GE Healthcare Camden Group Insights Blog

Best of 2015: Population Health Alliances--Rethinking the Business Model

Posted by Matthew Smith on Dec 31, 2015 12:22:02 PM

By Tara Tesch, Senior Manager, MHSA, GE Healthcare Camden Group

Population health alliancesLeading into the new year, GE Healthcare Camden Group will be re-publishing the most shared and popular blog posts of 2015.

Healthcare systems are increasingly choosing to partner with other provider organizations to pursue population health initiatives on a more regional and sometimes state-wide basis. These “alliances” are often viewed as alternatives to more traditional mergers and acquisitions, and are created through the collaboration of more than one health system, hospital, or physician group. This emerging collaboration model provides opportunities to share common infrastructure, expand geographic reach, and increase access to additional clinical and support resources. These alliances also face additional challenges associated with sponsorship by multiple organizations that in some cases have historically been competitors.

The Next Generation of Physician Engagement Strategies

The healthcare environment is changing at a rapid pace and the path toward population health requires committed physicians, administrators, and clinicians at all levels and across the continuum of care. These leaders must commit to taking accountability for clearly communicating the transformational vision, goals, and objectives of the population health alliance to unite its members around this effort. Success in engaging the providers will be around demonstrating a true desire and understanding of the critical importance of integrating physician and clinicians into all levels of the alliance’s governance and operations.

Key to meeting this strategic imperative is to engage dynamic, knowledgeable physician leaders with creditability among the broader physician network to proactively meet with the front-line physicians and build support and engagement. Do not assume that established structures (e.g., medical staff meetings, etc.) will always be an effective means to distribute information and build engagement.

Additional strategies that have proven successful for alliances include:

  • Ongoing education for community-based providers in clinical integration, innovative care models, and tracking of clinical quality and outcomes aimed at increasing their understanding of the value of participation in the alliance network. Education requirements should be included in all physician agreements, and dedicated staff and resources assigned to support these efforts.
  • Leadership training and support to empower the next generation of physician leaders to jointly problem-solve and collaborate in achieving the tenets of population health. Set the tone that this is a transformational journey that will have successes and mistakes; jointly learning from them will offer new insights and promote future efficiencies in ongoing value-based care delivery planning and implementation.
  • Transparency in communication and evolving metrics are necessary to keep providers informed and engaged, and to elicit critical behavioral change. Adjustments in reimbursement, care models, coding requirements, IT systems and capabilities, and alliance-wide goals should be distributed regularly followed by timely educational sessions. Physicians can no longer focus only on their individual performance; rather, focus must shift to the care of their patients across the network continuum, and feedback on how appropriate interventions and utilization of care can improve the health of the populations served.

Adding Value to Physicians

Another critical concept in understanding best practices in physician engagement and network development is the realization by alliance and member system leadership that physicians only practice one model of care; they do not change that approach based on what payer or “bucket” the patient may be attributed. Where alliances can add true value to physicians and actively engage providers is in support services such as care management and IT platform/analytics – areas to support efficiency and provide actionable information in real time.

  • Create a centralized care management institute at the network level that includes performance improvement and care management resource support that can be accessed by other organizations if they do not have their own resources for local work efforts.
  • Establish an ongoing monitoring process, overseen by the alliance clinical committee to measure and track improvement in a clinical indicators over time. This active monitoring and validation helps to test whether or not the data is accurate, the metric(s) is (are) appropriate, and if the process in place actually impacts performance/outcomes.

A consistent challenge remains around providing meaningful data at the point-of-care to educate and engage providers around their performance on clinical quality and financial outcomes. As value-based care delivery relies on care model transformation, physicians rely more and more on receiving actionable information around their clinical outcomes, adherence to evidence-based guidelines and protocols, and value-based metric performance to impact behavior change and operational tools to support practices in care redesign.

The new care models and payment methodologies associated with population health management will require more tightly aligned financial and clinical incentives between hospitals and physicians. Initiatives in these areas must be physician-led to achieve sustained success clinically and financially.

