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Analysis

Hospitals are Ready to Assume More Risk

By John Commins  
   June 19, 2019

A survey shows most providers believe they have the capacity to assume more risk and will do so within the next three years.  

Hospitals and health systems are ready to take on more risk in contracts with commercial insurers, Medicare and Medicare Advantage, a new survey shows.

A Navigant-commissioned survey of 170 hospital senior finance executives found that 72% of them believe they have the capacity to take assume more risk, and will do so within the next three years.

Of those planning to assume more risk, 64% said they would do so with commercial payers, 57% said they'd do so with Medicare value-based models, and 51% said they'd do it with Medicare Advantage, the survey found.

The survey also found growing enthusiasm for partnering or starting provider-sponsored health plans under the risk-assumption strategy, with 44% of executives saying their hospital is already part of a PSHP and 19% say they plan to start one. 

Navigant Managing Director Richard Bajner says the Affordable Care Act was supposed to make risk-based models "the new normal," but that didn't happen as quickly as anticipated.  Nonetheless, providers appear to be accepting the inevitability of risk-models.

"With most health systems anticipating continued downward pressure on margins, accepting risk can represent a lever for revenue growth," Bajner says, "as long as providers clarify internal accountabilities and commit enough of their resources to risk models."

"These results show the value-based movement may be coming full circle, and this time providers will benefit from previous experiences in designing their approach," he says.

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For those health systems that are taking on more risk, 62% said their biggest capital outlay will go toward improving technology. In addition, more than half of the respondents said they would work toward improving physician and patient engagement in the risk-based models. 

The survey found that other factors that are driving the move toward risk include the growth of the Medicare rolls, which are adding 10,000 new enrollees every day, a decline in inpatient services, and consumer demand for coordinated care. 

Of the hospital leaders who said they would not increase risk levels, 56% blamed a lack of local market demand, and 42% said operational obstacles, such as contract execution and care coordination and management, challenged their capacity.  

“These results show the value-based movement may be coming full circle, and this time providers will benefit from previous experiences in designing their approach.”

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

Of those planning to assume more risk, 64% said they would do so with commercial payers, 57% said they'd do so with Medicare, and 51% said they'd do it with Medicare Advantage.

The survey also found growing enthusiasm for partnering or starting provider-sponsored health plans under the risk-assumption strategy.

Of the hospital leaders who said they would not increase risk levels, 56% blamed a lack of local market demand, and 42% cited operational obstacles.


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