Healthcare Analytics

Use Healthcare Analytics to Create Narrow Networks and Minimize Patient Leakage

The Evolving Definition of Narrow Networks

Traditionally, narrow networks were seen as a way for health plans to limit their coverage to providers that delivered the most cost-effective care. Payers would designate preferred providers based on cost, quality, and efficiency. The goal was to keep patients using physicians within the narrow network.

With the rise of value-based reimbursement and the increasing popularity of population health management, narrow networks are now defined as the services and continuum of care that are provided within a single network. Controlling patient leakage from the narrow network creates opportunities for improved coordination of care, ultimately leading to better patient outcomes as well as optimized reimbursements and revenue.

The patient centered medical home (PCMH) model encapsulates this emerging take on narrow networks. A PCMH serves as central point of care coordination for a patient or specific population. Properly managed, it creates a "medical neighborhood" of aligned inpatient, non-acute, and preventative care providers. Patients requiring hospitalization or imaging, for example, would only be referred to providers within the network.

Today's Healthcare Market: Falling Per-patient Revenues

Population health management, shared savings, and capitated contracts reward hospitals and healthcare networks for improving quality and reducing the overall cost of care. Success and survival require increased efficiency, but also a reduction in the utilization of potentially avoidable services such as expensive emergency department visits or inpatient hospital stays by proactively managing the population toward healthier outcomes. For a horizontally integrated network, this translates to less revenue per patient.

In order to make up for revenue lost to shorter length of stays and fewer readmissions, networks have two options: increase the number of participating patients or decrease the amount of care provided outside of the network. Patient leakage to competing networks is typically curtailed by financial incentives—or penalties—that are passed on to the patient. For instance, patients may pay significantly higher out-of-pocket expenses when visiting an out-of-network provider.

The True Cost of Patient Leakage

When patients receive out-of-network care:

  • The ability to coordinate care is dramatically decreased, which in turn can undermine patient outcomes and population health management efforts
  • The network loses both clinical and financial control of the patient's care. For example, an out-of-network physician may order tests and treatments that do not align with evidence-based best practices. Regardless, the parent network is still responsible for the cost. In this case, patient leakage can significantly increase the cost of care

Keep Networks Narrow with Healthcare Analytics from McKesson

Narrow networks can be an important factor in the success of a value-based reimbursement transition. In addition to providing greater control over cost of care, the efficiencies gained in care coordination help drive better clinical outcomes.

A healthcare data analytics solution from McKesson that includes health data visualization and healthcare consulting can support and leverage the benefits of narrow networks for both short- and long-term initiatives. For example:

  • Assuming an organization has historical data, healthcare analytics can quickly pinpoint the providers in a network whose referral patterns are leading to patient leakage and serve as a guide to change this behavior
  • The ability to combine claims data from your payers with the visit and utilization data from your own source systems provides you with unprecedented visibility on both in and out of network utilization
  • Over a longer timeline, hotspot analysis can be used to correlate patient addresses with out-of-network services. If patients in a particular ZIP code tend to utilize a non-network emergency department, the development of an urgent care center in the area may have significant long-term advantages

Learn more about how healthcare analytics software can help providers identify and avoid patient leakage.

Next: Health Data Visualization with McKesson Analytics Explorer™

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