There is a common misconception in healthcare that nearly all value-based care models are one-of-a-kind. If this were true, the lessons learned from these approaches would not be replicable. In truth, while the starting point for value-based care models may be unique for many organizations, they are actually conceptually quite similar.
At their most basic, these models are all designed to help providers prepare for changes to reimbursement while creating a sustainable business model for the future. In order to do so, they must effectively improve quality and rein in costs while helping the organization maintain profitability.
The appropriate starting point
Given this assumption, the most important question for many organizations is how to begin these efforts—and at what point in the continuum of risk. The answer may be very different based on analysis of four factors. These include (1) an organization’s readiness to change and current structure, (2) whether a strategic plan is in place, (3) leadership alignment and (4) the projected budget. For example, if an organization has the buy-in, infrastructure and budget to take a significant leap, a more dramatic, rapid transformation may be possible.
However, it is rare that an organization is fully prepared to address all four of these factors immediately. The vast majority fall into a middle ground where the organization is strongly positioned in two or three areas. The exception might be a clinically integrated organization with deep experience assuming risk.
Many groups will need to take a phased approach. This may include an initial focus on provider and member incentives in a clinical model in order to participate in shared savings. Then, when the entity is consistently meeting quality targets, they can convert to higher risk models. These could include risk share contracts or provider-led health insurance products that offer greater upside potential.
Risk-based offerings are becoming increasingly popular options as early adopters gain more experience. They are attractive to provider systems looking to access a greater portion of the overall premium dollar from payers for commercial markets. If the model is right for the provider and payer, a risk sharing agreement could give providers the ability to earn more for every dollar they save above the agreed-upon target.
Managing risk and optimizing rewards
If an organization decides to pursue these advanced approaches, a few key strategies must be in place to drive success. Many of these strategies focus on the importance of member incentives and engagement. Early learnings from value-based care models reveal it is not enough to focus solely on provider incentives to drive appropriate utilization. Plan design changes on the insurance side must also align members with the desired quality objectives. For example, reducing copays or eliminating them altogether for diabetic members may improve medication and treatment compliance.
Patients also need access to better transparency data to help them make healthcare decisions. This can include information about the types of services available, costs for these services and their appropriate use. Fortunately, new patient portals and mobile applications are an ideal forum to begin implementing these resources. Patients have already shown an interest in using these tools. However, these resources need to be easier to use and better woven into the overall healthcare experience. An early investment in technology and infrastructure is a key indicator of value-based care success.
No time like the present
Of course, there are still organizations employing the “wait and see” approach. Their leaders may be unwilling to acknowledge that our industry is undergoing a dramatic shift. As a result, they are not investing their time or resources to build out infrastructure or move toward greater integration.
Or, there may be few external forces that are driving immediate change. For example, they may be in a market where they are currently the biggest player. However, it is clear that the waiting game is not the right option when there are revenue-generating strategies they can leverage immediately.
The right move today is to choose an appropriate starting point and begin building the structure, culture and technology needed to prepare for the market shifts that are underway.
This is the first of a three-part series on ACO success strategies.