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Moving From Talk to Action on Population Health

February 5, 2016
by Heather Landi
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A survey finds that most healthcare organizations are still just testing the waters on population health and have identified IT issues, such as tracking and managing cost of care, and cultural issues as significant roadblocks
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While 79 percent of healthcare organizations are in at least one payment arrangement with a payer that includes either upside gain or both upside and downside gain/risk, most organizations are still just testing the waters, according to a survey report from Numerof & Associates.

And, the survey found that healthcare organizations are contending with a number of barriers and challenges to pursuing population health, including issues with internal systems, difficulty in changing the organization’s culture and hesitation about when to make the transition from the current fee-for-service model.

Numerof & Associates, a consulting firm, partnered with the Jefferson College of Population Health to examine the pace of transition from fee-for-service to models based on fixed payments linked to outcomes. For the two-phase survey, Numerof first conducted 104 in-depth interviews with executives across healthcare delivery organizations nationwide, followed by online surveys completed by more than 300 individuals including C suite executives across the U.S.

The report, titled “The State of Population Health,” charts the healthcare industry's ongoing transition to value-based payment models, pointing to the Centers for Medicare & Medicaid Services’ (CMS) announcement last year to increase Medicare payments through value-based models from 20 percent in 2014 to 50 percent in 2018 and the introduction of the Comprehensive Care for Joint Replacement Model, a mandatory bundled pricing initiative. The report notes that announcements from the private sector suggest that the push to value will only continue to accelerate, such as the Health Care Transformation Task Force’s goal to transition 75 percent of its members’ healthcare payments to value-based arrangements by 2020.

“Given the current environment, adopting a ‘wait and see’ approach has become exceedingly risky. Organizations that don’t act now are in serious danger of being left behind,” the survey report authors wrote.

Out of that 79 percent of respondents who reported that their organizations have at least one payment arrangement with a payer that includes either upside gain or both upside and downside gain/risk, more than half (55 percent) reported that 20 percent or less of their organization’s revenues currently flow through these arrangements. Only 14 percent report that up to 40 percent of their revenues flow through alternative payment models, and 9 percent reported that 41 to 60 percent of their revenues flow through those arrangements.

According to the report authors, this suggests that many organizations are still focused on small experiments and/or pilot programs, which leaves population health in the realm of “business model experimentation.”

More than half (54 percent) of respondents cited population health as “critically important” to the future success of their organization and nearly all (97 percent) cited that it was more than “somewhat important.”

According to the survey results, the general consensus among executives and healthcare leaders is that the use of alternative payment models will expand significantly in the future. Almost half of respondents said they expect that more than 40 percent of their organization’s revenues will flow through alternative payment models in the next two years.

Currently, as noted above, very few healthcare organizations are reporting that 40 percent of their revenues are tied to alternative payment models. This, coupled with the fact that two thirds of respondents rated their organization’s ability to manage variation in cost at the physician level as “average” or worse indicates that the execution gap for many organizations looms large, says Michael Abrams, managing partner at Numerof & Associates.

“There is growing understanding about what population health is and the pace that which it’s moving, and yet there is a disconnect, because the amount of progress that organizations have made towards being ready to adopt this as a new business model is really quite limited,” Abrams says. “To boil it down, there’s a lot more talk than action among healthcare providers.”

While  respondents cited numerous reasons for engaging in population health, including better control of cost, quality and outcomes, Abrams says the survey results indicate that those providers moving ahead with population health tend to be more “mission-driven” rather than just financially motivated.

Organizations that choose “it’s part of our mission statement/culture” as the primary reason for pursuing population health are more likely to be in arrangements with the potential for both upside and downside gain/risk and these organizations also reported a significantly larger proportion of revenues under alternative payment models, the survey found. 

In fact, nearly twice as many “mission/culture” respondents reported having more than 40 percent of their revenues flowing through an alternative payment model, and these organizations rate their ability to manage variation in cost and quality at a significantly higher level than others. And, the survey found that these organizations are about three times more likely to have been actively engaged in these efforts for at least five years.

“Not surprisingly, culture can be a significant roadblock for organizations pursuing population health,” the survey report stated. “Among survey respondents, two of the leading challenges to pursuing population health management are related to cultural issues (difficulty in changing the organization’s culture and resistance/lack of buy-in from physicians).”

In addition, the survey indicates that while healthcare executives believe the current FFS model won’t last forever, they are unsure when to make the transition from the current model and cite concerns about potential financial losses as a top challenge/barrier to pursuing population health.

Organizations also report that having the appropriate systems, platforms and benchmarks in place represents an ongoing challenge in the transition to new payment models. Respondents particularly identified issues with internal systems, including IT and the ability to track and evaluate cost and quality, as the top barrier.

“Many organizations struggle with acquiring the data necessary for supporting their population health management initiatives,” Abrams says. “The capability to analyze even the data that they have within their control is oftentimes very limited. Some of that starts with the software platforms that are in use today as the platforms were designed to facilitate getting paid and they weren’t designed to facilitate analyzing treatment paths, the cost of a particular course of treatment or getting at the cost by physician for that particular course of treatment. And many organizations say that a big obstacle is accessing data from outside their four walls.”

Managing variation in cost and quality, especially at the individual physician level, is a considerable hurdle for many organizations and "that’s a key challenge to getting the cost of care under control,” Abrams says. Taking a look at the actions that organizations have taken to manage variation, less than half of survey respondents reported that their organization has a formal process for working with physicians who are outliers on cost/quality and less than half also said that physician payment is based, at least partially, on the ability to manage variation.

The survey report also offers a number of insights for accelerating the transition to alterative payment models, including the need for providers to focus on deepening their relationships with payers as well as getting involved in partnerships and collaborations with other entities across the care continuum.

Within each healthcare organizations, there needs to be clear-cut leadership as well as accountability for the success of population health initiatives, Abrams says, and healthcare leaders need to develop a specific definition for what population health means in order to have a focused approach to population health management.

"It's important to get clear with what you mean by population health. In many organizations, people use the same term, but it means different things, and if you can’t be on the same page about where you are traveling to, it’s difficult to get everybody there at once," Abrams says.

In the survey report, the authors noted that organizations with a clear and focused approach to population health management were generally much further along than those without clarity and focus.

"Overall, how population health is internally defined has real implications for the pace at which the organization can move forward on its value-based initiatives as well as what specific initiatives are prioritized over others," the authors wrote.



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