Providence Health & Services in Oregon optimizes value-based care

Left,  Aaron Rust, executive director of Providence Medical Group and Chris Pizzi, chief executive of the Southern Oregon Service Area for Providence Health & Services. 

Photos: Courtesy of Providence Health & Services

Value-based care has long been the goal, but becomes more than aspirational when the majority of patients are paying through Medicare and Medicaid.

Providence Health & Services in Medford, Oregon has a payer mix of 60% Medicare and 20% Medicaid, according to Chris Pizzi, chief executive of the Southern Oregon Service Area. 

This means 80% of Providence Medford Medical Center's reimbursement is based on fee-for-service Medicare, Medicare Advantage and Medicaid. All pay less than the more lucrative commercial-based health insurance.

This is when risk-based contracts become a financial lifeline, Pizzi said.

"The payers mix in southern Oregon is challenging," Pizzi said.

The southern Oregon service area is about the size of Connecticut and has an estimated half a million people. The city of Medford is the most populated, with people coming in from more rural areas in Jackson County.

Other than the payer mix, financial challenges include the much maligned 2.9% rate increase for Medicare in the Inpatient Prospective Payment System  for 2025 and inflation rising faster than what Medicare is paying.

"The government doesn't raise their rates that high … inflation is tracking at 9%," Pizzi said.

He and his team looked at what they could do to make hospital finances sustainable.

Competition was also a factor, with the Asante health system just three miles away. 

"We made an intentional decision," Pizzi said, "let's work with our medical group."

They turned to risk-based contracts and set high targets for coordinated care between acute care and ambulatory care through its medical group.

"It's been given some aggressive targets to hit," said Aaron Rust, executive director of Providence Medical Group.

WHY THIS MATTERS

Many of Providence's risk-based contracts, and the largest, are through the Medicare Shared Savings Program.

The highest risk option available in MSSP allows accountable care organizations to share in 75% of shared savings or losses, according to the National Association of ACOs.

Providence Medical Group is a multispecialty group of 1,200-plus caregivers and more than 500 providers.

Value-based care dollars represent 20-25% of the total revenue for the primary care medical group, Rust said. It now represents a third of operating revenue. 

"We've grown the value-based care pie," he said. "It's been a critical component for us and a component to improve the financial picture."

Headwinds included watching payers ratchet up thresholds and requirements to tap into value-based care dollars.

The provider took a financial hit when it participated in the Primary Care Plus model from the Centers for Medicare and Medicaid Services. Patient experience was a hurdle, at a time when primary care access is a challenge throughout the country, Rust said.

The work to overcome these challenges focused on optimizing higher margins in perioperative services and improving caregiver engagement and patient progression. All helped to reduce cost. 

Rust said his team does a lot of outreach whenever a patient is discharged. Under this transition care management, a patient sees a primary care physician within 14 days of discharge. 

"When we connect patients with a care management team, we are actually able to reduce readmission rates," Rust said. 

In comparisons between patients who get the transition care management support to those that don't, Rust found almost a 50% reduction in readmission rates. 

"From a financial standpoint, it's a huge cost savings," Rust said.

Quality metrics are translated to the team "in a way that resonates," Rust said. For instance, screenings for colorectal cancer, breast cancer and hypertension are quantified into the number of preventable deaths.

Margins have improved significantly since a low point in 2021, according to Pizzi.

Pizzi and Rust recommend having a clear understanding of payer contracts to see where risk can be tried. Robust data is critical.

Also, there should be a strong partnership between hospitals and medical groups. Physician leadership is critical to drive culture change and buy-in. Financial incentives must align with physician interest. From there, work and operational changes will follow,  they said.

THE LARGER TREND

Providence Health & Services in Oregon is part of Providence St. Joseph Health, which was formed in 2016 when Providence Health & Services merged with St. Joseph Health.

Providence St. Joseph operates more than 50 hospitals and 800 clinics in seven states: Alaska, California, Montana, New Mexico, Oregon, Texas and Washington. 

Providence is the third-largest Catholic, not-for-profit health system in the United States, with a mission to serve everyone, especially those who are poor and vulnerable, according to Pizzi.

The Centers for Medicare and Medicaid Services has the goal of having all Medicare fee-for-service beneficiaries and the majority of Medicaid beneficiaries in an accountable care relationship within six years. 

Email the writer: SMorse@himss.org