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HPC Looks At Hospital Grants & Possible Lahey/Winchester Hospital Merger

HPC Planned Actvities for 2014

HPC Looks At Hospital Grants & Possible Lahey/Winchester Hospital Merger

April 21, 2014

The Health Policy Commission (HPC) board met on Wednesday, April 16 to cover a wide range of issues that included an update on patient-centered medical home standards, planning around behavioral health integration, cost and market impact reviews, and Phase 2 for the Community Hospital Acceleration, Revitalization, & Transformation (CHART) Investment Program. Slides from the meeting can be found here. Keep reading for all the details.


Executive Director David Seltz first gave his report on upcoming Committee and Board meetings and an overview of the 2014 expected activities at the HPC (slides 5-6).  Next Commissioner Carole Allen, Chair of the Care Delivery and Payment System Transformation (CDPST) Committee, provided an update on the development of the Patient-Centered Medical Home (PCMH) Certification Program. After releasing proposed PCMH certification criteria, the CDPST Committee held a listening session on March 18, 2014 and accepted written comments during a public comment period from March 5 – April 4, 2014.  Almost 40 organizations provided written feedback on the criteria (all written comments can be downloaded here).  Feedback from the public comment period and listening session included suggestions for program design, measurement and validation, payer engagement and stakeholder involvement (slides 9-10). As next steps, the CDPST Committee will revise the criteria for PCMH certification based on feedback and public comment and propose measures and validation tools for criteria for public comment and stakeholder engagement (slide 13).

Next up was an update from the Quality Improvement and Patient Protection (QIPP) Committee. Commissioner Marylou Sudders, QIPP Committee Chair, reported on a joint meeting of the QIPP and CDPST Committees that took place on April 9, 2014 to further discuss behavioral health integration and inform the HPC’s behavioral health agenda. During the meeting the Committees heard presentations from Judith Steinberg and Alexander Blount of UMass Medical School and Nancy Paull, CEO of Stanley Street Treatment and Resources (SSTAR), a nonprofit health care and social service organization (slide 15). The UMass Medical School presentation focused on national, regional and state-based behavioral health integration efforts, including the MA behavioral health integration landscape, as well as the different approaches and elements in existing behavioral health models. Nancy Paull’s presentation provided an overview of SSTAR’s comprehensive efforts to integrate primary care and behavioral health. The Committees are digesting this information, along with reviewing behavioral health integration efforts from the CHART Investment Program, PCMH program, Division of Insurance mental health parity oversight activities, and other state agency efforts, in order to articulate the behavioral health integration agenda for the HPC (slide 16).

Commissioner David Cutler, Chair of the Cost Trends and Market Performance (CTMP) Committee, then introduced the next Committee update.  Karen Tseng, Policy Director for Market Performance, provided an overview of the material change notices the HPC has received to date – with the highest frequency as physician group affiliation or acquisition, acute hospital acquisition and clinical affiliation – and a description of notices pending the HPC’s decision of whether to conduct a full cost and market impact review (CMIR) (slides 19-20). Tseng then provided a comprehensive overview of the preliminary report on the CMIR for Lahey Health System’s proposed acquisition of Winchester Hospital (slides 22-65). In examining the potential impacts on cost, care delivery and access, the HPC concluded the following:

  • Cost impact: For the four major commercial payers studied, the HPC modeled cost savings of up to $2.7 million per year as a result of potential decreases in Winchester Physician Associates physician process and shifts in utilization from higher-priced hospitals to Lahey facilities. However, these savings depend on the resulting system not raising its process relative to other providers, or adding facility fees.
  • Care Delivery Impact: The parties’ stated plan to improve clinical quality through the exchange of best practices demonstrates potential for improving care delivery and health outcomes. However, given Lahey and Winchester’s strong overall quality performance, and their established experience managing populations through risk-based payments, it is unclear how this transaction is instrumental to raising their existing care delivery performance.
  • Access Impact: Lahey proposes to integrate behavioral health services into some Winchester physician practices in 2015. At the same time, Lahey and Winchester have not proposed specific changes in hospital services that would cause the HPC to anticipate changes to their existing inpatient service mix and payer mix trends.

The HPC Board voted unanimously to approve and authorize the issuance of the preliminary report on the CMIR of the proposed acquisition. As next steps, Lahey Health System and Winchester Hospital have 30 days to respond to the HPC’s findings and then the HPC issues a final report. The parties may not close the transactions until at least 30 days following the issuance of the final report.

Next on the agenda was an update from the Community Health Care Investment and Consumer Involvement (CHCICI) Committee. Commissioner Paul Hattis, CHCICI Committee Chair, began by reflecting on the recent closure of North Adams Hospital, which was also a CHART grant recipient, and what HPC can or should do to prevent future closings.

Iyah Romm, Director for System Performance and Strategic Investment, then gave an update on the status of the CHART Phase 1 projects. HPC staff are deeply engaged with the CHART grant recipients – conducting site visits and regular monthly calls, coordinating efforts of teams at different CHART hospitals involved in similar efforts, and doing ongoing coordination of CHART activities with key state agency and other partners (slide 69). HPC staff has also conducted a survey to assess the Phase 1 application process from CHART hospitals’ perspective to inform the Phase 2 process, focusing on issues such as clarity and ease of use of application materials, the revision process and timeline (slide 70). 

After reviewing the landscape of key market events involving CHART hospitals (slide 71), Romm turned to the CHART evaluation and Phase 2 framework. Key decision points for Phase 2 include the size of the total opportunity, structure of funding tier(s) and caps, specificity of project focus, funding model(s), how to ensure accountability, leveraging partnerships, and connection with future phases. Romm outlined some competing aims and pressures the HPC staff has faced in developing Phase 2, such as whether CHART should prioritize evidence-based interventions or innovative emerging approaches (slide 74). The CHCICI Committee’s proposed approach includes balancing such opportunities across the risk/impact spectrum. HPC staff has also grappled with how CHART should reconcile broad statutory and regulatory goals with the opportunity for focused, deep impact. To maximize impact, the CHCICI Committee discussed a narrow set of proposal aims for deep impact, only including aims likely to reduce health care cost growth. Romm then discussed the potential models for spreading investments across CHART hospitals. From the $50-60M investment pool for Phase 2, the investments could include few large awards, tiered awards, or many small awards (slide 75). From the Commissioners’ discussion, general consensus appeared to center on a tiered approach, with innovative, larger grants as the model, combined with some smaller grants when meaningful.  Romm outlined the standardized aims for Phase 2 (maximize appropriate hospital use, hospital-wide process improvement, and enhancing behavioral health care), while emphasizing the flexibility around hospital approaches (slides 76-77). He illustrated three examples of how hospitals can combine programs to reduce unnecessary utilization with efforts to improve operational efficiency, quality and connectivity (slides 78-80). Romm concluded with reviewing the timeline for the Phase 2 application process and information to date on the key decision points for Phase 2 (slides 81-82).

The meeting ended with some administrative details. The Commission voted to engage "Safe and Reliable Healthcare" (love that name!) after a competitive bidding process to assist with the implementation and evaluation of the CHART grants. The most interesting task will be running a "Leadership Academy" for the hospitals, including a 1-2 day leadership session on data, best practices, and areas for improvement. The contract will be for up to $525,000. The Commission also voted to add $100,000 to its contract with Bates White, who assists them with market reviews. Finally, Seltz announced that the Commission is in the final stages of negotiating a lease for new office space in downtown Boston, as the China Trade Building they share with CHIA is going to be redeveloped. The new space will contain their own meeting room for committee meetings and public hearings. The Board voted to authorize the signing of a lease.

    -Alyssa Vangeli