One final consideration: employment does not guarantee physician alignment or integration. The same principles of engagement hold true whether employed or independent, and incentives that align with targeted behavioral change become increasingly important for longer-term success and transformation. Design incentive plans that not only encourage productivity, but reward physician efforts to achieve shared goals in care, quality, and cost control.

Tesch_T_headshot.pngMs. Tesch is a senior manager with GE Healthcare Camden Group with more than 18 years of experience as a healthcare leader and strategist. Ms. Tesch specializes in value-based care delivery strategic planning, CIN development and implementation for commercial, Medicare, and Medicaid populations, health information technology data governance and analytics strategy, as well as care management strategy, design, and implementation. She has worked with a variety of healthcare providers, including integrated delivery networks, academic health centers, regional referral centers, rural community providers, and national non-profit and faith-based health systems. She may be reached at ttesch@thecamdengroup.com or 312-775-1700.

Topics: Population Health, Physician Engagement, Population Health Alliance, Tara Tesch, Population Reach

Design Your Payer Strategy to Meet Your Financial and Market Goals

Posted by Matthew Smith on May 28, 2015 9:46:14 AM
By Surabhi Swaroop, MBA, Manager, and Adam Medlin, MHA, Senior Manager, The Camden Group

payer_strategy.jpgAs hospitals and health systems consider the shift from fee-for-service to fee-for-value in their strategic planning efforts, they face the challenge of better understanding what their organization should look like in the new world. This means incorporating new concepts to the strategic planning process, including a payer strategy, and the recognition that the organization will need to change how it will generate revenue. In an effort for the organization to better understand how it will compete, questions to be answered include: In what types of risk products should my organization be participating, if any? How will my organization use alternative payments or differentiating payer arrangements to move market share? What is our current contribution margin of each payer type? Will our access points (e.g., primary care, retail clinics, e-health) be adequate to reach the population base we need? Should my hospital be considering expanding our range of services to include other care settings such as post-acute?

The answers to these questions will vary depending on the payer focus and patient population (market of segments) to be served, as illustrated in the diagram below. In this article, we discuss a refreshed approach to strategic planning that helps answer these questions and connects an organization’s long range financial plan (“LRFP”) to its strategic plan so that LRFP targets are realized.

Pyramid_of_Success_2.pngTo help arrive at the best approach, providers should begin the strategic planning process by first evaluating the expected future utilization trends for each major payer (e.g., Medicare, Medicaid, commercial) for all of the care settings that are relevant to the organization (e.g., acute care, ambulatory care, physician practices, post-acute). For instance, organizations should consider the following as it relates to their market: What if inpatient utilization rates (per thousand) continue to decline? What if value-based programs continue to move more imaging and outpatient surgeries into non-hospital facilities? What if expanded urgent care sites and retail centers continue to impact the emergency room? By answering these questions and quantifying the financial impact, hospitals and health systems can then begin to better understand their goals related to

  1. How much more market share they will need (grow the population served),
  2. In which care settings should they consider participating,
  3. What their pricing strategy and pace of change to alternative payment models should be, and
  4. Determining if they need to expand into new geographic markets.

Ultimately, this approach will help each organization gain a clearer picture of what they will look like in a fee-for-value world and while reaching their financial goals.

Considerations for each of these goals are described in further detail below.

Increase Market Share

How much more market share can the organization attain? One percent? Three percent? Based on what? Sometimes a hospital’s LRFP reflects a growth target of five percent year over year. How does one attain this in an environment with decreasing inpatient volumes? Does the organization plan to increase access points in terms of additional clinics, a health plan, and physician providers? Will there be increased outreach to the community and providers? Will the organization enhance services within existing service lines or add new ones to attract a new segment of the market? If so, what is the incremental volume that will be realized, and how does that compare to the investment required? Will participation in a tiered network enable increased market share? An organization can partner with other providers to create a broad provider network that could be marketed to both health plans and local employers. Within the network, tiered pricing with payers could be established which would, in turn, drive both greater market share and premium revenue dollars to the organization. What is the cost of these strategic initiatives? What is the return on investment? These are key considerations when quantifying the impact of increasing an organization’s market share. Once the impact is estimated, how much more of the gap remains, and what other strategic goals should be considered? 

