Transcript Value in Mental Health Services

Discussion with the NJ Mental Health Planning Council
Tom Pyle, January 10, 2013
www.psychodyssey.net
1
2
Police encounters
Arrests
Calls to Crisis Center
Hospitalizations
Outpatient programs
Court appearances
Prescribing psychiatrists/APNs
Diagnoses
Meds changes
Outside Therapists
Group sessions
Institutional case managers
Ambulance rides
5
1
3
10
3
1
14
3
over 10
2
Innumerable
12
6
3
C re
2
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9
9
$5 650
v id
6
$1 8
sp
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42
$8
$5
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dA
4
5
6
7
8
9
10
“…almost complete lack of understanding of
how much it costs to deliver patient care,
much less how those costs compare with the
outcomes achieved.”
Robert Kaplan & Michael Porter
11




Access?
Availability?
Equity?
Cost containment?
VALUE for the Consumer
12
The regard that something is held to deserve; the
importance, worth, or usefulness of something: your
support is of great value

the material or monetary worth of something

the worth of something compared to the price
paid or asked for it
13
14
𝑂𝑢𝑡𝑐𝑜𝑚𝑒𝑠
Value =
𝐶𝑜𝑠𝑡𝑠
15



Multidimensional
By steps…
Over time…
16
17

Complex delivery
 Many resources
 Each with different capabilities and costs

Fragmented delivery
 “Idiosyncratic” (i.e., “Individualized”)
 Highly customized “job shop”
18
Track the…
0f the…
used by the…
sequence and duration
clinical and administrative
processes
individual patient
𝑪𝒐𝒔𝒕 × 𝑻𝒊𝒎𝒆
Time-Driven Activity-Based Costing (TDABC)
19
Patient Jones’ outpatient visit…
Provider
Tasks
Time
Administrator
Check-in,
register,
document
payment
18 minutes
(0.3 hours)
Nurse
Take temp,
weigh,
take BP, prep
24 minutes
(0.4 hours)
Doctor
Direct exam,
consultation
9 minutes
(.15 hours)
Rate
Cost
20
Capacity Cost Rate = 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠 𝐴𝑡𝑡𝑟𝑖𝑏𝑢𝑡𝑎𝑏𝑙𝑒 𝑡𝑜 𝑅𝑒𝑠𝑜𝑢𝑟𝑐𝑒𝑖
for Resourcei
𝐴𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦 𝑜𝑓 𝑅𝑒𝑠𝑜𝑢𝑟𝑐𝑒𝑖
𝑪𝒐𝒔𝒕 × 𝑻𝒊𝒎𝒆
21
𝑪𝒐𝒔𝒕 × 𝑻𝒊𝒎𝒆
❶
Capacity Cost Rate = 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠 𝐴𝑡𝑡𝑟𝑖𝑏𝑢𝑡𝑎𝑏𝑙𝑒 𝑡𝑜 𝑅𝑒𝑠𝑜𝑢𝑟𝑐𝑒𝑖
for Resourcei
𝐴𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦 𝑜𝑓 𝑅𝑒𝑠𝑜𝑢𝑟𝑐𝑒𝑖
❶
Salary (nurse)
Supervision cost
Occupancy
(9 m2 x $1200/m2/yr)
Tech & support
$65,000
$9,000
$10,800
$2,560
Annual nurse cost
$87,360
Monthly nurse cost
$7,280
22
𝑪𝒐𝒔𝒕 × 𝑻𝒊𝒎𝒆
❶
Capacity Cost Rate = 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠 𝐴𝑡𝑡𝑟𝑖𝑏𝑢𝑡𝑎𝑏𝑙𝑒 𝑡𝑜 𝑅𝑒𝑠𝑜𝑢𝑟𝑐𝑒𝑖
❷
for Resourcei
𝐴𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦 𝑜𝑓 𝑅𝑒𝑠𝑜𝑢𝑟𝑐𝑒𝑖
❶
Salary (nurse)
Supervision cost
Occupancy
(9 m2 x $1200/m2/yr)
Tech & support
$65,000
$9,000
$10,800
$2,560
Annual nurse cost
$87,360
Monthly nurse cost
$7,280
❷
Start with
365 days
Less: w/e, vac’t’n,
holidays, sick, etc.
141 days
Available
224 days/yr
Available days (a)
18.7 days/mo
Start with
7.5 hours/day
Less: breaks,
meetings, etc.
1.5 hours
Available hours (b)
6.0 hours/day
Total Capacity (a x b)
~112 hrs/mo
23
𝑪𝒐𝒔𝒕 × 𝑻𝒊𝒎𝒆
❸
❶
Capacity Cost Rate = 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠 𝐴𝑡𝑡𝑟𝑖𝑏𝑢𝑡𝑎𝑏𝑙𝑒 𝑡𝑜 𝑅𝑒𝑠𝑜𝑢𝑟𝑐𝑒𝑖
❷
for Resourcei
𝐴𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦 𝑜𝑓 𝑅𝑒𝑠𝑜𝑢𝑟𝑐𝑒𝑖
❶
Salary (nurse)
Supervision cost
Occupancy
(9 m2 x $1200/m2/yr)
Tech & support
$65,000
$9,000
$10,800
$2,560
Annual nurse cost
$87,360
Monthly nurse cost
$7,280
❸
Nurse’s Capacity Cost Rate =
$7,280 -:- 112 hrs = $65/hr
❷
Start with
365 days
Less: w/e, vac’t’n,
holidays, sick, etc.
141 days
Available
224 days/yr
Available days (a)
18.7 days/mo
Start with
7.5 hours/day
Less: breaks,
meetings, etc.
1.5 hours
Available hours (b)
6.0 hours/day
Total Capacity (a x b)
~112 hrs/mo
24
𝑪𝒐𝒔𝒕 × 𝑻𝒊𝒎𝒆
Patient Jones’ outpatient visit…
Provider
Tasks
Time
Administrator
Check-in,
register,
document
payment
18 minutes
(0.3 hours)
Nurse
Take temp,
weigh,
take BP, prep
24 minutes
(0.4 hours)
Doctor
Direct exam,
consultation
9 minutes
(.15 hours)
Rate
Cost
❸
$65/hr
25
𝑪𝒐𝒔𝒕 × 𝑻𝒊𝒎𝒆
$84.50
Patient Jones’ outpatient visit…
Provider
Tasks
Time
Rate
Cost
Administrator
Check-in,
register,
document
payment
18 minutes
(0.3 hours)
$45/hr
$13.50
Nurse
Take temp,
weigh,
take BP, prep
24 minutes
(0.4 hours)
$65/hr
$26.00
Doctor
Direct exam,
consultation
9 minutes
(.15 hours)
$300/hr
$45.00
26
What is the proper unit?
All services and activities that jointly determine
success in meeting a set of consumer needs.
“Integrated practice units”
27

