Ready for Rain
From the Editor: Robert Fromberg, Editor-in-Chief
The cab’s windshield wipers will not stop wiping. The driver is jiggling the switch, turning the car off and on at stoplights, and throwing his hands up, but the wipers go on wiping.
I crane my neck to scan the sky; it’s a beautiful, sunny day without a cloud in sight. It occurs to me that in one way, having windshield wipers permanently on is helpful in that the cab is prepared for rain any time it may come. Inefficient, perhaps, and not something the driver controls, but it's preparation nonetheless.
In this month’s hfm cover story, “Navigating Performance-Based Risk,” authors James J. Pizzo, Carlos Bohorquez, Andrew Cohen, and Debra Ryan take a more active and nuanced approach to risk preparation. The article outlines how to actually shape the nature of the risk you face in a changing payment system.
As payment increasingly is based on the quality and efficiency of care provided, healthcare organizations are working to improve the value they deliver, while trying to calculate the financial impact of various value-based payment scenarios. The article outlines a systematic approach that takes into account the key factors in measuring performance, assigning remuneration to that performance, having the financial wherewithal to absorb risk, and aligning incentives with desired strategic outcomes.
“When evaluating a specific contract, hospital leaders should possess a comprehensive understanding of the patient population to be served ... the potential costs and revenue associated with covering the defined population ... [and] the infrastructure needs required to care for a specific population,” the authors write. Accepting performance risk is a complex and high-stakes proposition for healthcare organizations. But the payment system is moving inexorably in that direction, making tailored, active preparation a requirement. “Leaders reluctant to accept performance-based risk soon may find that they have no choice but to participate,” the authors write, “especially if their organizations want to preserve clinical and financial integrity and be an essential provider in their communities.”
Which is not the situation in my cab, where the driver’s lack of control over his own preparation for risk is on full display. For no apparent reason, the wipers have finally shut off, just as a few clouds begin to appear in the sky. The driver had better hope he can make the wipers go on again when it starts to rain.