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3 Keys for Population Health Success That Don't Require Capitation

Analysis  |  By Philip Betbeze  
   May 31, 2018

Contrary to popular belief, capitation is not a necessary condition for truly implementing population health at the system level, according to one New Mexico health system.

This article appears in the July/August 2018 edition of HealthLeaders magazine.

There's probably no bigger buzz phrase right now in healthcare than population health.

Applying population health—the formulation of healthcare interventions to maximize the long-term health outcomes of a given group—can seem intimidating, because it could conjure thoughts about the expensive infrastructure and transformational business model healthcare leaders may believe are prerequisites for deploying it.

They rightly recognize the difficulty of changing the way healthcare is provided in such a way that cost and quality are improved without hurting the bottom line, in what's still largely a fee-for-service system.

While Presbyterian Healthcare Services, an eight-hospital Albuquerque, New Mexico­–based system has many of the prerequisites, such as a proprietary health plan, to execute on population health strategies, Jason Mitchell, MD, its chief medical officer, insists such elements aren't necessary for other organizations to emulate strategies they've employed to cut costs, improve quality, and extract more value out of healthcare services.

Following are three tactics Presbyterian has successfully launched that don't necessarily need capitation to succeed.

1. Commit to 24/7 Services

You might say you already do commit to round-the-clock services, in that you have a 24/7 emergency room, but we're not talking about that kind of super-expensive care here. 

Mitchell says Presbyterian's Complete Care program, which features a 24/7 call center care team, was developed to help "bend the cost curve" on the health system's highest-cost members—those who are frequently admitted to the ER and who generally have hard-to-manage chronic conditions.

"When they want to call 911, instead they call our 24-hour team," says Mitchell. "[The program] addresses the next segment of patients who are not homebound and not critically ill, but who are expected to be high spend."

Presbyterian identifies this patient cohort through analytical algorithms that identify patients likely to die within the next two years but are not showing signs of it yet, such as critical illness.

"There's magic in data, and population health is identifying who will benefit most from an intervention and applying that to them."

—Jason Mitchell

Presbyterian can access behavioral, pharmacy, and intensive teams to help triage and arrange care for the patient and determine whether he or she really needs emergency room care.

The data that populate Presbyterian's algorithm are data any system would likely have, but it took over a year to figure out how to analyze it properly.

"It's based partially on the number of diagnoses, the number of meds, and the frequency of their ED visits," he says. "When we put it together to model it, it was about 80% predictive of mortality in the next two years. There's magic in data, and population health is identifying who will benefit most from an intervention and applying that to them."

Perhaps not surprisingly, the patients end up preferring this system over just showing up at the ER, he says.

He attributes the 24/7 call center to a decrease in hospital admissions from the group by 50% and says it's had a big impact on length of life and patient satisfaction.

2. Commit to Standardization

Presbyterian's Complete Care program generally caters to around 600 unique patients, "which doesn’t sound like a lot, but if you think about the spend, keeping them out of the hospital can save millions and millions of dollars," says Mitchell.

That also leaves dollars to do things for other populations because population health begets population health, as Mitchell likes to say.

"In time, you drop the cost of care across large swaths of patients," he says.

Mitchell says Presbyterian follows the data to make sure it's recognizing all the possible benefits. For instance, with some of the savings, Presbyterian instituted a small blood utilization team to standardize how the health system uses blood.

"The truth is blood products are dangerous, costly, and in short supply," he says. "We were using more than we needed to, but by promoting stewardship and appropriate utilization, we saved half a million dollars last year focusing on reducing variation."

That's population health, too, he says.

Another area dollars have been invested is in standardizing care in the health system's cardio program. The cardio team's efforts decreased length of stay in the ICU by 1.5 days on all procedures and by 2.5 days in valve replacement surgery.

"We provide resources and enable [the cardio team] to do the work, and they’ll become autonomous with standardization over three to five years," he says. "We make population health a component of our culture by helping them lead and not telling them what we expect them to do."

3. Commit to Investing the Savings

Mitchell says with population health strategies, at some point, health systems will need to invest in areas that don't generate revenue, but that do generate savings for the benefit of the patients.

"If it doesn’t work, we can turn it off after a year," he says. "Anywhere you can drop the total cost of care and improve quality, that's great. Even if you're all fee-for-service with no risk arrangements, think about where you are, in theory, capitated."

Medicare DRGs are, in effect, capitated. Assuming resources are finite, hospitals could save enough money to further invest in population health.  

"I don’t see a fee-for-service model interfering with this, but you have to find the right place to start," he says.

Demonstrated savings thanks to standardization or improving care or patient satisfaction opens the door to value-based alignment for payers.

"Go to payers and ask what their biggest challenges are and how you can help," he says. "Maybe you can work out a special payment to provide additional services." 

Philip Betbeze is the senior leadership editor at HealthLeaders.

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