Categories

Tag: Payers

The Opportunity in Disruption, Part 5: Five Strategies of Cooperation

By JOE FLOWER

The system is unstable. We are already seeing the precursor waves of massive and multiple disturbances to come. Disruption at key leverage points, new entrants, shifting public awareness and serious political competition cast omens and signs of a highly changed future.

So what’s the frequency? What are the smart bets for a strategic chief financial officer at a payer or provider facing such a bumpy ride? They are radically different from today’s dominant consensus strategies. In this five-part series, Joe Flower lays out the argument, the nature of the instability, and the best-bet strategies.

There are five ways that both healthcare providers and payers can cooperate while they compete to bring the highest value forward to the customer.

  1. Align incentives in the contracts: Healthcare providers must be able to provide performance guarantees that give at least some of the bottom-line risk to them. Work with third-party companies that can actually audit organizations’ abilities to give performance guarantees consistently over time.

  2. Eschew embiggening: Size per se is not a safe harbor from risk. There are few economies of scale in healthcare. Concentration within a given market can be essential to success in offering a true range of services, well supported, at a lower price, customized to the regional population, the provider mix, the state laws, and the local economy. But local concentration is not the same thing as size per se.

    And size does not help the customer. There just are no examples in the history of healthcare in which size alone has returned greater value to the patient, the consumer, or the buyer, whether lower cost, greater reliability, or higher quality. 
  3. Expand the definition: Widen the “medical services” that you fund and offer to include services such as functional medicine, chiropractic, acupuncture, and various other modalities that have been shown to be highly effective at far lower cost. There absolutely are ways to do this within licensing requirements.
  4. Integrate behavioral health: Find ways to fund behavioral health and addiction treatment. Integrate behavioral health directly into the patient experience, triaging at the door to the Emergency Department and in every primary encounter. Find local innovators that can help pre-empt costly crises. Partner with community health, housing, and nutrition advocates. Helping people change their habits, manage their lives, and get beyond their addictions is far less expensive than fixing them over and over.
  5. Retrain clinicians: Physicians and other clinicians are heavily trained to create and document reimbursable events. If you change the economics so that the system finds ROI in promoting health, preventing disease, managing population health, producing cures and reducing suffering as efficiently as possible, those very same clinicians will need to be retrained. Most of them will be deeply grateful, because they, like you, genuinely want to bring real value to the customer. In fact, if you do this you could end the physician shortage and the nurse shortage. People will flock back to do what they became a doctor or a nurse to do: Help people. 
Continue reading…

The Rebellion of the Buyers

By JOE FLOWER

Did you catch that headline a few weeks back?

An official of a health system in North Carolina sent an email to the entire board of the North Carolina State Health Plan calling them a bunch of “sorry SOBs” who would “burn in hell” after they “bankrupt every hospital in the state.”

Wow. He sounds rather upset. He sounds angry and afraid. He sounds surprised, gobsmacked, face-palming.

Bless his heart. I get it, I really do. Well, I get the fear and pain. Here’s what I don’t get: the surprise, the tone of, “This came out of nowhere! Why didn’t anyone tell us this was coming?”

Brother, we did. We have been. As loudly as we can. For years.

Two things to notice here:

  1. What is he so upset about? Under State Treasurer Dale Folwell’s leadership, the State Health Plan has pegged its payments to hospitals and other medical providers in the state to a range of roughly 200% of Medicare payments (with special help for rural hospitals and other exceptions). In an industry that routinely says that Medicare covers 90% of their costs, this actually sounds rather generous.
  2. What is the State Health Plan? It’s not a payer, that is, an insurer. It’s a buyer. Buyers play under a different set of rules and incentives than an insurer.
Continue reading…

Remember: Technology is but a Tool

Yesterday, Chilmark Research participated in the CRG conference, Driving Change Through Managed Care IT from Provider Payments to Quality, which was held in New York City. Despite having a title that no one will be able to remember, the overall theme of the event and presentations therein gave one a bird’s eye view into what payers are thinking as we march forward with healthcare reform and the digitization of the healthcare sector.

A common theme that repeated itself numerous times over the course of the day was the lack of business process maturity in the healthcare sector. Meg McCarthy, EVP of Innovation at Aetna was the first to make this statement citing this issue as arguably the number one challenge for this industry sector to overcome. (McCarthy provided some interesting details on the Medicity acquisition but we’ll save that for a later date.)

Later that day, Jessica Zabbo, Provider Technology Supervisor at RI-BCBS gave a very detailed presentation on her company’s experiences working with providers on the adoption and use of EHRs. Over the last several years RI-BCBS has done a couple of small pilots. In both cases a defining parameter of success was business process maturity. For example, the company did a Patient Centered Medical Home (PCMH) pilot that coupled pay for performance metrics (P4P) with EHR use. Basically P4P measurements were to be recorded and reported through the EHR. One of the key lessons learned was that P4P program success was highly dependent on the EHR being fully implemented and physicians comfortable with its use (process maturity). But in a Catch-22, to successfully incorporate P4P metrics into the EHR requires a very deep understanding of practice focus and workflow. Without that understanding, failure of the P4P program is almost certain.Continue reading…

Registration

Forgotten Password?