Could the CSO be the new MVP for hospitals and health systems?

My Take

Could the CSO be the new MVP for hospitals and health systems?

By Steve Burrill, vice chairman, US Health Care Leader, Deloitte LLP

I live in Houston, but having grown up on the West Coast I’ve always been more of Dodgers guy. My kids, however, are rabid Astros fans and were thrilled to see their beloved team make it to the World Series last month…for the second time since 2017. Unfortunately, the Astros didn’t have the correct strategy to respond to the Washington Nationals’ aggressive hitting and onslaught of sliders, high fastballs, and change-ups.

Paul DePodesta represented a new type of chief strategy officer (CSO) for Major League Baseball teams. The book Moneyball, which was later turned into a movie, is based on the role he played in helping the struggling Oakland Athletics win the American League Pennant in 2002. By digging deep into baseball statistics and using sophisticated analytics to identify low-cost, high-value players, DePodesta and General Manager Billy Beane built a highly competitive team despite having one of the league’s lowest payrolls.

Strategy is becoming increasingly important for every business—whether professional sports teams or health systems. While the idea of a CSO is still a relatively new concept for hospitals and health systems, the position is becoming an important asset as the health care ecosystem contends with transformative technologies, increasing consumer demands, challenging financial positions, value-based payment models, and new competition.

CSOs can help build an offensive strategy

Hospitals and health systems have changed surprisingly little over the past several decades. In addition to new technologies and changing consumer demands, the sector is in the midst of a 180-degree turn away from the fee-for-service (FFS) payment model. The new value-based model, which focuses on the management of chronic diseases and keeping people out of the hospital, is both a departure from the FFS model and a new playbook.

In the past, hospital and health system CEOs often relied on their experience (and sometimes a gut feeling) when making strategic decisions. Many of them collaborated with their boards. But health system CEOs often recognize that they now need someone fully devoted to strategy—and are relying more heavily on their strategy leaders. Most hospital and health system CSOs work closely with the CEO to develop, communicate, and launch corporate initiatives. CSOs also keep a close eye on market and industry trends, competition, and regulations to understand the potential implications for their organizations.

Some members of the C-suite have authority over certain areas of the organization. The chief information officer, for example, might be responsible for technology purchases, while the chief medical officer and chief nursing officer oversee the clinical staff. The role of the CSO is more of an influencer to the CEO. In that role, the CSO can play a critical part in defining the organization’s direction. CSOs also are well positioned to help connect with other leaders to offer a fresh market perspective and to ensure that all initiatives align with the organization’s broader strategies.

The CSOs I’ve met tend to have an interesting combination of skill and backgrounds. Sometimes they move up the ranks of a health system, and other times they come from outside the sector and have deep experience in consulting or strategy. They also tend to have advanced degrees. I’ve also noticed that many strategy leaders are more focused on population health and broader organizational goals than on operational metrics like average length of stay or keeping beds full.

CSOs are preparing for a changing game

The Deloitte Center for Health Solutions recently surveyed more than 60 health care strategy leaders (CSOs and EVP/VPs of strategy and planning) from health systems and health plans—and conducted interviews with 10 more. Many of them said they are preparing for a multi-directional change, which is being driven by a wide range of stakeholders. Nearly 60 percent of survey respondents said competition from traditional and new entrants was a top concern, and 56 percent said evolving consumer demands were a growing issue.

Through our research, we defined several imperatives strategy leaders, CEOs, and the entire organization should consider as the future of health begins to play out. Here are three of them:

1. Enlist the CSO to challenge the organizational status quo: Even just a couple of years ago, it was somewhat rare for me to see a CSO in a board meeting or to be involved in my discussions with a health system’s executive staff. But that has changed and CSOs are now regularly engaged in the conversation and appear to have more influence with the board and CEO than they have in the past.
2. Own and incubate edge businesses: As the health ecosystem changes, hospitals and health systems should emphasize expected value over discounted cash flow. Along with understanding new payment models, strategy leaders should help the executive staff and board understand local demographics, population health, and the services their organization offers or could make available. As we get better at identifying illnesses early, or preventing them entirely, we should be able to treat more people in lower-acuity settings. Moreover, strategy leaders should understand what is most important to consumers as the industry transitions to value-based-payment models. This understanding could be the key to winning in the new health economy.
3. Get into execution: Strategy leaders should be involved in implementing organizational and business-level strategies. One of my health system clients recently decided to expand operations into a rapidly growing part of the community. The CSO played a key role in encouraging the health system’s leadership to invest in a large outpatient facility and a small hospital, rather than the larger one that had been initially considered. It was the first time this health system executed a strategy in direct response to a payment model that will rely on more outpatient services and fewer in-patient beds. As CSOs gain greater influence, they are likely to move from offering direction and guidance to leading projects from start to finish. 

