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PHM Downside Risk 2021
Guiding Principles from Successful Organizations

author - Bradley Hunter
Bradley Hunter
author - Cathy McCabe
Cathy McCabe
October 14, 2021 | Read Time: 11  minutes

In the United States, just 10% of the average healthcare organization’s revenue comes from downside risk contracts. However, several health systems are ahead of the curve, and their valuable insights on adopting downside risk can help peers figure out how to move the needle on value-based reimbursement (VBR). KLAS worked with population health management (PHM) vendors to identify which of their customers are most advanced in adoption of downside risk contracts and then conducted interviews with top executives at 15 of these organizations. We spoke with large, midsize, and small health systems as well as a handful of ACOs, highlighting the fact that with the right technology and organizational structure and buy-in, organizations of all types can make significant progress toward VBR.

The Executive Insights portion of this report explores what outcomes the organizations have achieved as well as their aggregated insights regarding keys to success, lessons learned, and potential pitfalls. Case studies for each of the participating organizations provide additional detail and can be found in the Expanded Insights section of the report.

Outcomes Achieved with Downside Risk

Downside risk agreements build on the foundational successes of shared savings contracts to help organizations—in partnership with their vendors—achieve more advanced, high-value outcomes. Below are some of the top outcomes achieved by each organization in this research.

Interviewed Organizations

The following organizations have graciously allowed KLAS to share their valuable insights regarding the adoption of downside risk.

interviewed organizations

What about Other PHM Vendors?

Some PHM vendors could not identify provider customers with sufficient downside risk adoption to be included in this report:

  • Allscripts
  • athenahealth
  • Azara Healthcare
  • Relevant Healthcare
  • Salient Healthcare

Other vendors did not respond to KLAS’ request for participation in this study:

  • i2i Population Health
  • Optum

† Other organizations were interviewed, but asked that their results not be shared.

BayCare & Cerner

In-workflow registries
Cerner’s in-workflow registries make it easy for providers to help patients schedule needed services. This has increased performance in quality measures, resulting in improved payer collaboration and financial savings.

Beth Israel Deaconess Care Organization &

Contract-performance tracking
Insights from Arcadia allow Beth Israel Deaconess Care Organization to evaluate how they are performing financially against their downside risk contracts and make needed course corrections to ensure success.

Bridges Health Partners & NextGen Healthcare

Proactive identification of high-risk patients
Bridges Health Partners uses NextGen Healthcare’s risk-stratification tool to proactively identify high-risk patients and assign them a care management team to engage with them and help close care gaps.

CHI Health & Innovaccer

Better data for payer negotiations
Using Innovaccer’s claims data, CHI Health is able to complete their own analyses of high-cost/complex cases. With this data, they are able to better negotiate with payers and have saved millions of dollars as a result.

Franciscan Health & Cedar Gate Technologies

Reduced patient leakage
Data insights provided by Cedar Gate have enabled Franciscan to track patient referrals and keep those services in network. This reduced leakage was a significant factor in Franciscan saving $13 million in their first year.

Geisinger & Cerner

Reduction of unnecessary utilization
Geisinger uses Cerner technology to track healthcare utilization and quality measures both for their large primary care network and their ACO.

Health Alliance (Carle Health) & Health Catalyst

Cost avoidance
Health Alliance is working with Health Catalyst to gain visibility into how much money they are saving by changing their practices and reducing utilization of high-cost acute care services. Additionally, they are working to reduce readmissions and ED utilization and improve quality metrics.

Lee Health & Cedar Gate Technologies

Reduced ER utilization
Working with Cedar Gate, Lee Health has improved their discharge follow-up and seen a 30%–40% drop in ER utilization. The shared savings from this reduction have been significant.

Ochsner Health & Epic

Piloting of payer platform
Ochsner Health worked with Humana to pilot Epic’s payer platform. Results are early, but data is being sent bidirectionally and includes clinical and financial data.

Rio Grande Valley ACO & Lightbeam

Reduction in end-of-life costs
Lightbeam has been working with Rio Grande Valley ACO to develop more targeted lists of patients who may benefit from managed care. This has reduced end-of-life costs and improved quality measures.

Shore Quality Partners & HealthEC

Skin-in-the-game physician incentives
Shore has achieved significant savings, high performance in quality measures, and improved transitions of care by having physicians contribute their own funds based on the amount of risk they are willing to accept. Almost all physicians have signed up.

Spectrum Health & Lightbeam

Decreased utilization through improved follow-up
Spectrum Health and Lightbeam have worked together to reduce readmissions and ER utilization. They are focused on post-discharge outreach and will be utilizing analytics to identify high-risk patients who need follow-up. Spectrum reviews discharge plans and risk factors in weekly huddles.

