura Erskine wrote this case solely to provide material for class discussion. The author does not intend to illustrate either effective or ineffective handling of a managerial situation. The author may have disguised certain names and other identifying information to protect confidentiality. This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the permission of the copyright holder.

Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) cases@ivey.ca; www.iveycases.com. Copyright © 2016, Richard Ivey School of Business Foundation Version: 2016-04-07 In the late 1990s, home-based hospital care started to be introduced in the United States and worldwide. This initiative seemed to lower costs, improve quality, and positively impact patient satisfaction.1 In early March 2014, Graff Salot, the director of Performance Improvement (PI) at Pleasant Bluffs Health System (Pleasant Bluffs), was asked by the chief executive officer to develop a proposal, including a business case and an outline of a pilot program, for a Pleasant Bluffs version of home-based hospital care. Salot was expected to present his proposal at the monthly session of the health system leadership team on April 30, 2014. PLEASANT BLUFFS HEALTH SYSTEM Pleasant Bluffs Medical Center was created in the late 1950s, as a result of the merger between two longstanding local hospitals. With the addition of a helipad in the mid-1980s, the hospital became a Level 1 Trauma Center,2 a facility able to provide care for every type of injury or illness. By the early 1990s, the medical center had become Pleasant Bluffs Health System, which included a medical care foundation, a physician-hospital organization, and a medical care center. Pleasant Bluffs was frequently recognized in national rankings of hospitals. The non-profit medical center had more than 400 licensed beds and provided outpatient care, acute and subacute patient care, biomedical research, and graduate and undergraduate medical education. It operated both as an academic medical center and community hospital, engaged in population health and prevention, and had a large portion of patients over age 85. Pleasant Bluffs employed over 5,000 individuals (including some physicians who were employed by the foundation) and worked with an additional 1,000 private physicians. Hospitalists employed by Pleasant Bluffs also staffed the emergency department (ED) at Community Medical Center (Community), which was less than eight kilometres away. This document is authorized for use only by Abigale Williams in HSA 4140 Spring 2022 taught by SCOTT FEYEREISEN, Florida Atlantic University from Jan 2022 to Jul 2022. For the exclusive use of A. Williams, 2022. Page 2 9B16M058 PERFORMANCE IMPROVEMENT The PI department at Pleasant Bluffs managed projects and cross-functional process improvement teams. The teams used Lean Six Sigma, Plan Do Check Act, and Innovation/Design Thinking to improve clinical quality. These methodologies used cross-functional teams to improve performance by reducing waste (e.g., defects, overproduction, delays, inventory, etc.). Individuals in the department also participated in the annual quality strategic planning process and any regulatory or accreditation surveys that included reviews of PI processes. The PI team reported up to the chief executive officer, through the senior vice president for Service Line Operations. GRAFF SALOT Salot joined the PI department in 2008, and became its director in September of 2013. Before joining Pleasant Bluffs, he had worked at two different hospitals in Washington, DC. Salot had a Master of Public Health and a Bachelor of Business Administration from universities on America’s East Coast. He was a Lean Six Sigma Master Black Belt3 and spoke three languages.

He had been closely tracking home-based hospital care projects at other hospitals — the most prominent of which were Johns Hopkins (Hopkins) and Presbyterian Healthcare Services (PHS). Hopkins registered its program as Hospital at Home© under copyright. HOME-BASED HOSPITAL CARE PROJECTS Driven by the Patient Protection and Affordable Care Act, commonly known as the Affordable Care Act (ACA),4 signed into law in March of 2010, payers (insurance companies and other third-party payers) were restructuring their contracts with hospitals to lower costs and 30-day readmission rates.5 The Centers for Medicare & Medicaid Services (CMS) also announced the introduction of financial penalties for hospitals with higher-than-predicted readmission rates for patients with heart attacks, congestive heart failure, and pneumonia.6 In addition, there was pressure to keep patients, especially older ones, out of hospitals because of their vulnerabilities to hospital-borne infections and other complications.

7 One way of addressing the external pressure was the Hospital at Home© model developed by researchers at the Johns Hopkins Schools of Medicine and Public Health in 2001.8 For those individuals sick enough to require medical care but not sick enough to require hospitalization, nursing and physician treatment was provided in the patient’s home.

