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95% See Population Health as Critical, but Worry about Payment

A majority of healthcare organizations see population health as critical for their future, but they face significant implementation hurdles related to payer attitudes.

95% see population health as critical, but payer hurdles exist

Source: Thinkstock

By Thomas Beaton

- While the vast majority of healthcare organizations view population health management as a critical part of their financial future, providers are experiencing several challenges as they try to implement these strategies, including policy and payer concerns.  

In a Numerof & Associates survey that included responses from 500 C-level healthcare executives, 95 percent of participants rated population health as important for the success of their organizations. Nearly three-quarters of providers said that they already have staff positions, leadership posts, or organizational divisions dedicated to population health management.   

However, 84 percent of organizations reported that a major difficulty in moving to population health is the potential to incur financial losses by moving to a new payment model, which may be a result of payer reluctance to help providers take on more risk.

Only 28 percent of payers were rated by respondents as "very willing" to engage in these agreements. The figure represents a decrease from last year’s survey, when respondents said 37 percent of payers were very willing to take on risk-based agreements.

The majority of respondents (49 percent) said their payers were only "somewhat willing" to help them make the switch.

READ MORE: Using Risk Scores, Stratification for Population Health Management

The tension between providers and payers may make it difficult for stakeholders to successfully transition to value-based care, the survey indicated.


Organizations have more reasons to actively build out the infrastructure required for success in population health

There are several drivers for organizations to pursue population health as indicated in the study responses.

Ninety-nine percent of respondents agreed that developing the infrastructure to support population health would help them achieve important goals, including lowering clinical costs, improving care quality, and boosting patient outcomes.

READ MORE: Population Health Cuts Native American Kidney Disease by 54%

Over half of survey respondents added that taking a population health management approach would help them to avoid government penalties, gain competitive advantages in the marketplace, and promote their mission culture/statement.

While organizations in general want to move to infrastructure that supports population health management, the process of doing isn't so easy.

"While there is widespread agreement that organizations need to move to population health, it doesn’t make the task of getting there any easier," the researchers said. "[For example] the CEO of a large mid-Atlantic system shared that they are making 'steady progress in population health and our efforts are growing logarithmically. It’s been painful at each step, but it’s getting easier as lightbulbs go on for clinical leaders. It has taken (and will continue to take) an enormous ongoing educational and training effort.'"

Cited drivers in implementing population management

Source: Numerof and Associates

Organizations are partnering with more services across the care continuum

READ MORE: Population Health Management High Priority for Providers

Partnerships between organizations and post-acute care services across the continuum experienced gradual increases throughout 2016.

Skilled nursing facilities (SNFs) and long-term care facilities (LTCs) saw increased partnerships with other organizations, up 64 percent and 54 percent from the previous year. Retail clinics (42 percent), rehab facilities (78 percent), and home health services (82 percent) also saw partnerships increases as well.

The researchers predict that these services will continue to see more of these partnerships because of a heightened need for collaboration with post-acute care providers.

"The emergence of episodic bundled payments that span surgery through post-acute care, including private insurers’ bundles as well as CMS’s Comprehensive Care for Joint Replacement (CJR) program, has emphasized the need for collaboration between hospitals and post-acute care providers," the researchers said.

“In our most recent survey, respondents reported partnerships with or ownership of SNFs and LTCs nearly 10% more frequently than in the prior year. We expect to see continued growth in these areas, as well as in retail clinics where 2 of 5 respondents indicated some form of partnership exists."

Percent annual revenue from risk-based agreements

Source: Numerof and Associates

Risk-based agreements are still just experiments for many organizations

The survey noted that participation in alternative payment models is very limited, and even decreasing.

Even though more than 3 in 4 respondents reported their organizations participated in at least one agreement with a payer that includes upside gain or downside risk, only 1 in 10 reported that 40 percent or more of their revenues flowed through at- risk agreements.

Notably, compared to last year's survey, respondents reported less revenue coming in from at-risk agreements.  In 2016, one in every five respondents saw 40 percent of their revenue from these agreements.  

"We believe many organizations are not fully prepared to take on risk, and perhaps some jumped in a little too deep to start," the survey said. "This is illustrated by a CEO at a multi-hospital system that is conceptually aligned with population health and has historically had healthy margins under fee-for-service. A year ago, he saw their lack of CMS penalties as an indicator of success in risk-based models. Now, a year later, they are losing money in value-based payments."


Payer enthusiasm is very low, so providers are doing more to adopt risk-based agreements

In addition to low levels of willingness to engage in new value-based care contracts, the survey found that some payers are even backing out of certain risk-based agreements.  

"Relationships with payers can complicate the transition to new payment models," the researchers said. "According to an executive who leads payer negotiations at a large network, 'I’ve had to push, prod and shove everything to get them to move to shared or full risk arrangements! It seems payers don’t care if we are accountable for care and they don’t want that to change.' Despite the resistance, this organization continues pushing forward and is building the infrastructure and capacity required to deliver under new payment models."

Even though payers appear reluctant to accept risk-based agreements, organizations themselves are taking on more responsibility by building in-house payer models.

Three in five respondents said their organizations are dipping into the insurance business, the survey found. Over a quarter of respondents (27 percent) are operating their own successful payment models.

This also means that organizations have to focus on the entire care continuum and involve outside care facilities in payer relationships and developing value products and services.

"Managing change requires objective assessment of where the organization currently stands, what gaps need to be addressed, and what actions are needed to close them. Ultimately, organizations that go down the path to population health will be building capacity to effectively manage under a new healthcare paradigm. The results of our survey are clear: the time to act is now."


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