Anonymous Customer

Lower cost, higher quality
Primary care providers in a pilot program to prove whether VBR can generate savings have had a 40% increase in quality metrics. Additionally, their medical expenses are lower despite having sicker patients, and they report higher provider engagement scores.

Principles Mastered by Deep Adopters of Downside Risk

Three common principles stand out among organizations that have aggressively pursued downside risk contracts:

1Active, collaborative vendor relationships

Success with downside risk requires a lot of effort from provider organizations and their vendor partners, and both parties must be willing to put in the necessary work. Leading organizations have collaborative relationships with their IT vendors and work in tandem with them to develop needed technology. In some cases, organizations supply data to help train models, or they may develop functionality internally that is then integrated into the technology platform. This kind of development requires heavy internal investment from the provider organization.

quotation mark“I appreciate the continuous communication between our two organizations. NextGen Healthcare really views this as a partnership. The product has made great strides from where it started, and a lot of that is due to the work of both of us. NextGen Healthcare is willing to listen to our concerns. They understand what we are trying to achieve and are aligned around those goals. Our success is their success and vice versa.” —Executive at Bridges Health Partners

1Organizational investment/buy-in

Leading organizations have VBR advocates in senior leadership positions and work toward complete buy-in from senior leadership and physicians. Common approaches to creating this buy-in are (1) adjusting physician contracts to ensure physician alignment with organization goals, (2) distributing statements from leadership about commitment to VBR (including long-term road maps), and (3) creating a separate leadership structure responsible for VBR. These organizations demonstrate support for VBR by investing in technology and staff, including care management teams to close care gaps.

quotation mark“I would not underestimate the importance of deep organizational buy-in around value-based care. It can’t be a hobby. There has to be a clinical support structure in place that actually helps people succeed. The work done by the supporting care team is really what helps providers be more effective. There are people all along the continuum who could benefit from an end-to-end data set. If we can stitch together a comprehensive data set and enrich it with advanced analytics models, we can ensure the patients are getting really great care.” —Executive at anonymous customer

3Willingness to take on commercial risk and work with payers

Leading organizations have expanded beyond Medicare/Medicaid to enter into downside risk agreements with commercial payers as well. These organizations engage with payers and work with them to build trust and transparency.

quotation mark“In the past, we were used to more antagonistic, across-the-table relationships with payers. As we share risk, we are trying to get a bit more friendly and work from the same side of the table. That starts with being able to speak the same language when analyzing a patient population. We can go to the payers and show them their slice of our patient population. That makes the eyebrows and ears perk up. Payers and providers are getting closer and closer together.” —Executive at CHI Health

Top Advice for Peers: Contract Management Is Crucial with Downside Risk

As provider organizations enter into more downside risk agreements, they should be particularly careful to examine contracts closely and make sure they can deliver on the requirements. They should also ensure contracts don’t include stipulations that will penalize their organization for being successful in subsequent years. Leading organizations also recommend making the contracts as standardized and payer agnostic as possible and making sure they clearly stipulate how claims data will be accessed. Some health systems have worked collaboratively with payers to develop contracts that are favorable for both parties.

quotation mark“Strive for alignment across the various payment models that are being participated in. It is a huge administrative burden to manage multiple populations when the contracts are fundamentally very different across models. Some are risk adjusted and some are not, and some use a persistent attribution and some do not. All of those different things that go into how a model is designed should be considered.” —Executive at Ochsner Health

Biggest Pitfall to Be Aware Of: Despite Good Progress, Additional Functionality Still Needed for Data Aggregation and Advanced Analytics

All interviewed executives note the need for better interoperability between systems and for access to data from all payers. They want data to be timely and more easily transferred into their data warehouses, and some voice the desire for more standardized codes and structure. In addition, advanced analytics in the form of customized reports and dashboards are needed to create more actionable insights; this includes the predictive analytics that allow organizations to engage in risk and contract modeling. Claims data is a particular pain point. Access to claims data is crucial to an organization’s ability to take on more downside risk, yet gaps still exist, even for leading organizations. Executives report that the availability and format of claims data can differ across payers or even differ from month to month for the same payer.

quotation mark“The integration between different medical systems is getting better, but we still can’t automatically see everything. The Epic system is really good for communication between Epic users. If another organization uses Cerner, it is possible to see the data, but we have to really work at it to make that happen. We have done a pretty good job. Interoperability is a work in progress. Epic now has a payer platform; it is not the be-all and end-all solution for interoperability, but it will certainly help. We are piloting that platform, and I can’t think of a better way to get enhanced interoperability than to have the payers on the same platform as us.” —Executive at Ochsner Health

