3 Secrets to Ochsner Hospital System Success

This video provides an in-depth exploration of Ochsner Health System's remarkable success in simultaneously lowering healthcare costs and improving patient care quality. Dr. Eric Bricker, the speaker, highlights Ochsner's strategic shift from a reactive, fee-for-service model to a proactive, value-based approach, driven by their unique payer mix in the Gulf South region. The core message revolves around three "secrets" that enabled Ochsner to save $56 million in one year for 500,000 patients, re-investing $45 million into provider bonuses, while achieving significantly better health outcomes for chronic conditions like diabetes and hypertension.

The presentation details Ochsner's methodology, starting with a deliberate effort to reduce costly ER visits and inpatient hospitalizations by moving care into outpatient settings. This involved leveraging data and analytics to identify specific patient populations and pathologies, establishing strong primary care relationships for behavior modification and chronic disease management, and ensuring seamless outpatient care coordination. The second secret involves Ochsner taking on financial risk for the total cost of care for their patient population, effectively "owning" the entire care continuum. This allowed them to capture savings from reduced hospitalizations and increase their overall revenue by efficiently managing a larger patient panel in less expensive outpatient environments.

The third and most impactful secret is Ochsner's success in actively decreasing pathology—preventing disease, suffering, and death. The video cites impressive statistics: 88% of diabetic patients achieved controlled A1c levels (compared to a national average of 50-60%), and 85% of hypertensive patients had controlled blood pressure (versus a national average of 20%). This proactive disease management directly led to fewer heart attacks and strokes, demonstrating that financial incentives can align with dramatic improvements in patient health. Dr. Bricker emphasizes that Ochsner's innovation was spurred by a necessity born from a predominantly Medicare and Medicaid patient base, which offers significantly lower reimbursement rates compared to commercial insurance, forcing them to find efficiencies that other systems, cushioned by high commercial reimbursements, often avoid.

Key Takeaways:

• Strategic Shift to Outpatient Care: Ochsner's first secret involves a deliberate strategy to decrease ER visits and inpatient hospitalizations by shifting care to proactive, outpatient settings. This includes using data and analytics to target specific populations and pathologies, strengthening primary care, and enhancing outpatient care coordination.
• Embracing Financial Risk for Total Care: The second secret highlights Ochsner's willingness to take on financial risk for the entire patient population's care. This "total cost of care" model allows them to benefit financially from efficiencies and improved outcomes, contrasting sharply with the traditional fee-for-service model where revenue increases with more procedures and hospitalizations.
• Prioritizing Disease Prevention (Decreasing Pathology): Ochsner's ultimate success stems from its focus on preventing disease rather than just treating it more efficiently. By improving the control of chronic conditions like diabetes and hypertension, they reduced the incidence of severe events like heart attacks and strokes, leading to better patient health and lower overall healthcare costs.
• Significant Cost Savings and Reinvestment: Through these strategies, Ochsner achieved $56 million in cost savings in one year for 500,000 patients. A substantial portion ($45 million) was reinvested as bonuses for doctors and other healthcare providers, aligning financial incentives with quality and efficiency.
• Dramatic Improvement in Chronic Disease Management: The system demonstrated exceptional clinical outcomes, with 88% of diabetic patients achieving controlled A1c levels (compared to a national average of 50-60%) and 85% of hypertensive patients having controlled blood pressure (versus a national average of 20%).
• Data and Analytics as a Foundation: Ochsner utilized data and analytics to identify and target specific individuals and populations for proactive intervention, underscoring the critical role of data-driven insights in modern healthcare optimization.
• Payer Mix as an Innovation Catalyst: The video posits that Ochsner's innovation was largely driven by its challenging payer mix, with a high proportion of lower-reimbursing Medicare and Medicaid patients. This financial pressure forced them to find new ways to deliver care efficiently, unlike systems reliant on high commercial insurance reimbursements.
• The "Peter Drucker" Principle in Healthcare: The speaker invokes Peter Drucker's quote, "It is completely useless to do more efficiently what should not be done at all," to emphasize that true healthcare innovation lies in preventing pathology rather than just optimizing the treatment of existing diseases.
• Increased Revenue Through Efficiency: By being more efficient and effective in outpatient care, Ochsner was able to care for a larger panel of patients, increasing its total revenue despite decreasing the cost per patient. This demonstrates that financial success can be achieved through improved health outcomes and expanded patient reach.
• Implications for the Broader Healthcare Ecosystem: Ochsner's model challenges the status quo of many hospital systems that remain reactive due to the financial cushion of high commercial reimbursements. It suggests a path for aligning financial incentives with patient health outcomes, which has significant implications for how pharma, medical device, and other life sciences companies engage with healthcare providers.

Key Concepts:

• Fee-for-Service: A traditional payment model where providers are paid for each service they perform (e.g., office visit, test, procedure).
• Value-Based Care: A payment model that rewards healthcare providers for the quality of care they provide, rather than the quantity of services. It often involves taking on financial risk for patient outcomes.
• Pathology: The study of disease; in this context, refers to the presence and progression of disease.
• Hemoglobin A1c: A blood test that measures a person's average blood sugar level over the past 2-3 months, used to monitor diabetes control.
• Hypertension Control: Managing high blood pressure to keep it within healthy limits, crucial for preventing heart attacks and strokes.
• Medical Loss Ratio (MLR): The percentage of premium revenue that an insurance company spends on medical care and quality improvement activities.

Examples/Case Studies:

• Ochsner Health System: A large health system in New Orleans, Louisiana, and across the Gulf South, with over 40 facilities, serving 500,000 patients. The video details their specific strategies and outcomes in transitioning to a value-based, proactive care model.