2021 kicked off with the news that CMS decided to phase out the inpatient-only (IPO) list over the next three years. That timeline gives hospitals and health systems some room to prepare, but we’re advising our clients not to get too comfortable — the AHA has flagged this decision as a threat to both patient safety and already precarious hospital finances. 

Still, the cuts to the list are moving forward, leaving hospitals navigating a range of challenges — like the two-midnight rule and heightened competition concerns since physicians will refer more patients to their own ASCs. But there’s definitely hope for hospitals who want to prepare for the coming shift in patient volumes and thrive in their financial decision-making. 

Develop Ad Hoc KPIs

The shift toward the ASC is going to require a fresh look at your metrics and a push for organizational alignment. 

Most hospitals will need to start by building consensus around what KPIs will work best as the IPO list is phased out. Right now, it’s likely that you’re dealing with multiple silos — departments maintaining their own KPIs — so bridging the gap to managerial alignment will be a challenge. Much of your success will depend on building insight for both individual department managers and the executive team — a step that will require eliminating shadow systems and making sure that everyone is pulling from the same data source when they’re looking at statistics. 

Keep in mind that this is a learning process. There will be many people in your organization who think a stat is just a stat, but there’s a lot that goes into how that statistic is constructed. 

A focus on clean, honest data will be a critical asset in shaping your success. This will be true for organizations that are tracking shifts away from IP service lines, but also those who need insight into shifts from IP to internal ASC services. 

Hospitals should consider metric pipes like:

  • Utilization
  • Productivity
  • Financial ratios

We’ve definitely seen hospitals make the jump successfully. We have one client developing an administrative KPI tool (Heads Up Displays) by taking metrics from multiple areas across the hospital and combining them into a dashboard that their senior management team can review. They now have insight across the entire enterprise — hospitals, physician groups, clinics — and all aspects of operations. 

Focus on Efficiency

The shift away from the IPO list is happening at the same time the long-term effects of the COVID-19 pandemic are playing out. The financial and administrative burden will be long lasting, meaning the cost of inefficiencies will only increase. 

Hospitals will see a tangible benefit from building productivity-focused systems that identify areas of opportunity — systems that support processes and leverage data to make and measure change. These systems should highlight the high-value areas for improvement and flag them for action. 

This is one of the reasons we’ve been making new updates to our labor and productivity modules to facilitate measurement against established standards and targets. Hospitals will need to closely track how they’re applying resources to populations and forecasted populations to minimize and eliminate waste and duplication.

Quantify Shifts in Patient Behavior

One of the most fundamental steps hospital leadership will take in responding to the IPO phase out is taking a deep dive into quantifying shifts in patient behavior. 

Understanding patient utilization will be more important than ever — that’s in terms of understanding current trends and forecasting future scenarios. Leadership will need the ability to tie these insights to financial performance, integrating cost and patient utilization data and analyzing profitability from multiple angles as they navigate this shift in their service lines. 

Navigating the IPO list will be a unique journey for every organization. To discuss how to leverage healthcare data to improve your response to this CMS announcement, schedule a call here.