Provider Cost of Care

Cost of Care: The Provider Perspective

    

As we prepare for the upcoming Investment Symposium, we’ve discussed several big topics that have the attention of providers, vendors and investors alike. We started with a discussion on population health and realized quickly that a large piece of that discussion focuses around how we pay for healthcare.

To that end, three different perspectives exist when we discuss what “cost of care” means. For patients/consumers, the cost of care entails everything from insurance premiums to the out-of-pocket expenses associated with a healthcare visit. TripleTree, one of the sponsors of the upcoming symposium, recently dove headfirst into the Patient Pay Opportunity and some of the changes that ​our industry must undergo during the current rise of consumerism in healthcare.

For payers, the total cost of care often refers to the amount they must reimburse per instance of care. Today, however, I’d like to focus on the cost of care as it relates to providers. For some, it is as granular as the per-service costs of healthcare. Other providers (typically those in smaller facilities) often lack the technology to accurately measure in such detail, so for them – cost of care can often mean simply the overall costs for doing business.

The current trajectory of healthcare costs in the United States is unsustainable, and even as provider organizations adapt to shifting payment models, consumers and even the payers of healthcare too are adjusting. Everything from the ACA (and it’s current, “will they, won’t they” status in congress), rising premium costs, the increase of high-deductible plans offered from employers and other factors have sparked many providers to dive into the details of cost of care.

We’ve talked recently about the need for provider organizations to engage the right software vendors and services firms to support their efforts to manage cost of care. But what are those solutions? Who is offering the services that providers need to understand and manage their costs?

Overall, providers with cost-of-care strategies need to utilize the following types of consulting firms and software solutions:

  • Services: healthcare management consulting, value-based care consulting, and value-based care managed services
  • Software: EMR, cost accounting, population health, analytics, quality management, ERP, and workforce management

Some of the above areas are more widely applicable than others, but no type of solution or service is used consistently across multiple strategies. There is no standardized way to manage the cost of care. So, providers engage different types of services and software depending on their strategy.

ERP and workforce management solutions are used much less for cost of care in the current market than, for example, population health and EMR solutions. But these different types of solutions are used for very different strategies. Value-based care managed services are a popular type of consulting for providers with a cost-of-care strategy. However, no type of solution or service was mentioned for more than a few of the main strategies in the cost-of-care framework.

Even within a particular type of approach to cost of care, providers are using a wide variety of vendors. In provider interviews, 25+ vendors and services firms were mentioned by providers. Multiple vendors were mentioned only once or twice in our provider interviews, and some of the areas outlined above included almost as many vendors mentioned as answers given.

Here are just a few of the relevant vendors and firms and what they are offering to providers focused on cost of care (early data from our upcoming Cost of Care report):

  • A population-health driven approach to cost of care is one of the most popular. For providers using this approach, Epic has high mindshare as an enterprise vendor.
  • A common strategy for cost of care is attempting to cut down on unnecessary utilization and resources at the point of care. Value-based care is often a key factor in this strategy. Caradigm, Explorys, Koan Health, MD Revolution, and Optum are being used for their population health tools. And Premier and Truven were commonly mentioned for their managed services.
  • Providers focused on reducing fixed costs and optimizing operations tend to use services firms (such as EY, Huron Consulting, Impact Advisors, McKinsey, and Navigant) more than software solutions. These firms offer expertise and guidance that providers can’t get on their own.

More in-depth information on these and other vendors will be published in the upcoming Cost of Care report.

 As we move forward in the industry-wide shift of payment models, our hope is that providers, payers, investors, and even consumers - as their role in the costs of healthcare grows - will be led to those solutions that provide the best outcomes.