Separately for each condition
…with other conditions “risk adjusted”.

Not separately by department or billing unit
28
1.
2.
Select the condition
Define the care delivery value chain (CDVC)
29
30
31
1.
2.
3.
Select the condition
Define the care delivery value chain (CDVC)
Map each activity
32
33
1.
2.
3.
4.
5.
6.
Select the condition
Define the care delivery value chain (CDVC)
Map each activity
Obtain time estimates
Estimate resource supply cost
Estimate resource capacity; calculate
capacity cost rate
34
𝑪𝒐𝒔𝒕 × 𝑻𝒊𝒎𝒆
❸
❶
Capacity Cost Rate = 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠 𝐴𝑡𝑡𝑟𝑖𝑏𝑢𝑡𝑎𝑏𝑙𝑒 𝑡𝑜 𝑅𝑒𝑠𝑜𝑢𝑟𝑐𝑒𝑖
❷
for Resourcei
𝐴𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦 𝑜𝑓 𝑅𝑒𝑠𝑜𝑢𝑟𝑐𝑒𝑖
❶
Salary (nurse)
Supervision cost
Occupancy
(9 m2 x $1200/m2/yr)
Tech & support
$65,000
$9,000
$10,800
$2,560
Annual nurse cost
$87,360
Monthly nurse cost
$7,280
❸
Nurse’s Capacity Cost Rate =
$7,280 -:- 112 hrs = $65/hr
❷
Start with
365 days
Less: w/e, vac’t’n,
holidays, sick, etc.
141 days
Available
224 days/yr
Available days (a)
18.7 days/mo
Start with
7.5 hours/day
Less: breaks,
meetings, etc.
1.5 hours
Available hours (b)
6.0 hours/day
Total Capacity (a x b)
~112 hrs/mo
35
1.
2.
3.
4.
5.
6.
7.
Select the condition
Define the care delivery value chain (CDVC)
Map each activity
Obtain time estimates
Estimate resource supply cost
Estimate resource capacity; calculate
capacity cost rate
Calculate total cost
36
1.
2.
3.
4.
5.
6.
Organize system around patient
Measure outcomes and costs
Pay in “bundles”
Affiliate better (less all-service stand-alone)
Expand beyond narrow geographies
Build IT, but not for a broken system
37
38
39
40
41
42
43
44

…but not for an unreconstructed delivery
system!
45
Establish universal measurement and reporting
 Shift reimbursement systems  bundled

 Medicare to lead…

Remove obstacles to integration
 Stark Laws limiting referrals (“conflict of interest”)?
 Separate payments to hospitals and doctors?
 Illegal to hire a doctor as an employee?



Open competition
Encourage patient responsibility
Set standards and mandate EMR adoption
46
CHALLENGES…
OPPORTUNITIES…
Medical model
Localization (120 agencies)
Reimbursement rates
 Political barriers
 Length of “continuum”
 Individualization
 Scaling
 State v. Federal
 Excessive dehospitalization
 Funding limits






PsyR model
Wellness focus
Recovery ideal
 PACT team model
 Behavioral Health Homes
 Hospital consolidation
 Funding limits
 …
47
References
Kaplan, R. S., & Porter, M. E. (2011). How to solve the cost crisis in health care. [Article].
Harvard Business Review, 89(9), 46-64.
Porter, M. E. (2010). What is value in health care? New England Journal of Medicine, 363(26),
2477-2481. doi: doi:10.1056/NEJMp1011024
Porter, M. E. (2012). Value-based health care delivery [presentation to American Psychiatric
Association annual meeting, Philadelphia, PA, May 8, 2012]. Boston, MA: Institute for
Strategy and Competitiveness.
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
Big Think: http://bigthink.com/ideas/14761

Porter & Kaplan interviewed by HBR (9 mins):
http://www.youtube.com/watch?v=Y7HMHiv7xRg

Lecture at Center for Public Policy (90 mins):
http://youtu.be/Z3fKyWydweo
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