My house would have erupted if the Astros would have had the right strategy to win Game 7 and return the iconic Commissioner’s Trophy to Houston. But I’m happy for my friends and colleagues in Washington. They’ve had a long wait. The last time a D.C. team won the World Series, Teddy Roosevelt was in the White House. Maybe next year, the Astros—or better yet, the Dodgers—will be leading a hometown parade, high-fiving fans, and hoisting a shiny trophy above their heads.

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In the News

CMS releases 2020 Medicare Physician Fee Schedule final rule

On November 1, the US Centers for Medicare and Medicaid Services (CMS) released its 2020 Medicare Physician Fee Schedule final rule. The rule, which goes into effect on January 1, finalizes several updates to provider payments and service-quality policies, including:

• Implementing a provision of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Act to create a Part B benefit for treating opioid-use disorder (OUD): This benefit includes medication-assisted treatment (MAT) provided by opioid-treatment programs (OTPs). Previously, OTPs could not enroll in Medicare as providers, nor could they receive payment for services provided to beneficiaries. The rule finalizes the definition of OUD treatment to include approved MAT treatments, counseling and therapy services, toxicology testing, and periodic assessments.
  
• Finalizing payment rates to treatment programs for MAT: According to CMS, Medicare will pay enrolled OTPs bundled payments based on weekly episodes of care for:
  • Medications for OUD treatment
  • Dispensing and administration of such medications
  • Substance-use counseling
  • Individual and group therapy
  • Toxicology testing

• Finalizing revisions to evaluation and management (E/M) documentation and payment policies: The American Medical Association (AMA) said these changes could help reduce the administrative burden on providers by focusing E/M visits on physicians’ assessments and patient care, rather than on mandatory standards.
• Giving physicians assistants (PAs) greater flexibility to practice: CMS is revising supervision requirements to clarify that a PA can work with more than one physician.
• Modifying processes for medical-record documentation: Under the final rule, medical practitioners—including physicians, PAs, and advanced-practice and specialist nurses—can add their signatures and dates to notes in medical records that were made by other medical practitioners, rather than e-documenting. According to CMS, allowing providers to review and verify these notes might help reduce their administrative burden.
• Aligning Medicare Shared Savings Program (MSSP) metrics to the Merit-based Incentive Payment System (MIPS): This could help accountable-care organizations (ACOs) and participating physicians dedicate resources needed to perform well on MIPS quality metrics.

(Sources: CMS, Finalized Policy, Payment, and Quality Provisions Changes to the Medicare Physician Fee Schedule for Calendar Year 2020, November 1, 2020; CMS, Trump Administration takes Steps to Expand Access to Treatment for Opioid Use Disorder, November 1, 2020; AMA, CPT® Evaluation and Management, E/M office visit revisions, November 1, 2020)

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CMS finalizes 340B drug payment cuts, site-neutral payments in 2020 hospital outpatient rule

On November 1, CMS released its 2020 Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System final rule. CMS will continue paying an adjusted amount of average sales price (ASP) minus 22.5 percent for drugs covered by the 340B program, including drugs provided by off-campus provider-based departments. This adjustment was initially in the 2019 OPPS final rule (see the December 4, 2018 Health Care Current). In May, however, a federal judge ruled the payment adjustment was unlawful, and several hospital associations expressed support for the ruling (see the May 14, 2019 Health Care Current). The federal government is appealing the ruling and began oral arguments on November 8.

The rule finalizes CMS’s site-neutral cuts for clinic visits in 2020—a policy that was initially in the 2019 OPPS final rule (see the November 6, 2018 Health Care Current). In September, a federal judge determined that CMS lacks authority to pay less for off-site clinic visits, and said the site-neutral payment reductions were not implemented in a budget-neutral manner (see the October 29, 2019 Health Care Current).

However, the 2020 OPPS rule does not finalize CMS’s proposed hospital price-transparency policy, which the agency released in July (see the August 6, 2019 Health Care Current). This provision would require all hospitals to publicize their “standard charges”—both gross charges and payment rates that health plans have negotiated with them—for all items and health services, including “shoppable” services or procedures that patients schedule in advance.

(Source: CMS, CY 2020 Medicare Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System Final Rule (CMS-1717-FC), November 1, 2019)

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Medicaid expansion states had fewer hospital visits, lower costs, study finds

States that expanded Medicaid had fewer preventable hospital admissions, fewer hospital stays, and lower costs compared to non-expansion states from 2014 to 2015, according to a recent study published in the journal Health Affairs. The study identified three key improvements among Medicaid expansion states:

• 3.5 percent reduction in annual discharge rates for “ambulatory-care sensitive” conditions 
• 3.1 percent decrease in inpatient days 
• 3.0 percent reduction in hospital costs
  

Patients with chronic conditions such as respiratory illness or diabetes experienced a significant decline in discharge rates. Consistent with other research on this topic, the researchers from this study suggest that people who gained health coverage through Medicaid expansion were better at managing these conditions, meaning they did not require hospitalization.

