MHA FPX 5014_Stoycoff_Joshua_Assessment 3_Attempt 1

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Jan 9, 2024

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1 Cost-Benefit Analysis for Transitional Management Care Joshua Stoycoff Capella University Health Care Quality, Risk, and Regulatory Compliance Dr. Pamela Meares Assessment 3 December 2023

2 Abstract Transitional care management (TCM) is the patient's transition from being discharged from the hospital to continuity of care in the community. A cost-benefit analysis (CBA) will be conducted to demonstrate the cost of the TCM program, and the benefit-to-risk ratio will be analyzed. Firstly, the benefits and objectives of the TCM in a hospital setting include but are not limited to the following. A reduction in patient readmissions, increased quality of care outside of the hospital setting, continuity of patient care, and long-term health for patients discharged from the hospital (Elsener et al., 2023). The CBA is an essential tool to determine the risks versus the benefits cost of the TCM. Lastly, the CBA is used to identify the anticipated costs of the TCM implementation over five years. With the cost-benefit analysis over five years, the program's benefits can be compared with the projected costs of the TCM, alluding to the best decision following the completion of the CBA (Elsener et al., 2023). Keywords: Transitional Care Management, Cost-Benefit Analysis, Continuity of Care, Readmissions, and Center for Medicare and Medicaid Services. Focus of Stakeholders for a Cost-Benefit Analysis Firstly, it is essential to identify the stakeholders concerning TCM from a hospital setting. The most important stakeholders to consider are the patient and their caregivers and the hospital discharging the patient. Secondly, external stakeholders include pharmacists, care management at the transitional care center, payors, and community service agencies. The hospital organization and stakeholders focus on determining how the implementation of TCM will benefit the patients upon discharge and lower readmissions versus the program's costs over five years. Additionally, patients in TCM will be discharged from the hospital with an established caregiver or facility that will provide seamless care and treatment. Once back in the community,

3 patients will have oversight by external medical professionals to bridge the gap from inpatient services to outpatient services either in an external facility or with a professional caregiver at the patient’s home. Lastly, hospitals can benefit from the Centers for Medicare and Medicaid (CMS) Hospital Readmission Reduction Program (HRRP) established in 2012. Under the HRRP, hospitals adopting a TCM program and reducing readmissions 30 days following discharge will benefit financially. As a result, the cost-to-benefit ratio will likely favor the TCM under the HRRP (CMS, 2021). Value Proposition for Change Management Anytime change is initiated in a healthcare organization; challenges can arise that require systematic strategies and approaches to ensure smooth transitions with minimal roadblocks. Change management is used to assist professional organizations during internal transitions or transformations. Change management is essential in the TCM as it is novel to healthcare organizations, providers, patients, and staff members. Change management requires administrative support, financial support, provider support, and team collaboration. Additionally, change management will help ensure a smooth internal and external transition with patients, family members, caregivers, team members, and healthcare providers while initiating TCM in the healthcare organization. Building partnerships in the community through change management initiating TCM in healthcare organizations will highlight the benefits of TCM (Nathan et al., 2021). TCM partnered with change management strategy will prove valuable as it increases the quality of patient care and satisfaction in the hospital and, upon discharge, for short and long- term care. Consequences for not utilizing change management can result in prolonged transition time, increased costs for long-term patients, and the inability to provide optimal long-term care

4 to discharged patients, resulting in increased readmission to the hospital. Mitigated risks are lower mortality and infection rates for discharged patients, fewer emergency room visits, and reduced readmissions. Lastly, the TCM initiative will reduce costs via readmissions while also improving financial incentives and rewards under the CMS HRRP program by decreasing 30-day readmissions (Nathan et al., 2021). Strategies to Influence and Impact the Changes for Quality Improvement Recent research shows that poor communication and coordination are the primary contributors to preventable hospital admissions and readmissions. Additionally, when considering TCM models, hospitals that don’t have the TCM model have poor or no patient coordination efforts upon discharge, higher readmission rates, higher mortality rates, infection rates, and long-term illnesses. Additionally, the lack of the TCM model demonstrates a lack of patient education, self-care, family involvement, little or no communication with external caregivers, and poor or inadequate continuity of patient care post-discharge ( Racheal & Shen, 2023). Firstly, the success of the TCM model requires strong leadership and support. Leaders who are actively involved can provide oversight and direction to ensure strategic momentum and accountability during the initiation and execution of TCM in the healthcare organization. The initial strategy for quality improvement under the TCM model and initiative is ample communication and coordination internally and externally, which stems from leadership. Secondly, follow-up care for patients discharged from the hospital needs communication from the TCM coordinators within 14 days to ensure proper patient care is rendered. Lastly, providing a culture of safety and improvement must be a primary strategy when implementing the TCM model (Hughes, 2008).

5 Cost-Benefit Analysis and Assumptions A cost-benefit analysis is needed to project the hospital organization's assumed costs for a TCM program. Given that the TCM is essentially a service-based care model, the return on investment (ROI) for the TCM program is challenging to project. Research highlights the immediate benefits and potential cost savings of the TCM program through fewer readmissions in 30 days following discharge, higher patient satisfaction rates, greater communication efforts, and better continuity of care internally and externally. Initially, the CBA will allude to the initial cost of implementing the TCM program in a standardized hospital setting beginning in the current year, 2023 through 2028 (Pedrosa et al., 2022). The annual cost for the first year of initiating the TCM program comes to $774,688.00. The estimated cost includes the workspace needed on a lease of 1,000 square feet of clinical and office space priced at $20/sq ft = $20,000. Next, staffing of 4 full-time Certified Family Nurse Practitioners (CFNP) with an annual salary of $123,172 for each CFNP with a total of $492,688.00; this also includes a 10 percent increase in the overall salary budget annually until year 5. Additional non-clinical staff required for the TCM operation comprises three staff members to assist with administration duties such as fielding phone calls, documentation, collaboration, organization, scheduling, and other related tasks. Each non-clinical staff member’s salary will be 38K, totaling 110K (Salary.com, 2023). The non-clinical staff members will receive a 2.5 percent salary increase each year, assuming satisfactory performance markers. At year five's end, the estimated salary will equal 123K. The established electronic health record system, EPIC, will be utilized and accessible to all staff members. The contract agreement and the initial setup for each National Provider Identifier

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