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).”
Get the latest information on Health IT and attend other valuable sessions at this two-day Summit providing healthcare leaders with educational content, insightful debate and dialogue on the future of healthcare and technology.