(Source: Health Affairs, Medicaid Expansion Associated With Reductions In Preventable Hospitalizations, November 2019)

RELATED: Georgia Governor Brian Kemp (R.) announced plans to provide coverage to low-income adults (i.e., annual income below 100 percent of the Federal Poverty Level) who are ineligible for Medicaid. To obtain coverage under the partial Medicaid expansion, applicants need to be employed, engage in employment-related activities, volunteer in community service for 80 hours per month, or be enrolled full-time in vocational training or in an institution of higher learning. Georgia also announced plans to apply for a reinsurance waiver to reduce insurance premiums in the state by helping cover high-cost health insurance claims.

(Source: Fierce Healthcare, Georgia seeks partial Medicaid expansion that includes work requirements, November 4, 2019)

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New legislation would add telehealth services to Medicaid coverage

On October 30, lawmakers in the House and Senate introduced bipartisan legislation to expand Medicaid coverage to include telehealth services. The Creating Opportunities Now for Necessary and Effective Care Technologies (CONNECT) for Health Act builds on previous versions of the bill to improve access to care and address rising health care costs. If enacted, the legislation would allow the US Department of Health and Human Services (HHS) to waive telehealth restrictions based on geography or the type of service provided. HHS could also find new ways to expand access to telehealth services so that more patients can receive care in their homes or from approved telehealth locations within their community, such as rural health clinics or federally-qualified health centers (FQHCs).

The CONNECT bill is supported by more than 100 health care organizations, including the AMA and the American Hospital Association (AHA). The legislation would help remove some of the systemic barriers that have stalled widespread adoption of telehealth and could help to address the growing physician shortage in the US.

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Fourteen hospitals, health systems invest $700M to fight health disparities

Fourteen US hospitals and health systems have pledged a total of $700 million to address the economic, environmental, and social disparities that can lead to poor health outcomes. The new investments include projects in communities, such as financing for affordable housing, new grocery stores, and child-care services. The participating providers will have five years to implement the projects using the money they’ve set aside for community development. Participating researchers will collect initial data, such as the number of jobs or housing units created, and then analyze changes in health outcomes. During a recent webcast, Deloitte leadership discussed the role communities can play in transforming health systems—and improving the well-being of people in those communities.

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Breaking Boundaries

Have online patient portals helped boost preventive services?

People who use online patient portals are more likely to keep up with their recommended preventive services, including flu shots, and screenings such as blood pressure and cholesterol. Health systems use patient portals to provide patients with tools that help them manage their appointments, access their medical records, and contact their physicians. A study published in the October 2019 issue of the Journal of Medical Internet Research shows that patients who used a health system’s portal were twice as likely to get their blood pressure checked, and 50 percent more likely to get a flu shot and cholesterol screening. Recommended preventive screenings are critical for addressing common conditions such as diabetes, hypertension, and heart disease.

The study was based on data from 10,000 patients who were at least 50 years old. While the study showed an uptake in preventive services, it didn’t identify a significant correlation between portal use and chronic illness prevalence. However, the research team is planning a longer-term study that will examine the impact of online portal use on chronic disease.

The study also showed that people who use online portals are more likely to be Caucasian and have private insurance, compared to a group of non-users. Portal-users also tend to be younger and have higher incomes than non-users. The authors noted that more work needs to be done to encourage patients from a wider range of populations to access patient portals.

RELATED: Deloitte's recent publication, Medicaid and digital health, explores how states and Medicaid agencies might integrate digital strategies into their outreach and engagement initiatives. It found that most adult Medicaid beneficiaries own mobile devices. They use their devices for health purposes and say they are interested in trying new digital health applications in the future.

Adult Medicaid beneficiaries differ from people who have private insurance—Medicaid members generally have lower incomes, fewer years of formal education, and are more likely to have social needs related to unstable housing, employment, and food security. However, when it comes to the adoption of digital technology, such as smartphones and tablets, the survey found that the Medicaid population mirrors other groups. Eighty-six percent of adult Medicaid beneficiaries own smartphones, and 69 percent own tablets, which is nearly identical to the general adult US population. While 29 percent of Medicaid beneficiaries report owning a wearable device, the rate is lower than that of the general population (39 percent).

(Source: Amy Kaplan, Penn Medicine study finds online patient portal users are more likely to get flu shots, The Daily Pennsylvanian, October 16, 2019)

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