Funds can be used to support development of new business models, reduce avoidable hospitalizations The Delivery System Reform Incentive Payment (DSRIP) Plan may provide New York State healthcare providers significant financial assistance in transforming their care delivery and business models to achieve the State’s goal of reducing avoidable hospitalizations, however, a majority of healthcare entities are unsure how to best use these funds, according to a recent poll conducted by KPMG LLP, the U.S. audit, tax and advisory firm.
The KPMG poll, conducted on March 20th, 2014, found that nearly half of the 90 respondents polled (49 percent) indicated that they have not determined how they would use these Medicaid safety net funds. Of those that have considered how they would use the funds, 38 percent indicated that they would leverage the funds to develop population health management programs, address outpatient and chronic disease treatment gaps, construct integrated delivery networks and implement care management and transition programs.
“Transforming our care delivery system and business models, providing care in the most appropriate settings and reducing volume in today’s fee-for-service environment is a tall task,” said Joe Kuehn, an advisory Partner in KPMG’s Healthcare & Life Sciences practice based in New York. “But by strategically allocating the Medicaid funds and working with New York State, healthcare providers can create incentives and payment methodologies that will improve the way quality healthcare is delivered to some of our most vulnerable populations.” Kuehn further added, “Healthcare providers will be wise to leverage this assistance to develop new care delivery and business models that are more in line with today’s market demands.”
DSRIP funds will make a difference on “avoidable” hospitalizations
A key reason for the establishment of DSRIP is to address an issue that burdens New York’s Medicaid infrastructure to the tune of $1.2 billion - avoidable inpatient utilization – and 80 percent of respondents agree that avoidable hospitalizations have an impact on New York’s hospital system. Among those, 39 percent described the impact of avoidable hospitalizations as “significant.”
“Research from New York State shows that up to 16 percent of all Medicaid hospital admissions could be avoided if the right care were provided at the right setting,” said Marc Berg, M.D., a principal at KPMG who leads the firm’s Healthcare Strategy Transformation Practice. “When you add the number of avoidable emergency room visits, which the state estimates at nearly 60 percent, you get a complete picture of just how much impact this program is intended to have on New York’s healthcare infrastructure.”
KPMG’s survey found that 40 percent of respondents estimated their avoidable hospitalization numbers were between 11 and 20 percent, in line with the state’s assessment. Eighteen percent, on the other hand, believed that the avoidable hospitalization rates were above 30 percent.
DSRIP’s impact on primary and ancillary care
Combined, 47 percent of those polled listed insufficient number of primary care staff and lack of access to appropriate sites of service as the greatest challenges on delivering quality care to New York patients. Thirty seven percent felt Medicaid and Medicare cuts were the biggest hurdle, while 18 percent believed regulatory and legal obstacles posed the biggest challenge.
Along with its goal to reduce the number of avoidable hospital admissions, DSRIP will attempt to ensure all Medicaid members have access to vital services. The program plans to invest heavily on primary and community care, medical and healthcare homes and care coordination upfront, with optimizing the gatekeeper function of primary care and focusing on inpatient and acute care further down the spectrum.
Overall, providers are optimistic that DSRIP will have a positive impact on the way healthcare is delivered in New York. Nearly three-quarters of respondents believe it will have a positive impact. Thirty six percent describe it as “significantly positive.”
“Ultimately, providers must allocate these new found resources toward programs that are substantial and transformative in nature,” concluded Dr. Berg. “To be successful, healthcare provider executives must think creatively and strategically on where to allocate DSRIP funding so that they effectively address the needs of the populations that they serve, the nature of the system they operate and - looking towards the future - the capability and infrastructure to take on risks.”
About the study
KPMG LLP conducted a webcast on March 20, 2014 and included a series of survey questions pertaining to DSRIP preparation. Responses were gathered from healthcare providers in New York, mostly affiliated with community and state hospitals and health systems; large physician groups and nurses. The survey was launched at the conclusion of each webcast.
About KPMG Healthcare & Life Sciences
KPMG LLP is a leader in healthcare convergence, assisting organizations across the Healthcare and Life Science ecosystem to work together in new ways to transform the business of healthcare. With more than 1,500 U.S. partners and professionals supported by a global network of in 150 countries, we offer a market leading portfolio of tools and services focused on helping our clients adapt to regulatory change; design and implement new business models, and leverage technology, data and analytics to guide them on their path to convergence. A replay of each webinar can be found by clicking here.
About KPMG LLP
KPMG LLP, the audit, tax and advisory firm (www.kpmg.com/us), is the U.S. member firm of KPMG International Cooperative (“KPMG International”). KPMG International’s member firms have 155,000 professionals, including more than 8,600 partners, in 155 countries.