Economic, Market, Regulatory, and Organizational Feasibility of Care Pathway Standardization at Cleveland Clinic
Overview
This feasibility study analyzes the implementation of a system-wide care pathway standardization and Evidence-Based Management program at Cleveland Clinic. The paper examines economic and financial viability, payor mix implications, and the transition from volume-based to value-based care models, demonstrating how standardization can reduce costs while improving clinical quality and organizational efficiency.
What this case study covers
- Economic and Financial Issues: analysis of start-up costs, reimbursement challenges, and financial impact of care pathway standardization
- Payor Mix and Reimbursement: examination of Medicare/Medicaid proportions and how value-based models enhance bargaining power and reduce uncompensated care
- Program Benefits: projected outcomes including reduced variability in care, decreased readmissions, improved workforce productivity, and regional economic advantages
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Project Feasibility Study
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PART II: Economic, Market, Regulatory, and Organizational Issues
Economic and Financial Issues
The proposed program, a system-wide standardization of care pathways, the introduction of Evidence-Based Management (EBMgt) into the administrative decision-making process, and the implementation of the DECIDE method of changing the management, will help the Cleveland Clinic to address such fundamental issues as the transition to value-based care and geographic expansion and restructuring into institutes (Porter & Teisberg, 2019). These projects have high start-up costs as well as high economic costs over the long term.
The economic challenges significant to the program development are the continual strain of the decreasing fee-for-service reimbursement and the necessity to prove the value in terms of full-cycle results and cost management (Ross, 2021). In 2014, the Clinic had a 6.7 billion operating revenue, 466 million operating incomes, but had suffered charity care expenses of 211 million and persisted in making reimbursement changes that compensated volume instead of value (Porter & Teisberg, 2019). The multiple-site expansion within a short period of time exposed the company to the risk of dilution of the margins by not providing a consistent care pathway and utilizing the available resources in the community hospitals inefficiently. In the absence of standardization, the old volume-based incentives still clashed with the value-based models like bundled payment and ACOS.
The suggested program will have a beneficial effect on the local and regional economy of Northeast Ohio.