Strong Integration & Configurable Functionality Can Make or Break a Downside Risk Strategy

Interviewed executives consistently describe two technology factors as being key to their progress with downside risk: (1) strong integration to ensure data is complete, accurate, and accessible and (2) timely customization that ensures broad functionality (e.g., dashboards and reporting), enabling organizations to expertly manage their downside risk contracts. The chart below highlights which PHM vendors are best at delivering these crucial factors across their customer base. Note that ratings in the chart below come from KLAS’ broader PHM research and thus encompass a larger number of respondents than those interviewed specifically about downside risk. For additional PHM customer satisfaction ratings, see KLAS’ latest PHM report.

Azara & HealthEC (for Smaller Organizations) and Innovaccer (for Large) Deliver Key Insights for VBR

Vendors whose customer bases primarily include ambulatory organizations—as is the case with Azara Healthcare, HealthEC, and Cedar Gate Technologies—tend to earn higher functionality ratings. These three vendors are noted for their strong care management functionality, for customizing tools to meet customers’ workflow needs, and for working closely with customers to ensure they understand updates. Azara Healthcare and HealthEC are also noted for their strong integration. Azara Healthcare customers feel their solution interfaces well with various other systems and generates actionable insights. Clients describe HealthEC’s PHM platform as robust and easy to connect to external data sources. For larger organizations, Innovaccer earns high integration ratings for providing a system that is able to quickly integrate complex data. Several Allscripts customers report frustration with the effort it requires to manage interfaces between their vendor’s various solutions. More advanced Cerner customers (including those interviewed for this report’s case studies) have integrated the data sources necessary to inform their VBC programs. Some other Cerner customers say they are still building out their own workflow-specific reporting and thus do not gain all the insights they need from their data.

integration functionality and overall performance

About This Report

Data for this report comes from two sources: (1) interviews with executives at organizations with advanced downside risk adoption and (2) KLAS performance data.

Interviews with Executives at Leading Downside Risk Organizations

Health systems that are ahead of the curve in their adoption of downside risk contracts have valuable insights that can help peers understand how to move the needle on VBR. KLAS worked with population health management (PHM) vendors to identify which of their customers are most advanced in adoption of downside risk contracts and then conducted interviews with top executives at 15 of these organizations. The Executive Insights portion of this report explores these executives’ aggregated insights regarding keys to success, lessons learned, potential pitfalls, and positive outcomes achieved. Case studies for each of the participating organizations provide additional detail and can be found in the Case Studies section of the report.

KLAS Performance Data

Encompassing feedback from a broader sampling of customers than those interviewed specifically about downside risk, the KLAS performance data in this report was gathered over the last 12 months using KLAS’ standard quantitative evaluation, which is composed of 16 numeric ratings questions and 4 yes/no questions, all weighted equally. Combined, the ratings for these questions make up the overall performance score, which is measured on a 100-point scale.

Sample Sizes

Sample sizes displayed throughout this report (e.g., n=16) represent the total number of unique customer organizations interviewed for a given vendor or solution. However, it should be noted that to allow for the representation of differing perspectives within any one customer organization, samples may include surveys from different individuals at the same organization. Ratings from these individuals are aggregated in order to prevent any one organization’s feedback from disproportionately impacting a solution’s score. The table below shows the total number of unique organizations interviewed for each vendor or solution.

It should be noted that some respondents choose not to answer particular questions, meaning the sample size for any given vendor or solution can change from question to question. When the number of unique organization responses for a particular question is less than 15, the score for that question is marked with an asterisk (*) or otherwise designated as “limited data.” If the sample size is less than 6, no score is shown. Note that when a vendor has a low number of reporting sites, the possibility exists for KLAS scores to change significantly as new surveys are collected.

about this report

Product Designations Used in This Report

Regional [R]: Product for which the majority of data comes from organizations located in the same, small geographical area.

author - Elizabeth Pew
Elizabeth Pew
author - Natalie Jamison
Project Manager
Natalie Jamison
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This material is copyrighted. Any organization gaining unauthorized access to this report will be liable to compensate KLAS for the full retail price. Please see the KLAS DATA USE POLICY for information regarding use of this report. © 2024 KLAS Research, LLC. All Rights Reserved. NOTE: Performance scores may change significantly when including newly interviewed provider organizations, especially when added to a smaller sample size like in emerging markets with a small number of live clients. The findings presented are not meant to be conclusive data for an entire client base.