We’ve written previously about the changes in provider reimbursement from health plans — more value-based reimbursement, smaller provider networks, a move to the “center of excellence” model, and more (see Where Are We On The Path To Value-Based Reimbursement? and Value-Based Reimbursement & Accounting: Show Me The Money). And, at our institutes, we’ve discussed the best practice processes for health plan business development – including a heavy focus on performance measurement capability, data literacy oriented to the market, and capital investments for management infrastructure (see The Next Generation Of Care Collaboration: Building Your Business Case In A Value-Based Market and The Benefits & Challenges Of For-Profit Business Operations In Non-Profit Organizations).
But when it gets down to writing that proposal for a specific “preferred role” in a health plan, where do you start in this new era of provider contracting? At a high level, your proposal needs five key elements:
- Solutions for cost/quality issues for “problematic populations”
- Customized solutions
- Gainsharing in financing model
- Outcome and performance data
- Demonstrated return-on-investment (ROI)
As I discussed in my closing keynote, The Transition To Value: Addressing The Triple Challenge Of Performance Measurement, Talent & Capital, at The 2017 OPEN MINDS Performance Management Institute, this construct is simple. But, I’ve found that many management teams get stuck on taking the clinical model and creating a corresponding financial model. Proposing value-based reimbursement takes some planning. (They don’t call it “risk” for nothing.) Pulling together preliminary performance data can be time consuming, and projecting return on investment (ROI) takes analysis and creativity.
But these are the new rules of competition in an increasingly crowded service delivery market, and management teams need to learn how to approach these opportunities. One constant in developing a financial model for an innovative clinical programming approach is that to generate ROI numbers, the clinical model assumptions need to be reworked to a particular price point — in this case, the price point the market will bear. This ability to “manage to the market” is common in more competitive fields, but relatively new to health and human services.
To be successful, management teams need to generate the leading indicator data — that is, the data needed to manage to the performance required by customers. But even that isn’t enough. Management teams need skills in information literacy, performance management, and “manage to market” competitive orientation. For more information on “managing to the market,” check out:
- Winning The Business – Business Development In A Shifting Health & Human Service Market
- “Following The Money” In Specialty Care Management
- Better Yield From Business Development Dollars? Go Where The Money Is
- The Market Metrics That Shape Your Business Development Tactics: Mapping Your Market & The Payers
- Collaborations Demand ‘Proving Your Business Case’
- Why Unit Costs Matter & What To Do About It
- The Amazon Leadership Principles & The Amazon Flywheel – What They Could Mean For Your Organization
- ‘Competitive Advantage’ Drives Your Operational Performance Metrics
- Target Costing & Managing To Market Rates
- Tools for launching new service line in turbulent times
For more on developing relationships with health plans, join my colleague and OPEN MINDS Senior Associate Steve Ramsland, Ed.D., on June 7 for his session, “Finding New Opportunities With Health Plans: How To Market To Managed Care” at The 2017 OPEN MINDS Strategy & Innovation Institute.