Further Medicare Cuts Could Cut off Healthcare Innovation says Kindred CEO

If Medicare payments to providers remain unstable, their ability to reduce costs through innovative ways to coordinate care could fail, according to testimony from Paul J. Diaz CEO of Kindred Healthcare during a Senate Finance Committee hearing earlier this week. 

“The problem from a care perspective is that as patients move from the acute care hospital to multiple post-acute settings there isn’t anyone, particularly physicians, who are responsible for coordinating care and driving the outcomes throughout the patient’s entire episode,” said Kindred dude.

The lack of coordination between providers creates a “silo” based delivery system that is inefficient for all parties involved. Through Kindred’s network of companies, it has been able to test new models of how to deliver the continuum of post-acute care in local communities. 

“We have discovered in testing these models that no one approach will fit every situation and every community,” he said. “The adage that “all health care is local” is especially true when considering how to transform the system and make care and payment more integrated.”

Kindred and its partners set up Joint Operating Committees to establish a formal mechanism to identify shard goals and strategies and improve overall care. As a result patient length of stay has dropped significantly between 2008 and 2011. According to Kindred data, patient length of stay has dropped at Kindred LTACs and Skilled Nursing and Rehabilitation Centers by 12% and 27% respectively.

“This is better for patients as they are able to return home sooner and it also lowers cost to the system by reducing length of stay,” he said.

But these new innovative methods could all be put in jeopardy if Congress continues to adjust payment rates and create more uncertainty in the future. In 2013, Congress is required to implement a 2% sequestration cut to Medicare payments and it would continue for another 10 years. 

“Innovation requires stability, and more payment cuts will cause a level of instability that I fear will prevent the kind of innovation needed to transform our healthcare system,” he said.

Diaz also suggested that post acute providers have aligned incentives to reduce hospitalizations and re-hospitalizations. 

“Acute hospitals are already incentivized by the payment system to address this important issue. I see no reason why post-acute providers should not also have “skin in the game” so that interests are aligned,” he said.

Written by John Yedinak

John Yedinak

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