About 58% of specialty provider organizations are getting some revenue from value-based reimbursement agreements, and 9.3% have 20% or more of their revenue coming from VBR—a big change (see VBR @ Scale-Changes Required and 2019 OPEN MINDS Performance Management Executive Survey). The health plan speakers at The 2019 OPEN MINDS Performance Management Institute all spoke about the push to increase VBR arrangements in both number and degree of risk sharing.
The question for most executive teams is, as VBR arrangements become more common and riskier (financially, speaking), how do you know if your organization is ready? That was the topic of the session, Have You Optimized Your Organization For Value-Based Reimbursement? The OPEN MINDS VBR Assessment, featuring Donald J. Dauman, Senior Vice President of Finance & Chief Financial Officer, Spectrum Health & Human Services, and OPEN MINDS Senior Associate John F. Talbot, Ph.D.
Dr. Talbot spoke about the common domains in assessing VBR readiness—clinical management and clinical performance optimization, client access, financial management, technology reporting infrastructure, strategic alignment, a culture of innovation, and workforce adequacy. From a preparation perspective, these domains can be measured as part of pre-planning (see Value-Based Reimbursement Readiness Assessment).
Mr. Daumann spoke to the on-going issues of managing VBR arrangements. Spectrum is a behavioral health provider in Western, New York that has 14 locations in five counties. They are a member of Health Home Partners of WNY, which manages integrated care services for consumers with chronic conditions under a per member per month reimbursement structure, and the Value Network, IPA: Independent Practice Association, which is designed to enhance the bargaining power of the local behavioral health care system. Spectrum is also participating in value-based arrangements through the state of New York’s Delivery System Reform Incentive Payment (DSRIP) program, including the Millenium Collaborative Care System and the Finger Lakes Performing Provider System. For more information about Spectrum, see 3 Steps To Competing On Performance and The Nuts & Bolts Of Making A Health Home Sustainable.
The basic question many institute attendees were asking was, once you “go live” with VBR, then what? You may think you have a handle on all your competencies but like any strategy, what you have on paper going into a plan is seldom exactly what it looks like in practice. Mr. Dauman identified six key areas that provider organization executives need to master for VBR success—partnerships, leadership buy-in, technology and data mastery, fiscal management, clinical development, cultural buy-in.
Partnerships—Success in a VBR arrangement relies on developing and maintaining partnerships with payers, health plans, and other provider organizations alike. Put simply, effective whole-person care management relies on it. But just having a collaboration isn’t enough. Executive teams need to know what value you need from those relationships. Mr. Dauman noted:
Every person who works in your organization will be part of building these partnerships. They need to know how critical this is, so they know how best to react. Look for local community resources, and get your people involved in the community to make those partnerships for your organization. Depending on the type of talent you need, and depending on where you are located, bringing in the people you need to run and administer the programs can be hard. Especially when you have multiple organizations looking for and competing for that talent. Consider what makes your organization more attractive than others. Also look to shared services/shared management structures to address the high cost of upper level talent.
Leadership Buy-In—Provider organization executive teams (and boards of directors) need to align strategy and commitment at the highest levels of the organization with operational execution. Executive leadership skillsets that are critical include financial management, human resources, technology, data management, and the ability to prioritize and act on growth opportunities. Mr. Dauman noted:
Do you have a board and administrative understanding of the change? You will go through a lot of change, and everyone needs to understand the risk involved. You will need the ability and resources to expand into this and that will take top level commitment.
Technology & Data Mastery—Mastering VBR means mastering all the tools, skills, expertise and infrastructure needed to practice it. This means making the investments in tech infrastructure, data analytics, and population health management. The goals? You need the ability to integrate data from many sources, meaningfully analyze data through business intelligence capacity, and inform your staff from front-line, to clinicians, to management. Mr. Dauman summarized-“Interoperability is a big word, but we haven’t gotten there yet.”
Fiscal Management—The reinvention of the chief financial officer position is a fundamental shift for VBR because the traditional ways of “doing the finances” must change. The new skillsets of importance include more focus on cost accounting and cost management, understanding population-based payment mechanisms, unit costing, KPI development, reporting, and analysis. Mr. Dauman explained:
This is a whole new world. This is not just about revenue and expenses. It’s a whole process of understanding cost, how the data is provided, how the services are provided. I need to develop what each service is costing me within a particular framework. The big word is cost accounting and understanding how you are going to price your services. You need to invest in the financial talent that can generate cost accounting analysis, design rolling budgets and forecasts, price your various service lines and determine units costs, costs per episode of care, costs to serve different populations, diagnosis groups, age/demographic groups, and ultimately capitated cost models.
Clinical Development—When aligning staff and culture with the demands of a VBR-oriented practice, clinical staff decisionmaking and performance is front-and-center to overall organizational performance. Clinical staff will need ongoing access to best practices and decision support tools, non-traditional service models, and performance management platforms. The new dimension for clinical leaders is incorporating the services (and service data) of collaborating organizations into care coordination models. Mr. Dauman noted:
You must get this team to think outside the box. What skills do they have and what skills do they still need? You will need to look at training to make this happen. You will need to involve the people at the ground level to find out what they need. You will need measurable outcomes for everything you are doing. Train, educate, and hire for what the consumer and payers need tomorrow, not the position you have open today.
Cultural Buy-In—Culture touches everything in an organization, and when it comes to VBR, mastering the necessary culture means embracing education, adaptability, change management, and accountability at all levels of the organization. This shift is, once again, promoted at the highest levels of the organization. VBR, already reliant on the use of metrics, will demand an investment in staff performance reviews that use Key Performance Indicators (KPI). Mr. Dauman noted:
We are always working on the next big thing, and you must be able to make that shift to adapt a culture of change. We invested a lot in ongoing staff training and education to make that happen. Do all your managers know what they are responsible for monitoring and to achieve. Do they know where their own staff is in terms of productivity and performance against VBR metrics. To include all these things in your culture will make you more versatile and attractive to payer systems.
The move to value-based reimbursement has been central to strategy for more and more health and human service organizations. This shift requires new organizational infrastructure—and new approaches to management and leadership. How can you tell if your organization is prepared to make the shift? You can find out by taking OPEN MINDS online Value-Based Reimbursement Readiness Assessment. Developed by OPEN MINDS’ team of experienced executives, our assessment is designed to help provider organizations navigate the management challenges of the transition to VBR. The assessment is for sale now in the OPEN MINDS Shop and is available free to all OPEN MINDS Circle Elite members.
For more, join OPEN MINDS Senior Associate Ken Carr on June 3 in New Orleans for his executive seminar, Succeeding With Value-Based Reimbursement: An OPEN MINDS Executive Seminar On Organizational Competencies & Management Best Practices For Value-Based Contracting.