Value-Based CareHistorically, hospitals have prioritized volume of services in order to maximize reimbursement. As more healthcare systems transition to value-based payment and adopt new care delivery models, their focus is moving to providing the right care in the most appropriate, lowest cost settings—generating fewer emergency room visits, hospitalizations, and patient hospital days. As facilities transition from individual profit centers to cost centers within a total cost of care model, the tension between volume and value presents a new challenge for healthcare organizations. Success within this new environment requires a population health approach that can help organizations provide the best possible care in the most cost-effective manner.

Given that initially the majority of services still fall within fee-for-service reimbursement, transitioning to a population health approach can be challenging. Since only a relatively small proportion of the population will be eligible for risk sharing at the beginning, applying a population health mindset to the entire patient base can result in inadequate revenue relative to the decrease in utilization, especially admissions. To mitigate the adverse financial consequences of decreased services, organizations may want minimize "leakage" – patients that receive care outside of the network – and attract tertiary referrals from other networks to increase appropriate hospital and diagnostic utilization.

To successfully manage the transition to value-based care, leaders need to also focus on three key initiatives: securing organizational alignment, implementing a new care model and implementing programs to meet quality and cost (utilization) objectives.

Secure Organization Alignment

Aligning the healthcare organization is critical for population health success. Healthcare leaders need to lay the groundwork by securing buy-in from all organization constituents, not just their physicians. Members of the leadership team must also be engaged.

Since physicians treat all patients similarly regardless of the reimbursement model – that is, physicians don't provide different treatment for patients in a fee-for-service model than those under value-based care – leaders will have to tread carefully to avoid sending mixed messages as compensation models evolve. Strong, consistent leadership is required to lead all constituents through the change process. Education, transparency and aligning compensation models with organizational goals are also important.

Care Models Must Evolve

Success in a value-based environment requires the implementation of a new care delivery model with two essential characteristics: each patient's care must be managed across the continuum, and patient populations must be managed proactively.

Managing Care Across the Continuum. The focal point for care coordination is often the Medical Home through which a Primary Care Provider (PCP) and team assume responsibility for their patient population. Many such teams now include a member whose primary focus is to coordinate care for patients in high-risk situations, such as transitions of care. For a patient recovering from an acute illness, the care coordinator can contact the patient by phone or in person to assure she takes the correct medications, can identify what symptoms need medical attention, and keeps all follow up appointments. Similarly, to ensure an efficient hospital stay and a smooth recovery for a patient with an elective hip replacement, the care coordinator may help oversee both pre and post surgical care, including pre-op consultation and labs, post-op medications, and rehab and physical therapy.

Adopting a Population Health Approach. Successful proactive population management requires that the network know and understand their populations: for example, diabetics, high cost patients, and patients with gaps in care must be identified and managed. Typically, this process is conducted using an enterprise registry solution that routinely identifies patients with care gaps and facilitates proactive outreach. Given that a small volume of high risk patients account for a disproportionate share of total costs, networks also need predictive modeling tools to identify and target their high-cost population for intensive care management with care managers.

Quality and Cost Management

To achieve financial success, healthcare leaders also need to focus on key quality and cost drivers. Paying attention to quality metrics is critical since many payers, including the CMS Shared Savings Program, require meeting quality targets in order to be eligible for shared savings.

Cost and utilization drivers may be managed with drug substitution programs that improve generic drug use and programs focused on emergency room frequent flyers, which can yield significant results.

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Lastly, leaders may also want to identify and variations in patterns of care that can lead to physician education opportunities and cost reduction. It's not unusual to identify at least one high volume orthopedic surgeon with significantly greater total risk adjusted hip replacement costs than the rest of the group. Accurate analysis should include all care components, such as pre- and post-procedure diagnostic costs, post-acute costs such as rehab and home care, and costs related to readmissions or other complications after discharge. This analysis can be applied to both primary and specialty care providers to generate opportunities that can yield significant cost savings.

Prioritize and Work Toward Early Wins

As healthcare changes from fee-for-service to value-based care, it's clear that health system leaders must position their organizations for the evolution. From attaining stakeholder buy-in to implementing care management programs, healthcare leaders have a lot to consider. Typically, most do not have the resources to simultaneously implement all of the programs needed for value-based care success, nor can the provider community absorb so much change at one time.

Leaders must, therefore, prioritize and develop a progressive transition plan. Many organizations find that managing their own, self-insured employee population is a good place to build core competencies and achieve early wins that can drive organization buy-in and participation. At the same time, leaders should also envision their mature program goals and structure to procure technology that can grow to meet their ultimate needs. Those who develop strategies now are laying vital groundwork for future success.