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Intelligence Report: Toward Population Health

Michael Zeis, for HealthLeaders Media, October 14, 2013

"You have to be strategic about what your program development efforts are," Steinberg warns. "There may be a limited number of key partners. In certain markets, you're going to see teaming relationships, or you will see payers establish narrower networks."

Fair share of value created

Part of the accommodation for lost patient revenue should be negotiated on the basis of lower overall costs that will be the result of improving the health status of the population. Says Steinberg, "Providers will have to contract with payers in a way that gives them a share of the value that they create."

And while healthcare providers may have a thorough understanding of how to deliver care, they will find themselves negotiating with payers who understand populations and risk inside and out.

Nash points out, "The payer community, especially the managed care payer community, has been on this gig for 30 years. They are the only ones with an economic incentive aligned for prevention and wellness."

If it sounds like providers might be at a competitive disadvantage, that's going to be the case for many. But providers can make moves now that will help them become better informed and stronger at the negotiating table. Two-thirds of survey respondents (68%) say they are well positioned to be among a payer's population health management partners, including 73% of those from health systems.

Lancaster General's McGowan includes payers among her resources for learning. Lancaster General has been in touch with national payers, managed care organizations, and regional and local health systems with their own health plans. "Our discussions have been very rewarding," she says, "and have given us insights about whether this is even financially doable. They're sharing more openly so we can understand what is meant by assuming risk while advancing care."

Pace and scale

The pace and scale of the shift toward population health management have financial implications.

>Pace of change. McGowan identifies the pace of change as an important variable, cautioning about becoming financially vulnerable by shifting away from fee-for-service too early. "How do you migrate from a discounted fee-for-service environment, where you're paid for production, to one where you're paid for value while assuming a certain level of financial risk? It's not just how you do it. It's at what pace. The question of sustainability through the transformation process is a big one."

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1 comments on "Intelligence Report: Toward Population Health"


bob sigmond (10/14/2013 at 11:19 AM)
The best and easiest way for hospitals and health systems to embrace the new model of population health is to collaborate with a Blue Cross plan or other insurer which already understands population heath. Together the two organizations can design a strategic plan for transitioning to population health and agree on an annual provider budget that carries out that strategic plan. This will work best if the hospital turns over its entire billing and collection function [and collection staff which remains at the provider site] to the collaborating third party payer organization which takes over all collections and pays the hospital/health system a single monthly check that covers all the provider organization's expenditures. This avoids the provider organization having to duplicate all the initial preparatory work that the third party payer organization has gone through in becoming expert in population health. With no more involvement with fee-for-service and collections, with no more uncompensated care, and with no more worry about the bottom line, the collaborating provider organization can concentrate on incrementally transitioning into population health, with its collaborating third party payer organization, with goals of increasing quality and access while reducing expenditures. Clearly, many details have to be worked out, including [a] the method for making adjustments whenever the expenditure budget estimates turn out to be too low, [b] how to divide up any net gains or losses at the end of the year, etc. But with trust between the two collaborating organizations, the transition to population health will be remarkably easy and effective. For more information about this approach, call me at 215-561-5730 or e-mail. Right on! Bob