April 28, 2022
Navigating the Journey to Population Health and Value-based Care
- Understand the policy trends and competitive forces across the U.S. that are driving a need for change in the way that healthcare is reimbursed.
- Gain strategies for future proofing your healthcare organization in the movement from payment for volume to payment for value.
For more on this topic:
Making the transition to value-based care (VBC) and population health models, such as accountable care organizations (ACOs), can be complex for any healthcare organization, regardless of where they are on the journey.
From understanding the market dynamics at play, to knowing which of the multiple VBC programs and payment arrangements to engage upon, to working through the myriad challenges that come along with data reporting and government mandates, profitability and sustainability in these new models requires thoughtful strategy and execution.
In a recent webinar, Premier’s Gerry Meklaus, Vice President, Population Health Advisory Services, and Seth Edwards, Vice President, Advisory Services, break down the details and share some tips for navigating the journey to VBC and population health success. What follows is a digest of their conversation.
The Winds of Change: Seth Edwards on Policy Trends
To kick off the webinar, Edwards notes that America’s aging population is driving the growth of enrollment in Medicare and catalyzing the need for a change in the way we reimburse for healthcare. He says that the industry is experiencing a shifting dynamic “where we’re moving from payment for fee for service and volume to payment for value, and potentially pushing healthcare organizations to take on two-sided risk.”
In reaction to these changes, there are several important policy-driven trends Edwards sees in motion:
- By 2030, 100 percent of traditional Medicare and Medicaid Advantage payments going through some type of risk-based model.
- Current administration to move even greater amounts of reimbursements under value-based models.
- Other payer segments likely following Medicare’s lead around value-based contracts and risk.
- The willingness of providers to move into greater levels of accountability and greater levels of risk and incorporating them into their own models to reduce their total expenditure.
- Growth in consumerism with beneficiaries pushing the need for the federal government to leverage data transparency to inform providers and payers.
Edwards goes on to explain that many healthcare organizations have started to move forward, looking at how they can participate in VBC programs, while many are still waiting and evaluating how they’re going to play in the VBC space – at full ownership of the risk, in a partnership or potentially as a commodity for a group that’s willing to take on the risk.
Market Disruption: Gerry Meklaus on Competitive Forces
Adding to the policy trends at play, Meklaus talks about the competitive market factors that are influencing organizations. What was once a provider domain is now being penetrated by innovative, well-established organizations that are “really meant to compete directly with health systems and, in many instances, disintermediate health systems, and specifically hospitals, as it relates to the provision of care,” he explains.
In many ways, these innovators can be excellent partners for health systems that are looking to establish partnerships as these organizations are typically looking to take on risk. “They’re looking to take accountability for a population and make the economics work for them,” he says. “In most cases, it’s an opportunity to move more and more volume out of the hospital setting and move into ambulatory environments under primary care.”
Meklaus shares examples of what some of these risk takers are doing:
So, what steps can healthcare organizations take to position themselves amid these disruptive market conditions? According to Meklaus, what needs to be determined as organizations think about where they’re headed is their endgame, and organizations do have choices:
- Be a healthcare hub for an accountable population and control the premium dollar.
- Be a co-leader or a partner with a payer where the health system takes a share of the premium dollar to deliver services.
- Continue as a fee for service provider and risk commoditization.
“Entering into risk arrangements allows organizations to be looking at growth as an opportunity to effectively care for more patients,” says Meklaus. “So, risk assumption may be an appropriate competitive response. It likely will be for many healthcare organizations, but not for some. This is where the strategy really comes in, and Premier can help organizations with their response.”
The Strategic Response
Meklaus explains one of the ways Premier works with organizations is our ‘payer strategy model’ that identifies whether taking on higher levels of risk makes sense for the organization. “We’re doing a financial opportunity analysis,” he says, “looking at whether or not to take risk, what that is and how that impacts performance as an enterprise, not just within the risk-based organization itself.”
On the execution side, Premier has developed population health and VBC support capabilities focused on margin improvement. “We believe that executing well on VBC is a margin improvement opportunity,” says Meklaus. In addition, Premier can help with managed care contracting and yield analysis from managed care contracts, resulting in a holistic way of looking at revenue and the revenue opportunities health systems present.
Edwards closes out the webinar by touching on Premier’s three-pronged, collaborative methodology of connecting people, connecting data and connecting knowledge as a way to facilitate performance optimization of organizations participating in Premier’s Strategic and Performance Improvement Collaboratives. According to Edwards, “it really helps ensure that we stay aligned with and close to the strategic needs and priorities of our members.”
Moving from fee-for-service to value-based payment models is the path the healthcare industry has been on for a decade and the path will continue. In an industry where value is the economy and measurement is the currency, health systems need to continue creating care delivery and population-based models that are efficient and effective.
Premier will continue to support organizations every step of the way, always meeting them where they are in the value-based journey – from just starting out through transformation and moving to new models of taking on risk – helping them find sustainable and successful approaches to VBC and population health.
The insights you need to stay ahead in healthcare: Subscribe to Premier’s Power Rankings newsletter and get our experts’ original content delivered to your inbox once a month.