SHIP Frequently Asked Questions

Frequently asked questions fall into the following categories. Click a link to jump to that category:

Program Basics and Eligibility Requirements

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Program Priorities: HCAHPS, ICD-10

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Special Innovation Project (SIP)

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SHIP Coordinator Guidance: Budget

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SHIP Coordinator Guidance: Hospital Applications

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Examples of Training and/or Investment Activities

Program Basics and Eligibility Requirements

What is SHIP?

SHIP, the Small Rural Hospital Improvement Grant Program, is a program run through the Health Resources and Services Administration’s Federal Office of Rural Health Policy. Through SHIP, small rural hospitals that meet certain eligibility requirements are able to apply for funding to assist in the implementation of activities related to:

  • Value-Based Purchasing (VBP)
  • Accountable Care Organizations (ACOs)/Shared Savings
  • Payment Bundling (PB)/Prospective Payment System (PPS)

SHIP is authorized by section 1820(g)(3) of the Social Security Act.

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Should we use HRSA’s Rural Health Grants Eligibility Analyzer for rural designation?

Yes. Use HRSA’s Rural Health Grants Eligibility Analyzer to verify hospital and rural designation.

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How do hospitals apply for SHIP funding?

Direct federal funding for SHIP is secured through the State Office of Rural Health in each of the 46 states with eligible hospitals. States in turn solicit applications from their SHIP eligible hospitals.

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Who is eligible for SHIP?

Eligible small rural hospitals are non-federal, short-term general acute care facilities located in a rural area of the United States and the territories, including faith-based hospitals. They may be for-profit, not-for profit or tribal organizations.

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Which states participate in SHIP?

All states participate in SHIP, except Delaware, New Jersey, Connecticut and Rhode Island which have no SHIP eligible hospitals.

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What is the SHIP application and award process?

The State Office of Rural Health (SORH) submits a grant application to the Federal Office of Rural Health Policy within the Health Resources and Services Administration (HRSA) on behalf of eligible hospital applicants in their state. The SORH is the official grantee of record and serves as the fiscal intermediary for all eligible hospitals within the state. The SORH receives the federal funds, verifies hospital eligibility, makes awards to eligible hospitals and ensure appropriate use of funds. At the end of the grant period, the SORH submits a financial report to the HRSA Division of Grants Management Operations (DGMO).

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How do hospitals qualify as rural?

Hospitals can qualify as rural, even though they are not in non-Metro counties or eligible Census Tracts, by being designated as rural, either by statute or regulation by the State government. All critical access hospitals are rural by definition and qualify for SHIP.

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Can SHIP hospitals, affiliated with large health system and who no longer file cost reports, attest that they are still operating with 49 beds or less?

Yes, they can attest to the number of beds from hospital administrator.

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Can a SHIP eligible hospital affiliated with a large hospital system, use the combined cost report information for the system?

Yes, hospitals can submit an attestation from the Chief Executive Officer or Chief Financial Officer indicating they are operating at 49 beds or less.

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What is the specific language in the Guidance for how SHIP funds can be used?

The notice announces the opportunity to apply for funding under the Small Rural Hospital Improvement Program (SHIP). This program supports eligible hospitals in meeting value-based payment and care goals for their respective organizations, through purchases of hardware, software and training. SHIP also enables small rural hospitals: to become or join accountable care organizations (ACOs); to participate in shared savings programs; and to purchase health information technology (hardware and software), equipment, and/or training to comply with quality improvement activities, such as advancing patient care information, promoting interoperability, and payment bundling.

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Do we apply through grants.gov?

Yes.

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Will the Technical Assistance (TA) webinar slides be available?

Yes. They are posted on the SHIP State Coordinator Technical Assistance Webinar: October 2018 page of this site.

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Program Priorities: HCAHPS, ICD-10

Are hospitals allowed to use "real time surveys" instead of HCAHPS?

SHIP Hospitals need to be implementing HCAHPS and reporting to Hospital Compare. HCAHPS vendors need to be CMS certified.

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Are hospitals still allowed to use SHIP funds to pay the recurring costs for HCAHPS and ICD-10 vendors?

Yes.

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What is the best way to determine whether a hospital has fully implemented HCAHPS and is reporting to Hospital Compare?

