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Market Report: Dallas’ Slow but Steady Push Toward a Value-Based Care Future

November 8, 2017
by Rajiv Leventhal
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Texas healthcare leaders discuss the region's move to value-based care and how health IT will play a large role

Editor’s note: To align with our Dallas Health IT Summit in December, Healthcare Informatics took a deep dive into the Dallas healthcare IT and value-based care markets, providing an update on how the region is progressing in these areas.

Everything is bigger in Texas” is an old saying that Texans like to use to describe their home state, and when it comes to healthcare, this phrase also rings true; various patient care leaders in this region point to the Dallas-Fort Worth area specifically as being one of the fastest growing markets in the U.S.

According to a 2016 “Texas Healthcare Market Review” from Allan Baumgarten, a Minneapolis-based independent analyst and consultant studying trends and organizations in local health markets, hospitals in the state are expanding through acquisitions, partnerships and adding new convenient care sites, and all of the area’s major systems are making large investments in new facilities. Indeed, Baumgarten’s report specifically noted, “Bolstered by strong profitability, Texas hospital systems are pursuing a variety of strategies to gain market share, including acquisitions, partnerships and new facilities. However, inpatient utilization is flat or increasing slowly in much of the state. Texas health insurers have added a million Medicaid and individual members in the past two years, but large losses by a few insurers broke a streak of strongly profitable years.”

One type of partnership that this Texas market report is referring to is payer-provider collaboration, when a health system and an insurance provider link up to work on population health management and value-based care initiatives. Interestingly, Baumgarten said in a prior report on Texas healthcare that in the Houston region, there’s more risk sharing between insurance plans and providers than in the Dallas area. Said Baumgarten, “The bottom line is, in Houston, I do think that because they’ve moved toward a fee-for-value type arrangement to a greater extent, that their revenues and income are more modest than in Dallas/Fort Worth. They’re just moving that way today.”

Leaders at major Texas healthcare systems that were interviewed for this piece do acknowledge that historically, the Dallas-Fort Worth region is not the most advanced when it comes to risk sharing agreements and payer-provider collaboration, but in a broad sense, trends in this area are not too unlike other pockets of the U.S. Luis Saldaña, M.D., chief medical informatics officer (CMIO) at the 29-hospital Texas Health Resources (THR), based in Arlington, Texas, says that the Southern/Texas market in general runs a bit behind the North and the Northeast in terms of the penetration of value-based care. But, Saldaña, who has been in a leadership role at THR for over a decade, does add that C-suite executives at the health system are “certainly shifting their mindsets to the value-based world.” He adds, “We are strengthening our alignments with physicians, which you’re seeing in general, and we’re partnering with independent physicians, as well as with some key local partners for various different arrangements that would facilitate delivering population health.”

Similarly, Pamela McNutt, CIO at the seven-hospital Methodist Health System, based in Dallas, notes that years ago, there was a push in the region for providers to dip their toes into population health-specific products, but the population health initiatives didn’t grow as expected in Dallas-Fort Worth. “If you asked me [about risk sharing] a few years ago, the answer would have been about installing systems, and practicing and preparing for our Medicare Shared Savings [accountable care organization] programs so that this big shift to population health would happen. Pundits were saying that by this time, the payment model was going to totally shift and that population health would primarily be the way we would get paid. But that has not been the case,” admits McNutt.

Pamela McNutt

As Saldaña alluded to, the Dallas-Fort Worth region isn’t alone in its lag when it comes to advancements in taking on risk. Depending on the source, statistics might differ, but 2016 research from Salt Lake City, Utah-based analytics vendor Health Catalyst found that about 62 percent of health systems surveyed have either zero or less than 10 percent of their care tied to the type of risk-based contracts identified by the Center for Medicare & Medicaid Services (CMS) as “value-based,” including Medicare ACOs and bundled payments.

Nevertheless, the year prior, the government announced a plan to tie 30 percent of traditional fee-for-service Medicare payments to quality or value through alternative payment models such as ACOs and bundled payments by 2016, and to tie 50 percent of payments to these models by the end of 2018.

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