Source: HFMA-GHX survey results, 2020..
The four approaches were defined in the survey as follows.
- Develop/manage the care delivery network (33.9% of respondents): The organization will take population-based risk for cost and quality outcomes across as many payer classes as possible (e.g., a health-system-based Medicare Next Gen ACO).
- Blended approach (42.3% of respondents): Depending on the payer and the model, the organization might develop and manage the care delivery network or it might participate in someon e else’s network (e.g., a hospital in CJR and participating as a preferred provider in a physician-led ACO’s network).
- Participate in someone else’s network (16.9% of respondents): The organization will partner with other entities taking population-based risk in their care delivery networks (e.g., a hospital participating as a preferred provider in a physician-led ACO’s network).
- Other (6.9% of respondents): The organization described an approach that differs from the three others described in the survey.
These current numbers are lower than many would expect, but industry observers might also be surprised by the survey’s findings of projected revenue at risk in the next five years. Even though organizations in all four categories anticipate taking on increased APM-related risk, none of the projected increases were profound.
The comments of one respondent provide some perspective on how organizations view this journey. Donna Littlepage, senior vice president, accountable care strategies, for Carilion Clinic in Roanoke, Virginia, described her organization’s focus on value-based care as a reflection of her organization’s commitment to improving the health of the communities it serves.
“Value-based care prompts us to intervene sooner with our patients to create better outcomes for them and, as a by-product, to avoid unnecessary medical spend,” Littlepage said. “So we are taking on risk in some contracts to receive potential financial rewards to fund the resources we are utilizing to create these results for our patients. At the same time, we must remain aligned to today’s dominant payment models to ensure we can financially afford this work. We must balance the work we are doing and the pace at which we move to risk-based contracts to achieve long-term viability.”
In responding to the survey, Littlepage indicated that Carilion’s revenue at risk amounted to between 0.1% and 3.0% of total revenue. But she noted that the question is somewhat complicated by definitions. “If one looks at payments we receive under these models, it is a very small percentage of the health system’s net revenue. However, if you look at the fee-for-service dollars included in the reconciliation of these contracts, it is more like one third of our net revenue.”
Focus on capabilities required for successful risk contracting
The survey also focused on the capabilities deemed essential to success under risk contracts, along with other considerations around risk contracting. These capabilities included:
- Care coordination across care settings
- Application of business intelligence and analytics to reduce variation in care
- Physician engagement in risk-management activities
- Clinical pathway redesign
Not surprisingly, organizations that have developed and are managing their own networks have the most sophisticated capabilities. And in addition to their tendency to have more revenue at risk in APMs today, they anticipate assuming greater risk than other organizations in the future. Organizations pursuing a “blended model” or participating “only in others’ networks” have less developed capabilities, despite their projections of having almost as much revenue at risk in five years as the first group. This finding suggests organizations in these two groups have a significant gap to close if they are to credibly execute their stated strategy — that is, to provide a lower total cost of care at either the population level (under the blended approach) or the episode level (under either the blended approach or through participation in others’ networks) — and gain volume from other risk-bearing organizations.
Organizations acknowledge the importance of having the aforementioned capabilities to perform this work effectively. Littlepage underscored this point: “We have to be able to understand the attributes of our patient population to proactively address their healthcare needs,” she said. “We have to share that information with providers to enable them to best manage the care of their patients. And we need robust care coordination to spend more time with patients to work with them on self-management of their disease state.”
Littlepage also pointed to one more capability her organization regards as being essential: “A robust system to measure performance is helpful to succeed under risk contracts. We have a system to measure performance of our care coordinators. We measure both the caseload of our care coordinators as well as graduation rates for our attributed members. This allows us to know that what we designed is working effectively.”
Following are some highlights of findings with respect to these essential capabilities.
Care coordination. Within each capability examined, respondents were asked to rate their level of competence on a scale of 1 to 5 (with 5 being highest) regarding various aspects of the capability. Again, not surprisingly, organizations that had developed their own networks rated their care coordination capabilities higher on average than did those using the other approaches.
What was surprising, however, was how the three groups rated themselves regarding one key aspect of care coordination: the ability to discharge patients to a high-value post-acute care (PAC) network as necessary. Regarding this capability, the differences in self-ratings among the same three groups were narrower (i.e., 3.44, 3.25 and 3.27, respectively). The closeness of the ratings among the three groups and their relatively low levels were surprising because inefficient use of PAC often represents one of the most significant opportunities to improve outcomes and reduce the cost of care in both bundles and shared savings contracts.b