"Fully implemented" means that the hospitals is reporting to Hospital Compare for at least one quarter during the most recent SHIP budget period.

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What is the best way to track if the hospital has reported 1 HCAHPS measure for 1 quarter for the previous year?

If the facility is PPS, check Hospital Compare. If it is a CAH, reach out to your state’s Flex Coordinator, as they have access to the Medicare Beneficiary Quality Improvement Program (MBQIP) raw data that they can check.

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If a hospital has not reported 1 HCAHPS measure for 1 quarter in Hospital Compare during the previous year, are they required to select HCAHPs and/or ICD-10 on the SHIP Purchasing Menu now?

Yes, as these are SHIP funding priorities.

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What are the funding priorities a hospital must follow in selecting investment activities?

The first priority is that hospitals must fully implement the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) and ICD-10. Furthermore, hospitals must publicly report HCAHPS scores to Hospital Compare. Priority is not given to one over the other of HCAHPS and ICD-10 and hospitals may choose to work on both simultaneously.

The second priority for investment activities are all other options listed on the SHIP purchasing menu. For examples of efficiency, quality improvement or systems performance activities, see the Examples of Investment Activities section.

If a hospital has already completed ALL investments listed on the SHIP purchasing menu, the hospital may identify an alternative piece of hardware and/or software and/or service ONLY IF: a) the purchase will optimally affect the hospital’s transformation into an accountable care organization, increase value-based purchasing objectives and/or aid in the adoption of ICD-10; and b) the hospital receives pre-approval from both the state SHIP Coordinator and the appropriate Federal Office of Rural Health Policy project officer.

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What does a hospital need to do to get our HCAHPS scores displayed on Hospital Compare?

If a hospital is using a vendor for HCAHPS, the vendor should be able to walk the hospital through the process of ensuring all the necessary pieces are in place to allow data to appear on Hospital Compare. This will include at a minimum completing a vendor authorization and the Hospital Inpatient Quality Reporting Notice of Participation, both through QualityNet.

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Does our HCAHPS vendor have to be CMS certified?

Yes, your HCAHPS vendor must be CMS certified.

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What if a hospital has completed the necessary steps to allow for our HCHAPS data to appear on Hospital Compare, but due to low volumes, the data is suppressed? Is the hospital allowed to choose a different investment activity from the SHIP Purchasing Menu?

Yes, so long as the hospital has taken all the necessary steps to allow for HCAHPS data to appear on Hospital Compare, the hospital can select a different investment from the SHIP Purchasing Menu.

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Special Innovation Project (SIP)

What is a Special Innovations Project?

Network/consortia development has been a long-standing program priority to assist resource and knowledge sharing throughout the SHIP. SHIP Coordinators can support hospital networks or consortia in the development of a Special Innovations Project (SIP) to operate through the Project Period with streamlined reporting and a final report to provide additional feedback on best practices and lessons learned. For the purposes of this model, innovation is the process of evaluation, selection, development, and implementation of new or improved services and/or programs. Within the SHIP investment menu guidelines, the SIP can be a process and/or quality innovation.

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What are the requirements for the Special Innovations Project?

The applicant requirements are as follows:

  • Network/consortia membership (existing or newly formed) will include three or more SHIP hospitals and/or provider-based rural health clinics.
  • Cohort will stay intact during the Project Period, with minimal (if any) change in the participating hospitals and no change in annual SHIP investments.
  • All participating hospitals must continue to meet HCAHPS and ICD-10 requirements.
  • Existing networks/consortia may choose to participate.

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For the SIP option, do the hospitals need to achieve HCAHPS and ICD-10 or can they be engaged in meeting those requirements?

Yes. Hospitals must achieve HCAHPS and ICD-10 implementation before participating in a SIP.

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Is there any additional SIP money outside of the SHIP $12,000 per hospital?

There is no financial incentive for participating in a SIP.

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Can we divide up the money so that SIPs get more, if each hospital gets the majority of the $12,000?

No. All hospitals must receive equal funding.

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If we are not doing the SIP, do we need to include a "Not Applicable" attachment since it is attachment 7 and the hospital worksheet is attachment 8?

Yes. You may submit a page to indicate Attachment #7 is not applicable.

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SHIP hospitals can still be involved in network focused activities without participating in the SIP - is that correct?

