Building Blocks of Success for Two-Sided Risk Models: Aligned Strategy, Leadership and Infrastructure

The timeline to value-based payment is an uncertain and daunting one, particularly when you assume financial risk. None-the-less, we know value-based payment is coming and there are critical steps providers must take to optimize chances for success in a two-sided risk arrangement. In this five-part blog series, we provide a deeper dive into our recent white paper and Premier experts will share their insight on core capabilities needed to succeed in two-sided risk.

First, let's discuss the importance of alignment and partnership across c-suite, administrative and physician leadership.

Physicians as Partners

As providers move to two-sided risk, a fundamental key to success is recognizing and engaging physicians as true partners. This should not be a surprise. When has a healthcare initiative without physician support really flourished? It is not hyperbolic to say that if the physicians are not aware of, and on board with, the risk and incentive structure, it’s a recipe for failure. Some tips for success include:

• Develop organizational intelligence around value-based care. Your providers need to know why this issue is important to them. Education is vitally important. Communication of issues and the urgency of preparation and action is crucial (and it takes time).
• Commit to developing a business plan that identifies the mutual goals of both physicians and the health system. There is almost always a “win-win” that will bridge any gap. A “top down” approach will not succeed long-term.
• Form a joint task force or committee. Consider a dyad model, in which administrative leaders along with physician leader counterparts join forces to co-lead negotiations.
• Solicit and incorporate physician input on terms and provisions that they care about and incorporate them into the contract. Be clear and up front about the pay incentives, and make sure physicians know what’s in it for them.
• Don’t settle for physician leadership “lite.” Engage leaders who have wrestled with the issues, and are active in the hospital community and out there speaking with their colleagues. Physician involvement cannot be symbolic – leaders should be involved in a substantive and meaningful way.

Knowledge is Power

Not only does physician leadership need to be educated about the risk model, but all physicians and clinicians—particularly those with making care decisions like nurses and care managers—need to understand how value-based payments work. This will help them answer the “What’s in this for me and my patients?” question. Clinicians must be educated about the performance metrics so they know what targets they’re striving for and why they’re important. Of course, the more engaged clinicians have been in articulating these terms, the more likely it is that they will adapt their behavior to better manage patients, improve outcomes, minimize costs and realize shared savings. One study showed that providers with no risk obligation or knowledge of two-sided risk generated $42,000 in losses per physician per year – certainly the opposite direction of where any value-based care effort needs to go.

Hospitals Can’t Afford to Wait

Hospitals and physicians can be seen as friendly competitors. As the push for cost control increases, the opportunity for physicians to venture out on their own grows. With favorable payment policies (e.g., Medicare Access and CHIP Reauthorization Act ) and market dynamics at play, it is in the hospitals’ interest to retain talent, and in conjunction with their physician leaders, capitalize on the current opportunities for shared savings.

Premier works with hospitals to help them develop risk-based programs, and a core component of these services is helping foster solid alignment and partnership with physicians. We recently worked with a woman’s hospital to establish an arrangement where physicians were incentivized to take electronic learning courses that corresponded to certain payer metrics. Quality scores rose as a result. Patient care improved, and the parties worked together to bring about the result.

When you have effectively engaged physicians as partners and educated clinicians on what you are doing, you are well on your way to reaching success in a two-sided model.

Want to learn more about how to liaise between physicians and hospitals and effectively align incentives? Premier’s national healthcare summit traditionally has significant sections on provider alignment. For additional information visit www.premierinc.com/vbc, download our white paper “Building Successful Two-Sided Risk Models” or listen to our webinar “Preparing to Take Two-Sided Risk.”