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

Health 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.

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Hospitals and Health Networks, Risk, Hospitals

Topics: Risk, Helen Stewart

The Great Risk Shift: A Strategic Road Map for Providers

Posted by Matthew Smith on Apr 13, 2016 2:47:41 PM

By William Ringwood, Manager, GE Healthcare Camden Group

When assuming financial risk for healthcare delivery, a provider has many options to choose from and a broad range of internal and market-based factors to consider to be able to choose the right option for its specific circumstances.

An unprecedented shift of financial risk from payers to providers is occurring within the healthcare delivery system as a result of reform efforts. Healthcare providers have many important strategic decisions to make in preparation for this shift that will have a profound impact on their future success. Foremost among these decisions is choosing from the broad range of risk options available to providers, including quality incentive and penalty programs, Medicare accountable care organization (ACO) models with various degrees of risk and requirements, commercial shared savings, bundled payments, cobranding, and partial/full capitation or percentage of-premium models. It is clear that government and private payers, as well as employers and the general public, are pushing to improve overall healthcare value by increasing providers’ degree of risk.

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Risk, Providers

Topics: ACO, Medicare, Risk-Based Contracting, Healthcare Delivery, Risk, William Ringwood

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