Yes. Hospitals can engage in network activities without participating in the SIP option.

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What methodology will we need to use to summarize the network/consortia activities for the Special Innovations Project?

For all hospitals within a SIP Project: include activities on the work plan for the entire period of performance (FY 2019-2022) for network/consortia (three or more SHIP hospitals (inclusive of provider-based rural health clinics) that will invest SHIP funds in one – two activities to be monitored, tracked, and evaluated for the entirety of the period of performance. Include baseline measures and goals for improvement. Cohorts will stay intact for the period of performance, but projects must be for a minimum of 2 years, and may be changed after successful completion, reporting once thereafter for the remainder of the period of performance with SORH approval. A sample of a SIP Project can be found on the Grant Guidance page. List the goal(s) and objective(s) for each budget period and the associated evaluative method(s) and measures that will indicate success.

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SHIP Coordinator Guidance: Budget

Does the same amount of funding have to be provided to all hospitals?

Yes, all hospitals must receive the same amount of money. Pooling of funds in the form of networks or consortia is encouraged to increase purchasing power of hospitals pursuing similar activities.

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SHIP funds were used for a different category than what the hospital initially asked for so what should I do?

Remind the hospital of their agreement, monitor, evaluate progress and likelihood of it happening again and if it does, exclude them from future participation. They should seek prior approval from SHIP Coordinator/State Office of Rural Health before changing activities.

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Can SHIP funds be used to support provider-based rural health clinic (RHC) investments?

Yes, SHIP funds can be used to support RHC investments if they are aligned with the SHIP menu. Additional guidance and examples of RHC investments are provided in the SHIP Investment Menu.

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Can a hospital spend leftover money on another activity on the SHIP purchasing menu?

Hospitals that have realized a cost savings can spend leftover activities on other SHIP investments. The State Office of Rural Health must approve any change in use of funds.

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What can the State Office of Rural Health do if hospitals do not spend all funds?

State Offices can redistribute funds among all hospitals or undertake a SHIP-oriented training. They may also develop a special project aligned with SHIP guidance and hospital needs. If the SHIP Coordinator has questions, they should contact the Federal Office of Rural Health Policy Program Officer for guidance. Funds cannot be transferred to another participating hospital without prior FORHP approval.

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Can state SHIP Program staff salaries be paid with SHIP funds?

Yes, personnel costs are allowed only for award oversight; this does not include hospital personnel. Remember, SHIP is primarily a pass-through for hospital improvement, so budgets will be scrutinized for reasonable costs.

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Can indirect costs be included in the SHIP budget?

Yes, indirect costs up to 15% can be allocated for the State Office of Rural Health.

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Is the indirect cost in addition to the $12,000/hospital or included?

All costs, including Indirect costs, must be deducted from this amount. Budgets more than $12,000 per hospital, the maximum allowable, will not be considered.

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If not taking any indirect, do we still have to include the indirect cost agreement?

No. The indirect cost rate agreement is not required if you are not taking indirect costs.

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Is there a limit to the personnel costs percentage-wise?

See Section 4.1.iv Budget – Salary Limitation of HRSA’s SF-424 Application Guide for additional information. There are no SHIP-specific limitations beyond HRSA’s requirements.

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Do hospitals have to allocate 100% of funds to one category?

No, hospitals may split funding between different SHIP Purchasing Menu categories.

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Can hospital staff salaries be paid with SHIP funds?

No, SHIP funds cannot be used for salaries at the hospital.

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Can travel be paid for with SHIP funds?

SHIP funds may be used to cover travel where specifically approved as part of the contractor's training costs. SHIP funds may not be used to cover travel costs for grantees and SHIP hospital staff.

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Can SHIP funds be used to pay for any type of assessment?

No, SHIP funds cannot be used for assessments. See language under "Use of Funds".

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Can SHIP funds be used to pay for an internal training conducted by an affiliated hospital system?

Yes, with SHIP Coordinator approval and understanding of how the training aligns with selected SHIP menu activity and supports improvement.

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Can SHIP funds be spent on an HCHAPS vendor?

Yes, because many hospitals cannot afford the costs of HCAHPS without SHIP and because it is part of quality improvement.

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Is it possible for hospitals to pool SHIP funds on a shared activity?

