MHA 515 Week 3 Trends in Care Delivery and Outcomes Example

Surgery Leaves the Hospital, Payment Follows Results: Three Delivery and Outcomes Trends and What a Tucson System Should Do About Each

[Student Name]

University of Phoenix

MHA/515: Scanning the Health Sector as an Industry Expert

Week 3 Assignment

[Instructor Name]

[Date]

The health system, its data and decisions are composites written for a model paper; national findings come from the federal report and research cited.

At its annual strategy session, the board of a composite Tucson nonprofit with three hospitals asked the director of strategic planning a pointed question: which trends in how care is delivered and judged are we behind on? The environmental scan had named many forces. The director chose three that most directly affect the system's revenue and reputation and analyzed each with evidence. This paper presents that analysis.

Choosing Three

The director chose trends that met three tests: strong national evidence that they are happening, direct effects on the system's finances or quality and choices the system could make in the next two years. Surgery moving to outpatient centers, payment shifting toward shared savings and outcome-based penalties met all three.

Trend One: Surgery Leaves the Hospital

Procedures once done only in hospitals are moving to ambulatory surgery centers. In their 2026 report, Medicare's payment advisers traced part of the centers' 2024 growth among fee-for-service beneficiaries to knee replacement volume climbing 27.6% and hip replacement volume 28.7%, and noted that Medicare's rates for most services in the centers were about 46% lower than in hospital outpatient departments (Medicare Payment Advisory Commission, 2026).

What Drives It

Several forces push surgery out: Medicare's removal of joint replacements from the inpatient-only list, lower prices that attract insurers and employers, lower patient cost sharing, surgeon preference for efficient schedules and ownership opportunities, and anesthesia and pain control that make same-day discharge safe for more patients.

The System's Position

The system performs most joint replacements in its hospital outpatient departments and owns no surgery centers. Two physician-owned centers in the region have grown quickly, and the system's orthopedic volume has been flat for two years. On this trend, the system is behind.

Trend Two: Payment Follows Results

Payment is shifting from volume toward shared accountability for cost and quality. In Medicare's shared savings program, accountable care organizations that keep spending below a benchmark while meeting quality standards share in the savings.

The Evidence on Shared Savings

A study of the program's first three years found that physician-group organizations reduced spending more the longer they participated: the 2012 entrants had lowered annual Medicare spending per patient by $474 by 2015, a 4.9% reduction from before they joined. Hospital-integrated organizations achieved much smaller reductions, and their savings were offset by bonus payments; physician-group savings produced net savings to Medicare of $256.4 million in 2015 (McWilliams et al., 2018). When an organization earns most of its money from hospital volume, it has less reason to reduce that volume.

The System's Position

The system participates in one accountable care organization, led by its hospitals, which has earned modest shared savings. The evidence suggests that a hospital-led organization faces a conflict: savings often come from fewer admissions, which reduce hospital revenue.

Trend Three: Outcome-Based Penalties

Payers increasingly reward or penalize hospitals on outcomes such as readmissions, infections and mortality. Medicare's readmissions program reduces payments to hospitals with higher-than-expected readmissions for selected conditions.

Unintended Consequences

A study of 8.3 million hospitalizations found that, compared with earlier trends, both the program's announcement and its start coincided with rising deaths within 30 days of discharge for heart failure and pneumonia, mainly among patients who were not readmitted, while mortality after heart attack declined after the announcement (Wadhera et al., 2018). The findings do not prove the program caused the deaths, but they warn that penalizing one outcome can shift attention away from others.

The System's Position

Two of the system's hospitals pay readmission penalties, mainly for heart failure. The quality team has focused on reducing readmissions but tracks mortality after discharge less closely.

Response to Trend One

The director recommended a joint venture with one of the physician-owned surgery centers or a new center with orthopedic surgeons, rather than competing against them. The system would bring capital, payer contracts and hospital backup; surgeons would bring cases and efficiency. The measure is the share of the system's orthopedic cases performed in outpatient settings, with a target of half within three years.

Response to Trend Two

Based on the evidence that physician-led organizations save more, the director recommended restructuring the accountable care organization to give primary care physicians a majority of its governance and a larger share of savings, and aligning hospital incentives so that avoided admissions do not simply appear as lost revenue. The measure is total cost of care per attributed patient against the benchmark.

Response to Trend Three

The director recommended balanced outcome measures: every readmission goal paired with mortality after discharge and emergency visits, reported together. Heart failure programs would focus on patients' survival and function, not only on avoiding readmission. The measure is a balanced heart failure scorecard.

What Competitors Are Doing

The region's other large system opened a surgery center with its orthopedic group two years ago and restructured its accountable care organization around primary care physicians. Its orthopedic market share has grown while the system's has stayed flat. Competitors' choices are not proof that a strategy works, but they show which trends others are betting on and how much time remains to respond.

What Physicians Think

The director interviewed orthopedic surgeons and primary care leaders. Surgeons said they wanted more control over operating room schedules and a share in the efficiency they create, which a joint venture would offer. Primary care physicians said they would take on more responsibility for cost only if they had the data and staff to manage patients between visits. Both views shaped the recommendations.

How the Trends Interact

The trends reinforce one another. Moving surgery outpatient lowers costs that count against the accountable care benchmark. Better heart failure care reduces both readmissions and total cost. A strategy that treats the trends separately would miss these links.

Financial Effects

Each response reduces some hospital revenue in the short term. The joint venture shifts cases from the hospital outpatient department to a lower-priced setting, and the accountable care changes reward fewer admissions. The finance team estimated the system could offset the losses through shared savings, joint venture income and retained market share, but only if it acts before competitors take the cases.

Risks

Joint ventures with physicians raise legal questions under fraud and abuse laws that require careful structuring. Shared savings are uncertain from year to year. Balanced measures may show uncomfortable results. Each risk was assigned an owner, and the legal review of the joint venture will be completed before any term sheet is signed.

Conclusion

The board asked which trends the system was behind on. Evidence showed surgery moving steadily to outpatient centers, shared savings working best when physicians lead and outcome penalties carrying unintended consequences. The system is behind on the first, structurally conflicted on the second and at risk of narrow focus on the third. Responses matched to the evidence, each with a measure, give the system a path to catch up without repeating others' mistakes.

References

McWilliams, J. M., Hatfield, L. A., Landon, B. E., Hamed, P., & Chernew, M. E. (2018). Medicare spending after 3 years of the Medicare Shared Savings Program. New England Journal of Medicine, 379(12), 1139-1149. https://doi.org/10.1056/NEJMsa1803388

Medicare Payment Advisory Commission. (2026). Ambulatory surgical center services: Status report. In Report to the Congress: Medicare payment policy (pp. 325-342). https://www.medpac.gov/wp-content/uploads/2026/03/Mar26_Ch11_MedPAC_Report_To_Congress_SEC.pdf

Wadhera, R. K., Joynt Maddox, K. E., Wasfy, J. H., Haneuse, S., Shen, C., & Yeh, R. W. (2018). Association of the Hospital Readmissions Reduction Program with mortality among Medicare beneficiaries hospitalized for heart failure, acute myocardial infarction, and pneumonia. JAMA, 320(24), 2542-2552. https://doi.org/10.1001/jama.2018.19232