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GE Healthcare Camden Group Insights Blog

Beyond Risk Sharing: Forming Relationships Based on Outcomes

Posted by Matthew Smith on Mar 7, 2017 1:03:26 PM

By Helen Stewart, Managing Principal, GE Healthcare Partners

shutterstock_199186658.jpgHealth care organizations face incredibly complex problems, including regulatory pressures, dropping revenue from public and private payers, and consumer demands for greater convenience, transparency and connectivity. These stressors are heightened by the current political uncertainty around health care reforms.

In these rapidly changing times, traditional fixed-price, transactional relationships between health care providers and vendors are of little value. When providers buy a discrete product or service, they do so with the intent of integrating it into their strategy, assigning it a specific role in achieving their goals. But if the market shifts, if regulations change, if their strategy runs into roadblocks, they are left with what they bought.

As a result, many organizations have turned to risk-sharing or risk-balanced relationships in which both sides — health care providers and vendors — take on specific accountabilities. In risk sharing, there are always two sides: the underlying assumption is that “you will be responsible for a, b and c” and “I will be responsible for x, y and z.”

In an environment as interdependent and complex as health care, someone is always left holding the bag if the original strategic assumptions do not prove out in the long run. Even with so-called risk sharing, most or all of the risk of achieving the goal falls on provider organizations. If they can’t effectively connect what they purchased — products, services or consulting — to the action they are trying to drive, they are often left to figure it out on their own.

To read this article in its entirety, please click the button below to be immediately directed to the full article posted on Hospitals & Health Networks.

Hospitals and Health Networks, Risk, Hospitals

Topics: Risk, Helen Stewart

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