Yes, pooling SHIP funds amongst hospitals is a great way to make efficient use of resources. The State Office of Rural Health must be involved in establishing any such projects.

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Can a hospital use SHIP funding to purchase tablets?

Tablets and other technology/hardware investments are allowed if they will be used by staff to support efficiencies. Tablets for patient entertainment purposes are not allowed.

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SHIP Coordinator Guidance: Hospital Applications

What is the SHIP Purchasing Menu?

In 2013, in order to ensure effective use of SHIP funding and increase program integrity, the Federal Office of Rural Health policy instituted a SHIP Purchasing Menu from which eligible SHIP hospitals select investments. Investment activities are broken into three categories: Value-Based Purchasing, Accountable Care Organizations (ACOs)/Shared Savings and Payment Bundling (PB)/Prospective Payment System (PPS). Activity priorities are set each year based on current industry trends.

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Can the State Office of Rural Health alter the hospital application to include more questions or requirements?

Yes, as long as all the information needed for the State Spreadsheet of SHIP Applicants is gathered, the form can be altered to meet state needs. This includes requiring hospitals to submit additional documentation needed at the state level.

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Are states required to submit individual hospital applications to the Federal Office of Rural Health Policy or do they keep them on file again?

States should keep hospital applications on file for the fiscal year for which they are applying. As part of integrity oversight and monitoring, FORHP may randomly ask States to provide signed applications.

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Are electronic signatures acceptable for the hospital applications?

The Federal Office of Rural Health Policy has indicated that electronic signatures are acceptable from their perspective. State Office of Rural Health will want to ensure their application process aligns with any state requirements for signatures.

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The hospital application requires that hospitals agree to select investments for which they will be able to demonstrate measurable outputs/outcomes and to report those measures and progress to the State Office of Rural Health (SORH) upon request and at the end of the program year. What kinds of measures should the hospitals be tracking and what is the SORH supposed to do with that information?

At this time there is no standard set of measures for SHIP investments; however, program integrity is of utmost importance and therefore states are encouraged to maintain communication with their hospitals regarding use of their funds and outcomes from their SHIP activities. SORH’s can use what they learn in this regard to inform future projects at other hospitals and to identify opportunities for pooling of resources to maximize SHIP investment.

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Does the spreadsheet, Attachment 9, count towards the page limit?

FORHP has developed a work-around for submitting Attachment 9. See 10/24/2018 revision to Funding Opportunity Number: HRSA-19-020 on Grants.gov for details.

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Previously, we received permission to use a Survey Monkey instrument to collect hospital application information, which we included in the spreadsheet attachment. May we continue this practice, instead of using the application form?

Yes.

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How many years are we required to hold the SHIP hospital applications on file?

At a minimum, grantees should keep hospital applications on file for fiscal year in which the hospital was awarded SHIP funding.

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Are hospitals allowed to change their investment after they have submitted their application?

The State SHIP Coordinator has discretion to determine if a change in investment can/should be made. In an effort to ensure program integrity, coordinators may want to monitor hospitals that make such requests closely. Some coordinators have implemented deadlines for hospital changes to investments.

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Can hospitals select the same priority 2 years in a row?

Yes, they can.

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The application asks if the applicant hospital is participating in various Centers for Medicare and Medicaid Services (CMS) programs. Where can I find out more about these programs?

Click on the links below to find out more about each of the CMS programs included on the hospital application:

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How is hospital bed count determined?

For purposes of SHIP, hospitals report the number of beds on Line 14 of the Medicare Cost Report. If that number is 49 or less (staffed, not licensed), the hospital meets the bed count requirement to participate in SHIP. "Eligible small rural hospital" is defined as a non-Federal, short-term general acute care hospital that: (i) is located in a rural area as defined in 42 U.S.C. 1395ww(d) and (ii) has 49 available beds or less, as reported on the hospital’s most recently filed Medicare Cost Report. Cost report instructions define staffed beds as, "the number of beds available for use by patients at the end of the cost reporting period. A bed means an adult bed, pediatric bed, birthing room, or newborn bed maintained in a patient care area for lodging patients in acute, long term, or domiciliary areas of the hospital. Beds in labor room, birthing room, post anesthesia, postoperative recovery rooms, outpatient areas, emergency rooms, ancillary departments, nurses' and other staff residences, and other such areas which are regularly maintained and utilized for only a portion of the stay of patients (primarily for special procedures or not for inpatient lodging) are not termed a bed for these purposes." Source: Cost Report Data

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Are the detox beds included on line 14 of the cost report?

