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Switch to Value-Based Model Saves California Hospital $7 Million


Henry Mayo Newhall hospital is a 357-bed acute care hospital located in Santa Clarita, California. With nearly 2,000 employees, the organization has continued to expand healthcare services to create the ideal patient-centered experience. With a Level II Trauma Center, an Advanced Primary Stroke Center and a number of other national designations, its dedicated teams have cared for patients in the Santa Clarita Valley area since 1975.

As the Henry Mayo leadership team began shifting to a value-based care model in 2017, a fragmented culture among physicians in the community posed a number of challenges.

Henry Mayo’s team set out to build a trusted partnership with clinicians that would result in increased collaboration, higher physician satisfaction scores, shared cost savings and patient retention.

To address the issues, teams successfully formed a clinically integrated network (CIN) and a Hospital Quality Efficiency Program (HQEP) contract, resulting in $7 million dollars saved during the first two years of the program, higher physician satisfaction scores and decreased 30-day readmission rates.

The Opportunity

Henry Mayo strives to provide the best quality of care to an aging population, and its physician teams – comprised of small practices, independent physician groups and other trusted partners – are an integral part of a patient’s journey. With physician satisfaction scores below the national median, leaders needed to reverse the trend with a standardized approach that would better facilitate collaboration and continuous quality improvements.

Leaders determined that in order to grow Henry Mayo’s offerings successfully – without sacrificing its core values of quality and teamwork – physicians needed a sustainable way to partner as one aligned team.

The natural progression, then, was toward a value-based care model that would enable teams to effectively manage patients and foster shared savings.

The Approach

As the hospital sought to engage physicians differently in a new model, it brought in Premier as a trusted partner to create a physician-led entity and an internally focused, value-based arrangement. Premier’s Provider Network Strategy team, comprised of thought-leading industry experts, worked closely with Henry Mayo and medical groups in the community to create a CIN and HQEP.

Premier’s consultants immediately identified performance improvement needs and utilized proven, data-driven approaches to build a successful physician network in Henry Mayo’s competitive healthcare market.

Key initiatives included:

  • Forming a CIN. In 2018, Premier facilitated the formation of the Henry Mayo Newhall Care Network. The Premier team recognized the first critical step toward a successful CIN was understanding the needs of community physicians and medical groups, and spent time understanding their needs and challenges. Within a period of just three months, more than 230 physicians joined the network.
  • Creating an HQEP contract. Henry Mayo developed a contracting strategy between the hospital and the newly formed CIN. Premier partnered closely to develop the new provider incentive payment model within the HQEP contract, establishing performance metrics dependent on cost savings and taking a global, patient-centered approach.
  • Leveraging data to achieve quality outcomes. Leaders tapped into Premier’s data analytics tools to establish aligned incentives among physicians. By applying benchmarking analytics early in the process, Henry Mayo’s teams also measured economic opportunities to lower costs.
  • Looking to the future as healthcare evolves. Premier designed the HQEP contract with incentive payment flexibility. Now, Henry Mayo can easily revisit the performance improvement metrics, funding sources and distribution model. The hospital can also make changes as it identifies new opportunities annually to improve and remain competitive with physician recruitment, positioning itself for success in value-based care.

The Results

Henry Mayo values its relationships with community physicians, and Premier’s implementation of a shared network model and a competitive HQEP contract enabled leaders to achieve the true physician-led partnership and competitive edge they were looking for.

  • By creating a platform to connect teams into one collaborative model, Henry Mayo improved its clinical efficiencies as well as its Press Ganey physician survey scores.
  • The contract approach incentivized physicians to improve standards of care, rewarding teams for providing an efficient patient experience. Specifically, Premier identified about $10.6 million in potential savings across three service lines: medicine, women’s health and surgery. With the implementation of cost-saving measures and a focus on reducing care variation among physicians, the HQEP generated $7 million dollars in shared cost savings in its first two years.
  • To realize millions in savings, Premier helped Henry Mayo evolve its approach to population health by leveraging data to identify high-cost patient conditions. The organization implemented new disease management programs for several complex diseases – including sepsis, chronic heart failure and chronic obstructive pulmonary disease – thereby decreasing its 30-day hospital readmission rates, reducing length of stay and driving down cost per inpatient case.

Learn how Premier consultants can enable your transition to value-based arrangements and build high-performing provider networks.

Looking for more? Find out how Premier's Physician Enterprise team helped University of Louisville Physicians grow visits by 10 percent and achieve $6 million in combined savings and revenue enhancements.

This content also ran in Modern Healthcare.

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