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Healthfirst CEO on Returning $500M to Providers, Future of VBC

Analysis  |  By Jack O'Brien  
   November 30, 2020

Healthfirst CEO Pat Wang discussed the move towards value-based care, as well as how payers and providers can improve their working relationship.

Between April and June, Healthfirst, a New York-based insurer, sent back more than $250 million in surplus to providers in the Empire State as health systems dealt with the severe financial issues arising from the coronavirus outbreak.

In a recent interview with HealthLeaders, Healthfirst CEO Pat Wang said that the insurer had returned around $500 million to providers during 2020.

Related: CMS Administrator Seema Verma Discusses Price Transparency, Value-based Care, and COVID-19

Additionally, Wang discussed the move towards value-based care, how payers and providers can improve their working relationship, and why fee-for-service isn't a sustainable element of the healthcare system going forward.

Related: What Hospitals Need to Know About the Changes to Stark Law

This transcript has been lightly edited for brevity and clarity.

HealthLeaders: From your perspective, how do you think the shift towards value-based care will be impacted by the pandemic?

Wang: I think in the short-term, many providers, especially hospital organizations because they were just so overwhelmed, are focused on trying to get things back to normal, getting their patients back in for delayed care, and sort of stabilizing their normal revenue base things like that.

But I think that the long-term view is still value-based care. In my personal view, there's no other way; there's going to be a lot of financial pressure on the healthcare system. State budgets are getting hammered and that funds Medicaid; the Medicare trust fund is now expected to expire in 2024 which is much earlier than usual.

So, people are going to need to find ways to be more economical and get better outcomes for the dollars that are available. Policymakers have been pushing [value-based care] for a long time, whether it's the Center for Medicare & Medicaid Innovation, accountable care organizations, payment bundles, or things of that nature.

I think that there are a lot of forces out there to say, 'We have to push in this direction because fee-for-service healthcare is just not going to be the long term solution for the United States.' It's not easy to get there. 

The key thing here is if the goal is to improve quality, reduce disparities, improve the health of an entire community, that is a team sport. That is not me doing my traditional thing as the health insurer and making hundreds of billions of dollars in a given year; that is not a provider system on its own putting the pedal to the metal and just like squeezing every dollar that they can out of a fee-for-service system, that is aligning payers and providers in a particular way.

[Healthfirst] thinks value-based payment (VBP) does that through a trusted working relationship with the provider, saying 'You don't have to measure your success based on how much fee-for-service revenue you generated. You get to measure your success based on how you improved quality and outcomes for this population.'

Even though providers lowered fee-for-service spending, they don't get hurt because, in a VBP model, they keep the surplus that they generated through the effectiveness of their efforts.

I think it's definitely going to be a time of stress for the delivery system, but VBP is the sort of the true north on your compass. Once people find their bearings again, I do think that we're going to continue to charge forward with it.

HL:  Do you think that there's an opportunity for improvement in payer-provider dynamics coming out of the pandemic?

Wang: I think it's stressful. I think that there are a lot of providers who are very resentful at the sort of how well, economically their commercial health insurance partners have done during the pandemic. Obviously, we're different, we have returned so much money to them, I think they're incredibly appreciative.

But there's some tension and I think that the handwriting is on the wall for payers as well as providers to say, 'Let's get over this and try to do what's better for America, our customers, and your patients' because people do want the same goal. I think there's always going to be tension. Payers see the world through a slightly different lens, and it's important but I think it's in our interest to kind of figure out how to get through it.

Different payers have different views on VBP, and there's diversity of opinion in the provider community, too. I don't think it's one-size-fits-all. I do think that will see more emphasis on it from at least the two major payers.

Now, government payers are dominating health insurance these days increasingly, and they have a lot more say in the directions that they set for the shape of the system.

Our latest projection, the amount of money that we are going to return to the delivery system is through 2020 is going to probably be close to $500 million, so it's significant. All this is just by operation of the contract. This is nothing special. No charity, no donation, no goodness of our hearts, it's just the way the model works.

It's kind of proof like I said before, this kind of model is important in peacetime because it aligns incentive to do the right thing for the population. But in wartime, it provides a lot of stability.

HL: Our audience is primarily comprised of leaders in the provider community, is there any sort of final message you want to convey to them?

Wang: I can't speak for the larger payer community, but all I would do is reiterate what I said before: this is a team sport.

Improving the health of the population is a team sport, and so I would encourage your readers to think about it from that perspective and find the team members that they want to work with on this.

It's the right thing to do. I believe it's the future and I think that there are willing partners out there and that people should feel hopeful about finding teammates that they want to go through this journey with.

Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.

Photo credit: Healthfirst an American Health Insurance company Lake Mary, Florida/ USA - April 2019 / Editorial credit: Benjamin Klinger /

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