If the detox beds are part of the hospital licensure and are available for acute care PPS, then the beds are included on line 1, column 2 on Worksheet S-3 Part I. The beds are also included in the total on line 14, column 2. If the detox beds are custodial beds and not available for acute care, then they are in a non-reimbursable cost center and not included in line 14. If the detox beds are a DPU and not available for acute care, then they have a separate sub-provider number and the beds are reported below line 14.

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What methodology will we need to use to summarize the network/consortia activities for the Special Innovations Project?

You will need to summarize how the network/consortia will:

  • Efficiently leverage SIP funds for overall hospital improvement.
  • Demonstrate how SIP activities will collective affect participants.
  • Demonstrate resourceful application of the consortium to improve quality improvement, financial improvement, shared savings, etc.

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What is the difference between an ACO and a Medicare Shared Savings Program (MSSP)?

An ACO can be eligible for a MSSP. To be eligible for the Medicare Shared Savings Program (MSSP), an ACO must agree to participate for at least 3 years, meet other program requirements such as establishing a governing body, to establish processes to promote evidence-based medicine, promote patient engagement, and to internally report on quality and cost measures and coordinate care.

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Examples of Training and/or Investment Activities

Many of the investment options on the SHIP Purchasing Menu are self-explanatory, while a few are more general in nature. What follows are examples of activities a hospital may undertake for some of the broader investment activities. Please note, this is not an exhaustive list; rather it is meant to provide some examples to assist hospitals in selecting activities that will work best for them and fit under the guidelines of the program. Hospitals should contact the State Office of Rural Health (SORH) with questions regarding the appropriateness or fit of a certain activity. SORHs with similar questions should contact the appropriate Federal Office of Rural Health Policy project coordinator.

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What are examples of activities for the investment option (C) under the category Value-Based Purchasing (VBP): Efficiency or quality improvement training in support of VBP initiatives?

Consider adopting Six Sigma, Lean, Plan-Do-Study-Act or other such efficiency or quality improvement processes to address performance issues related to VBP initiatives, such as the following:

  • Patient experience of care
  • Clinical care processes and outcomes
  • Patient safety
  • Reducing readmissions
  • Reducing infections
  • Medicare spending per beneficiary

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What are examples of activities for the investment option (D) under the category Accountable Care Organization (ACO) or Shared Savings: Efficiency or quality improvement training in support of ACO/Shared Savings initiatives?

Consider adopting Six Sigma, Lean, Plan-Do-Study-Act or other such efficiency or quality improvement processes to address performance issues related to ACO/Shared Savings initiatives, such as the following:

  • Non-clinical operations
  • Board organization/operations
  • Multihospital/network trainings (traditional and/or non-traditional partners)
  • Emergency Department Transfer Communications
  • Health Information Exchange (with traditional and/or non-traditional partners)
  • Swing bed utilization training
  • Care coordination training
  • Population health training

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What are examples of activities for the investment option (E) under the category Accountable Care Organization (ACO) or Shared Savings: Systems performance training?

Hospitals interested in systems performance training may want to consider adopting a framework approach, such as one of the following:

  • Baldrige
  • Balanced Score Card
  • Logic Model

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What are examples of activities for the investment option (C) under the category Payment Bundling/Prospective Payment System (PB/PPS): Efficiency or quality improvement training in support of PB/PPS initiatives?

Consider adopting Six Sigma, Lean, Plan-Do-Study-Act or other such efficiency or quality improvement processes to address performance issues related to PB/PPS, such as the following:

  • Financial improvement software or training
  • Operational multi-hospital/network trainings

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This project is/was supported by the Health Resources and Services Administration (HRSA) of the U.S. Department of Health and Human Services (HHS) under grant number UB1RH24206, Information Services to Rural Hospital Flexibility Program Grantees, $1,100,000 (0% financed with nongovernmental sources). This information or content and conclusions are those of the author and should not be construed as the official position or policy of, nor should any endorsements be inferred by HRSA, HHS or the U.S. Government.