Some examples of the medical services provided included administering and monitoring medications, home safety assessments, assistance to caregivers, diagnostic tests (including X-rays, ultrasound, and electrocardiograms), wound treatment, blood draws, oxygen therapy, pain management, and lifestyle improvements.9 In a 2002 study that took place in three different locations, 141 Hopkins patients over the age of 65 with one of four conditions (community-acquired pneumonia, exacerbation of chronic heart failure, exacerbation of chronic obstructive pulmonary disease, or cellulitis) were offered the option of receiving medical care in their homes rather than being admitted to the hospital.10 In two of the three piloted locations, 69 per cent opted to receive care at home; in the third location, 29 per cent opted for home care. Patients treated at home had a shorter length of stay (3.2 versus 4.9 days) and fewer complications. The mean cost of care was also lower for Hospital at Home© patients (US$5,08111 versus $7,480). Some time after the 2002 study was done, several other hospitals tried variations of the program, including PHS in Albuquerque, New Mexico in 2011.12 The results at PHS mirrored those from Hopkins (see Exhibit 1). This document is authorized for use only by Abigale Williams in HSA 4140 Spring 2022 taught by SCOTT FEYEREISEN, Florida Atlantic University from Jan 2022 to Jul 2022. For the exclusive use of A. Williams, 2022. Page 3 9B16M058 PLEASANT BLUFFS: HOME-BASED CARE Salot and his team thought that a home-based care program could work for members of the Accountable Care Organization (ACO) populations at Pleasant Bluffs. ACOs were groups of healthcare providers that shared financial and medical responsibility for providing coordinated care to patients. CMS used performance on 33 quality measures in four domains (patient/caregiver experience, care coordination/patient safety, preventative health, and at-risk population) to determine whether an ACO could share in the savings generated.13 Pleasant Bluffs had ACO contracts with Medicare, Aetna, and Anthem. For this population, it was in the hospital’s financial interest to reduce spending, mainly through shorter stays and fewer unnecessary tests. The PI team had been monitoring the ACO patient population at Pleasant Bluffs for three months by examining Pleasant Bluffs hospital admissions data each morning. Analysis of admitted patients that entered the hospital through the ED showed that, though sick, some patients had conditions that did not necessarily require admission. Based on the team’s internal assessments, approximately 20 per cent (600 individuals) of the admitted ACO patients were sick but could possibly have been treated at home. To find out how many of the patients actually fit the criteria to receive care at home, Pleasant Bluffs purchased the Hopkins algorithm for $20,000. Medicare used a coding system that incorporated all costs required to treat a specific condition. Task: Planning in Health Organizations

These were known as Medicare Severity Diagnosis-Related Groups (MS-DRGs). The algorithm used these DRG codes (see Exhibits 2 and 3), expected length of care, and comorbidities (additional disorders or diseases co-occurring with the primary disease) to determine whether a patient was suitable for the Hospital at Home© program. The doctor was then able to use this information to make decisions about the plan of treatment. Based on the Hopkins algorithm, 7 per cent of Pleasant Bluffs’ readmitted patients could have been successfully treated at home. While PI was gathering data about Medicare ACO patients that might be able to receive care at home, a Pleasant Bluffs senior vice-president (SVP) shared with Salot a story of his father (not a Pleasant Bluffs patient) who was discharged with home nursing.

He felt this was a great idea, and although not actually involved in the PI data-gathering project, he began to champion the idea and advocate internally for a pilot program. With encouragement from the SVP and other leaders, Salot and the PI team were tasked with developing a business case and creating a pilot program for a Pleasant Bluffs version of home-based hospital care for the ACO patient population. COSTS The PI team knew that in order to launch a pilot program, Pleasant Bluffs would require a relationship with a home health company, access to durable medical equipment (walkers, wheelchairs, bed rails, hospital beds, etc.), an agreement with a laboratory that could process samples collected by nurses, and a pharmacy that would agree to deliver medications to patients’ homes. Based on estimates of leasing medical equipment and contracting for nursing, laboratory, and pharmacy services, the PI team estimated homebased care would average between $750 and $1,250 per patient per day. Task: Planning in Health Organizations