If you're in charge of running a hospital or health system, managing the passive risk of payment reform is a given. To push your organization ahead, you'll need to take on the bigger risk that comes from being truly innovative.
For many hospital and health system chief executives, the embodiment of taking risk as it pertains to their organizations means talking about the new payment paradigm. This is the one under which government and commercial payers work with health systems to derive better value from their purchase of healthcare services. In other words, value-based care.
As opposed to fee-for-service payment, value-based payment puts the hospital, health system, or physician "at risk" for lower payment depending on a variety of metrics that attempt to measure the value of the patient outcome.
This is a very inexact science at this time, and that's one reason it's taking so long to figure out ways to incorporate risk into payment methodologies for commercial and government payers alike. Incidentally, despite all the fretting about risk-based payment, fee-for-service is still the dominant payment mechanism for the vast majority of hospitals and health systems.
Some regions are seeing the evolution in payment models more quickly than others, but the key is that it's changing very slowly. Of course any health system that incorporates a health plan into its business entities is already familiar with the gaps in information and analytical tools that would truly allow them to place a value on a health provider's services from a quality of care or efficiency standpoint.
Another, perhaps more productive way to take risk involves the risk that's inherent in any innovation. The risk of building a standalone emergency department, is one example. The risk of employing and managing care coordinators to help keep patients out of the hospital, is another.
In other words, this is a type of risk you'd take in trying to grow any other business, but a type of risk with which much of healthcare is unfamiliar.
To use a gambling analogy, providers of healthcare services are not used to betting on the come in this fashion. Instead, for the past several decades, the customer—whether you define the customer as the government, other payers, employers, or individuals—have paid the freight of the risk-taking, which, predictably, has proven unsustainable in the long term.
Think of the last time you green lighted a capital-intensive project like a heart or cancer center. Did you already know that the fees it would generate would make it successful, or was there a big element of uncertainty? The answer, in many cases, is that it was a no-brainer.
But some organizations are embracing these opportunities to innovate where success is far from guaranteed, and that fact was made apparent to me at a recent Roundtable discussion we hosted here in Nashville (for the November issue of HealthLeaders magazine). In contrast to risk-based payment, rather than worrying about what is being done to you by others, isn't it more exciting and interesting to figure out a better way yourself?
That's the kind of risk I'm most interested in discussing with CEOs, such as my recent conversation with a CEO who told me he's seen great success in getting people treated in the right place at the right time through their new off-site and standalone emergency room. It was an expensive investment, and risky, but it paid off.
Never mind that he's gotten high-cost patients out of the hospital's main ER, and never mind that he feels like he and his team are better incorporating their mission of providing the right type of care to the community. He has the satisfaction of actually doing something rather than having something done to him. The very real feeling of powerlessness in facing powerful outside forces is pervasive in healthcare, so I try to seek out those who don't use that as an excuse not to execute.
Another one of our guests spent a lot of our time together insisting that "I'm not a healthcare guy, but…"Almost always, his "but" was followed by a description of some innovative project his hospital is undertaking (a hospital which was on the verge of bankruptcy and closure just four or five years ago).
The risks he's taking include a variety of diverse business opportunities that will keep this community hospital at the center of where the community seeks care, and not just acute care. Part of his vision includes the hospital as a landlord.
By developing close contractual relationships with those who provide care outside the hospital's walls, from primary care to skilled nursing, he's not only strengthening his organization's position of leadership in the community, he's providing a physical location for smaller organizations to collaborate with each other and his hospital.
That's the kind of vision that will save many hospitals that, no question, are facing difficult financial times ahead. They're seeing shrinking reimbursements and regulatory burdens expand as organizations try to get a handle on waste and quality problems that still plague healthcare to an unconscionable degree.
And he thinks that vision will also keep it independent.
Uncertainty about the evolution of healthcare payment is well-founded. Just don't let it get in the way of what you and your team can do to adapt, and even thrive. You have to take risks. Real risks.
Philip Betbeze is the senior leadership editor at HealthLeaders.