“Neither a wise man nor a brave man lies down on the tracks of history to wait for the train of the future to run over him.”
– Dwight D. Eisenhower
More and more of health care reimbursement to provider organizations is moving toward some type of value-based reimbursement. And, despite some pending changes in federal policy, it appears that the “train has left the station” with regard to value-based reimbursement (according to Brian Wheelan, chief strategy officer and executive vice president of Beacon Health Options — see The Value Train Has Left The Station), and for health plans, there is no “Plan B” (according to Dr. Alan Muney, chief medical officer for Cigna — see There Is No Plan B).
If your organization is going to prepare for the change to value-based reimbursement, then how do you understand what health plans want — and how do you get there? That was the focus of my closing remarks at The 2017 OPEN MINDS Performance Management Institute, The Transition To Value: Addressing The Triple Challenge Of Performance Measurement, Talent & Capital. My advice to executive teams is to think about this in three stages: first, determine what health plans want that your organization can offer; second, develop a model with a “value equation” that works for your organization and the health plan; and lastly, address the infrastructure development issues that plague many provider organization executive teams as they move to value-based reimbursement.
1. Determine what health plans want that your organization can offer
The shift from vendor to partner in the provider organization/health plan relationship requires a change in business development tactics (see Getting That ‘Preferred’ Role With Health Plans). Health plan executives are looking for a solution to particular consumer population that has some gainsharing element based on proposed outcome/performance improvements and can demonstrate a return on their investment. This involves moving to a more solution-focused business development process based on understanding health plan needs and developing customized solutions. This is neither a rapid or inexpensive proposition.
2. Develop a model with a “value equation” that works for your organization and the health plan
For many provider organizations, the “solution” proposed to a health plan will involve rethinking current cost structures and business processes. It is rarely possible to keep current fee-for-service service delivery structure and operating processes in a move to solutions that have value-based reimbursement. The new reimbursement often requires a new business model and executive teams need to “manage to the market” and use target costing methodologies in developing their solution proposal.
3. Address the infrastructure development issues
To make value-based reimbursement arrangements work at the organizational level, I find that executive teams stumble on three issues: measurement, information literacy, and capital.
- Performance measurement capability: To succeed with any type of performance-based global payment model, you need to ability to track and manage your data automatically with a system that lets you review the information you need (clinical, HR, finance, consumer experience, etc.) seamlessly. In the future, data collection for mental and behavioral health will be automated and technology-powered, and won’t be solely the province of the electronic health record (EHR). We’re not there yet, but we’re on the way and most organizations need to ensure that they are building the infrastructure now to manage with metrics in the future.
- Organizational information literacy: It’s not just about collecting the data, it’s also about interpreting it. To do that, you’ll need to have a data-literate team and not just at the executive level. You need a market-oriented management team that is comfortable reading and interpreting data, and making decisions and managing performance based on organizational metrics.
- Capital for a performance management infrastructure: The tech infrastructure organizations need to compete is changing. An EHR system is just the beginning. You need to invest in executive leadership to take that tech infrastructure from data to information to action and a performance-oriented leadership team will be able to do that.
In the end, the reality for executive teams of provider organizations is that value-based reimbursement isn’t going away. So what are you going to do about it? For an answer to that questions, check out these resources:
- From Specialist To Full-Service Health: A Transmogrification
- Building The ‘Next Generation’ Behavioral & Social Service ACO
- Where Are We On The Path To Value-Based Reimbursement?
- P4P A Year Later – The Results Are In
- The Brave New World Of SMI Population Management – New Care Coordination Model, New Financing Model
To prepare your organization for the future, join me on June 7 at The 2017 OPEN MINDS Strategy & Innovation Institute in New Orleans. Our agenda covers a wide range of strategy options — from managed care to value-based contracting to more focus on integration and care coordination. And, I will be closing the institute with my keynote, There Is No Plan B: How To Demonstrate Your Value & Create The Collaborations That Matter In A Changing Market.