Enhance and Diversify Care Delivery Sites

What service lines or care delivery sites should be added in order to meet the demands of the population targeted and cost effectively deliver care? Which service lines may need to be closed or consolidated? The addition and diversification of sites of care or service lines not only enable additional volumes and revenues but also facilitate the higher quality and leaner expenses that result from offering a comprehensive scope of services across the continuum of care as effective care management is implemented. The addition of business units should consider extending beyond traditional acute service lines to post-acute and ambulatory services. Of course, additional services require some investment and typically different business skills and capabilities. Whether the organization builds its own infrastructure or partners with another provider, each option should be considered, and the return on investment and likelihood of success should be measured. The impact of additional business units or service lines should then be compared to the gap to see how much more is still needed to be filled.

Increase Top Line Revenue

Under a shared savings environment, expense savings and/ or quality improvement resulting from effectively managing care can result in incentive payments (pay for performance) on top of the baseline fee schedule that directly improve an organization’s margins. Through a defined provider network and effective care transitions and care management, the health system will be able to demonstrate value, therefore increasing market share (previously mentioned) and potentially access to new sources of revenue. Of course, if the organization decides to pursue full-risk or plan-to-plan arrangements, or even develops its own health plan, that comes with the opportunity to capture the benefit of effective population health management. With the potential for higher reward, also comes greater risk, so assuring the organization’s readiness for risk will have to be weighed carefully. All programs that include financial risk should be evaluated to determine the expected and actual return. In the future, most health systems will require some access to sharing in the benefits of reducing overall healthcare costs through either shared savings or direct participation in premium dollars to be successful.

Increase Population Reach/Service Area

stratgoals.pngUp to this point, we have assumed the service area remains as is. In some instances, an organization may need to increase the service area and its reach to capture a larger population. Generally, this is difficult to do and may require significant investment in terms of outreach efforts, and the resulting gain may be minor. Successful outreach may require partnering or collaborating with other providers or through expansion of relationships with physician groups in those markets. Regardless, organizations should evaluate the cost/ benefit of expanding its service area and use this in making an appropriate decision. It is important to note that the strategic goals above are not mutually exclusive; interdependencies do exist. Adding a service may not only result in higher revenue due to incremental volumes for that new service line, but also incremental revenue that results from effective care management across an enhanced continuum of care. An analytically-driven payer strategy that considers financial, market, and organizational capabilities will help organizations identify what will be required to achieve their goals. An objective approach will guide the prioritization of strategies to enable the achievement of the organization’s LRFP and its desired position in the market. 

Surabhi_headshot.pngMs. Swaroop is a manager with The Camden Group with more than ten years of experience in healthcare. She has assisted numerous hospitals and ambulatory care entities in their strategic planning and physician-hospital alignment initiatives with a particular focus on developing the business case for and financial models specific to the formation of joint ventures, strategic alliances, and acquisitions. She may be reached at sswaroop@thecamdengroup.com or 714-263-8200.



Adam_Medlin_headshot.pngMr. Medlin is a senior manager with The Camden Group specializing in finance, managed care, and value-based payment models. He has extensive experience with hospitals, physician groups, managed care organizations, and health plans. His areas of expertise include valuations, financial assessment and modeling in support of value-based payments, managed care contracting and reporting, risk pool reconciliation, auditing, payer contracts, financial forecasting, transactions, and hospital decision support and operations improvement. He may be reached at amedlin@thecamdengroup.com or 714-263-8200.

Topics: Payer Strategy, Population Reach, Adam Medlin, Surabhi Swaroop

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