More than half of healthcare executives surveyed believe they'll see a return on investment for healthcare information technology and data/analytic tools in four years or less.
More than half of healthcare executives believe they will recoup their investment in population health management programs within three to four years, an online survey from KPMG LLP shows.
"It can be realistic within three or four years, but let's not sugarcoat it. It takes a lot of time, effort, commitment, and understanding to make that happen," says Joe Kuehn, a partner with KPMG's Healthcare Advisory Practice.
"It needs a commitment to change how you're rendering care and getting funded from that care, moving away from fee-for-service base to quality and outcomes and some form of value-based payment. But there is still enough fat in the system and low-hanging fruit where those quick wins can be used to fund and reduce the costs and ultimately deliver that ROI."
The upbeat forecast from nearly 300 healthcare executives came even though 24% of them described their own population health management capabilities as "mature." Nearly 40% described their population health capabilities as "nonexistent," and 38% describe their capabilities as in the "elementary stages."
Population Health: Are You as Ready as You Think You Are?
"Trying to determine what the ROI is up front is sometimes more art than science, but looking at technology and population health management in a vacuum isn't what we are looking at," Kuehn says.
"It's looking at the future of healthcare delivery and the design of new target operating models, meaning redesigning the care delivery systems and business models to practice differently and also to practice in a way where we can accommodate new forms of payment and funding for the care we are rendering."
The survey found that 20% of executives believe they'll see an ROI for healthcare information technology and data/analytic tools within two years, and 36% said they expected an ROI within three or four years. Another 29% see the ROI in five years or longer, and 14% say they'll never recover the investment.
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Levi Scheppers |
'The Right Thing to Do'
Levi Scheppers, chief administrative officer at Nebraska Medicine, says the Omaha-based health system projected the ROI for the cost of the IT infrastructure and the new personnel needed for population health. The tricky part was trying to determine the cost of utilization of the "kept market share" and the risk of not doing anything.
"You think you are going to keep utilization, but on the flip side your competitors are thinking the same thing," he says. "Ultimately, we got comfort in doing it because it is the right thing to do at the macro level. It is the new cost of doing business in healthcare. You need to know how to produce value more consistently as opposed to just increasing prices and hoping volumes follow."
While there are uncertainties around any financial model for population health ROI, Scheppers says, "you have to do the financials to even have the conversation."
"You don't always have to make the decisions off of the financials, but you need to know it. It is still a valid lens. You need to know what you anticipate recouping," he says. "The approach we took was 'if we are going to do it we need to make sure we understand the financial risks so we are making the right decisions as we are implementing these strategies.'"
"Just make sure you know the risks you are taking and the assumptions you have made in order to recoup any semblance of the investment, but it's not a go/no go based on purely the financials."
Retail Disruptors
Forecasting ROI becomes even more complicated when the dynamism of the budding retail market for population health is factored into the equation.
"We've had Walmart trying to enter the market from a primary care base. You have CVS and Walgreens executing on their care delivery strategies. You have DiVita making their acquisitions of risk-taking providers and trying to deploy that nationally. All of those providers are disruptors and it's tough to incorporate all of those risks into our traditional models from an ROI perspective. So, we are monitoring the risks as we make our decisions, and that is more critical than purely trying to break even within two to four years."
Even with the daunting challenges in a new and fluid market for population health, Kuehn says providers are better served by joining the fray now, rather than letting others do the heavy lifting.
What's So Great About Retail Health Clinics?
"It takes folks who can see over the wall and understand where they need to be going," he says. "Those that are more proactive are going to be the winners because they have the time to make some mistakes that aren't financially devastating."
"Those who are sitting on the sidelines watching the game, by the time they get in it they are going to be under duress and pressure to make it happen, and that makes it that much more difficult."
John Commins is the news editor for HealthLeaders.