Make a Wholesale Shift to Value

Many health systems create divisions charged with value-based care, but if they are to succeed, the other parts of the organization must also see transformation as part of the overall mission.

What if organizationally, you could be an arbiter of value? What if you could choose the partners you will work with in the care continuum based on how well they perform their mission of keeping patients well?

You wouldn't have to own it; you could just as easily partner for your acute care needs as you partner with another company that owns nursing homes in your area. But your partners use your data. They adhere to standards your medical staff has formulated. You create the standards by which partners work within your network.

Sound like an impossible Utopia? The good news is that creating such an amalgam of partners, whether owned or contractually bound together, is possible under value-based care principles.

You might not be able to lead this, but the fact that it can be done should lend great importance and meaning to what you do as a healthcare executive. In fact, I heard as much at last week's HealthLeaders Media CEO Exchange. This is the kind of stuff, finally, that you got into healthcare to do in the first place.

CEO Exchange: Different Problems, Shared Solutions for Survival

No, you can't necessarily control the tipping point at which value-based care becomes predominant, because, you know, "follow the money," but you can manage your organization to be ready when that phase of healthcare transformation hits, and it will hit.

Avoid Poor Strategic Alignment
Jim Giordano, a partner and the director of population health management and value-based care services at Kurt Salmon, and former CEO of Good Samaritan Hospital in Suffern, NY, says the hospitals and health systems he works with to try to move to a more value-oriented posture are generally making the mistake of poor strategic alignment.

They may preach the message of a holistic health system, but by creating an arm of the organization charged with going forward with value-based care, the rest of the organization may not see it as part of their responsibility or even the overall mission of the organization. But assuming you can get strategic alignment, how do you manage the transition?

"One of the opportunities is to think beyond primary and secondary service elements and start to think about aggregating in your network a continuum of care partners in such a manner that you're increasing scale and the size of your market reach," Giordano says. "And that doesn't always require acquisition of a lot of physician practices."

Ah, the elephant in the room: Physician practice acquisition. Is it necessary to get physician alignment? Many experts would instinctively say that employment does not equal alignment. But acquisition can be a powerful knee-jerk reaction to perceived threats without which, you may fear, your organization may get carved out of the narrower networks that are becoming commonplace.

Yet, "there's a limit to one's capital access and ability to make this [transformation] happen with an acquisition approach," says Giordano. So if buying them isn't the answer, how do you get the organization, especially when it consists of a large cohort of independent contractors, pulling in the same direction toward value?

One way is tying them together through technology. Another is investments in clinical infrastructure, understanding the gaps around risk contracting, and creating value from partners who at some point will be asked to share a portion of payment for an array of services, or for a flat, per member, per month fee. Sound familiar?

Big Data and the Analytics Imperative

The truth is, even the largest, most influential of organizations will find themselves carved out to some degree. As data and analysis of that data becomes more granular, it becomes ever more important to tie pieces of the care continuum together such that data can be acted upon before it impacts health, and before it impacts the reimbursement cut your organization gets. Whatever you decide is your organization's strategic fit in the market, your job is to manage down the cost of your piece, says Giordano.

"Not everyone should lead the market," he says. "Aggregate a network and bring value and demonstrate it through performance. That will allow you to go to payers and create partnerships."

For hospitals and health systems, it often starts with an ACO, a transitional one-sided risk model, but that's desirable because physician and acute care centers are risk-averse, and doing something on this level is manageable, says Giordano.

The next step though, is critical, because the ACO is not sufficiently capable of producing a lot of upside.

Find Your Niche
"We say to health systems that are ready, 'take some risk on your self-employed. This is a population you're already taking risk for. You also have access to their data, claims history, and you can influence them,'" says Giordano.

"Much of the time, that population is already using your network. Once you can manage that population well, now you have a track record and can take it and create future value—direct to employer—working with payers with a wrap-around network around the narrow network. But this is a journey-pieces of this take years to develop."

Not every provider organization can lead this transition, so find your niche. Where do you bring value? Maybe your organization is high-quality, low cost. Maybe your organization has a geography that's valuable to a larger system engaged in value-based care. Find your niche and participate where you can be important.

Unsurprisingly, one of the most significant success factors, says Giordano, is creating the right economic value.

"Understand that if you're ultimately moving in the direction of partnering with a payer or becoming a payer yourself, think broadly," he says. "You can create generous revenue-sharing constructs, even with an ACO as a loss leader, because the goal is to create a robust network that can be further cultivated with other constructs as the network matures."