Author: Eric Wallace, Vice President, Lumeris
Regardless of the uncertainty with the Delivery System Reform Incentive Payment Program (DSRIP), the New York state healthcare market has already begun the process of transitioning its business models to support value-based care. The use of the program’s incentive dollars to support improved population health efforts for Medicaid patients has produced a halo effect on the behaviors of administrators and providers. Now, they are leading the charge to adopt business models that support long-term financial prosperity for health systems and enable improved health outcomes for their communities.
As New York healthcare leaders struggle in the awkward see-saw of balancing both models of care, one thing is clear in the drive to a better model:
That was the key theme of this year’s annual meeting with the Healthcare Association of New York State (HANYS) annual meeting. And in many ways, it sums up what health systems in New York must embrace in today’s dynamic landscape. With the move to value-based models, healthcare providers across the country are trying to balance their “two-canoe” situation and asking the following questions:
- How do healthcare leaders manage a fee-for-service, volume-driven business model along with one that seeks to manage the total cost of care?
- How do healthcare organizations ensure their resilience in this difficult financial position?
- How does a system remain focused on patient care, while building a sustainable strategy for the future?
- How do providers find a way to participate and control more of the premium dollar, given their influence over medical spend and outcomes?
Focusing on the near versus far
In the opening session, conference attendees evaluated the strategic options they face in positioning their organizations for the future. Maintaining the status quo in the near term may be the safe choice, but disastrous for the future. Health system leaders cannot avoid confronting the decisions they must make to ensure their organization’s viability in the future.
There is no question that health systems and providers must enter into value-based arrangements to move the needle on improving cost and quality outcomes. But talking about taking risk and successfully managing populations are two completely different scenarios.
Many health systems have indicated their discomfort in being forced into risk and express a lack of confidence in possessing the right capabilities to manage value-based contracts. Seeing the writing on the wall too late will result in new entrants and national payers overtaking the opportunity and leaving providers with little to gain.
Success in value-based care requires a transformative shift in the business and care delivery models of health systems and providers. Making the tough decisions in the “near” enables healthcare providers to be ready for the “far” of the future. But where should organizations start?
Aligning the organization
Organizational alignment is critical. Leadership teams must be bold to think about a new future and take action—not just discuss strategy. All too often health system leaders are debating the strategy but believe their organizations are not ready to shift to a new operational model or that their pilot programs are sufficient.
Alignment starts at the top. Then it must feed to the front lines. Providers and staff are eager to deliver the best care possible, but they must be bought into the strategy—as they will ultimately execute on it.
Finally, health system board members play an important role in ensuring their organizations stay true to their mission. Getting board buy-in is essential for health systems to embark on a transformative new strategy that will define their future.
Mobilizing the network
Health systems can no longer take their provider networks for granted. New entrants are changing the way providers can participate in the value chain, whether it’s through venture capital arrangements to support independent providers or acquisitions by payers to build their networks. Moreover, providers themselves are searching for ways to maintain independence, avoid burnout and drive career satisfaction.
Health system leaders need to be proactive and ensure they can support a network to deliver value-based care, anchored on Accountable Primary Care. They must not—cannot—wait to align with their provider networks. Otherwise, systems risk losing the ability to participate in meaningful value-based contracts without a high-performing network.
Finding the right financial model
A successful value-based strategy requires the right financial model in place. As providers move toward value-based models, they need to control more of the healthcare premium dollar to drive outcomes. Systems can achieve this by participating in value-based contracts with local payers or launching and operating their own health plan.
Partnering with a collaborative payer
Before providers look to expand their operational capabilities, whether through their payer contracts or their own health plan, leaders must consider what type of payer relationship they have. Historically, payer-provider contracts have been contentious, focused on win-lose scenarios. In contrast, a collaborative payer relationship enables providers to participate in win-win surplus generation that provides higher quality, cost effective care for consumers. If a health system cannot find a collaborative payer in market, there are options for bringing new collaborative relationships to drive the changes necessary to deliver value-based care.
So what should systems do?
Health system leaders in New York have the opportunity to improve the health outcomes for their communities. Whether the strategy is to grow and expand value-based contracts with local collaborative payers, or start a health plan of their own, provider organizations must be ready to take on significant strategic and operational changes. Success in delivering value-based care requires a population health services organization (PHSO)—an entity enabled by the right resources, clinical programs, and technology to drive improved performance in value-based contracts. Moreover, the PHSO enables organizations to prioritize and streamline population health activities, such bringing best practices to other value-based care initiatives across all populations such as Medicare, Commercial, and Medicaid.
Building a better healthcare system for tomorrow starts today. Resilient healthcare organizations can lead the way.