A Shifting Landscape Means New Priorities for Risk Management
From the President: Joseph J. Fifer, FHFMA, CPA
Healthcare organizations have always been exposed to a variety of financial risks embedded in the payment systems of the marketplace.
New contracting relationships are shifting portions of financial risk among industry stakeholders. For example, we’re seeing important shifts associated with risks in population health, and adaptations to systems that are based on quality and efficiency, not on volume. As healthcare organizations, payers, and physicians become increasingly aligned and integrated, the ability to manage our risk differently will become essential for all three.
To adjust to the changing marketplace, hospitals and health systems need to excel in capacity management and focus on market share versus market growth. Finding a balance between capacity and demand will be crucial for maintaining positive organizational performance while meeting the needs of patients in the communities served. Likewise, building specific relationships with target populations is a smart and necessary investment. Provider organizations can also achieve these goals by developing new collaborative relationships with payers and employers. This strategy can spread risk across organizations, while specific linkages—for example, with employers—can create more health-focused, value-conscious consumers.
Providers should be careful not to take on risk without the cooperation of payers. First of all, payers need to move to payment structures that reward better care coordination and improved quality of care for patients. Payers also need to share claims data as providers work to manage population health, and they need to work with providers to establish reasonable guardrails as providers develop their ability to take on and manage risk-based contracts. Commercial payer data remains critical to efforts to improve quality of care and manage healthcare costs.
Physicians also are critical partners as hospitals and health systems assume more risk. As organizations assume risk, physicians will need to maintain or improve the quality of care while closely managing per-patient costs. Physicians also can manage risk by standardizing medical devices and care practices for increased efficiency. This standardization is already happening as hospitals and health systems align with physician practices. Finally, physicians can work to get patients onboard with population health management initiatives, and promote increased personal responsibility around personal health. Frankly, I think most physicians are ready if given adequate and usable data. They are aware of the problematic aspects of the fee-for-service system and willing to take on the challenge of shifting to a new paradigm. We’ve known things had to change for so long, that, even though there will be growing pains, it’s a relief that it’s finally happening!
Managing risk is possible if we work together with shared data. We all need to work within our own organizations to make risk management a priority and to create the best possible position for ourselves going forward. In an era that will almost certainly be remembered for its volatile waves of change and reform, everyone in the marketplace should be examining options and taking strong action when needed.