Penguins Jumping

"Wait and See." The Motto of Value-Based Care

Have you ever watched footage of a colony of penguins standing at the edge of a glacier? They huddle together and shuffle slowly forward, reluctant to dive into the waters below for fear of seals and sharks below. Eventually, a few birds either make the jump or simply get pushed over the edge. The rest look on, waiting to see whether their friends resurface.

This is what I think of when I watch provider organizations approach the financing behind population health. For years, organizations have hung back from committing to value-based care and risk-based contracts. People unfamiliar with population health might ask, “Why wait?” But, like the penguins, stakeholders in Health IT get it.

They’re not really afraid of the fall—they know seals lurk below. Providers, too, have much more to worry about than simply the discomfort of change. Disrupting something as fundamental as how the provider gets paid can threaten an organization’s very survival.

A Fundamental Change

Until recent years, and for many still today, virtually every hospital or clinic in the world earns money in the same way: by performing procedures. But the shift from a fee-for-service model to a fee-for-performance model requires the provider organization to turn every traditional instinct on its head by performing as few procedures as possible. It’s no wonder than many organizations hesitate before making the leap.

Some providers see the difficulties of pioneering organizations and wonder whether value-based care is going to stick around. They tell themselves, “If we’re just going to fall back into a fee-for-service world, then none of this will matter. I’m not going to invest my time and money in changing my financial model unless I absolutely have to.” And so they wait, keeping an eye on both regulation and their counterparts who have already taken risks.   

No Defined Playbook

I don’t think there are many who would argue that the idea behind value-based care doesn’t make sense. Providing the best healthcare possible to patients, with a focus on reducing the amount of care they need resonates with everyone. Yet figuring out how to go about providing that care, much less financing it, leaves many scratching their heads.

Every organization, facility, and risk-based contract faces different challenges. Writing foolproof instructions for how to become a successful ACO is as realistic as writing a parenting manual guaranteed to work for every parent and child. What can provider organizations do? The bold ones either blaze the trail themselves, or try to follow other successful examples the best they can and hope that all goes well. It’s either that or sit tight and wait for others to test the waters.

A Long Wait

Organizations interested in creating provider-sponsored health plans may have it even worse than prospective ACOs. There are definitely some successful health plans out there who have achieved fully capitated models and profits. However, other organizations haven’t been so lucky. They have gone fully at risk only to realize a few years later that they aren’t going to be successful.

Much of the danger lies in the fact that it takes so long for organizations who have jumped into capitated models to learn whether the risk will pay out in the end. Who can afford to gamble 10 years and millions of dollars? Not most provider organizations.

Tools to Help

I had a conversation at the HIMSS conference with a friend whose organization had been considering going at risk. My friend told me, “We looked at a particular contract and knew there was no way we would ever make money on it.” This organization was able to dodge a bullet. Why? Because they’d learned what their costs were and how much they would need to make in order to cover those costs.

How can other provider organizations do the same thing? By using administrative and financial tools. These functionalities that fall under the fourth pillar of population health IT include total-cost-of-care analytics, financial-performance tracking, ROI tracking, insurer dashboards, actuarial-contract risk analysis, network-optimization modeling, and more. They can give organizations a better idea of how much is really at risk and where their mitigation efforts will pay off most.

The waiting game is certainly a tempting option in today’s healthcare world. But if CMS is right and value-based care is here to stay, then it may be best to board the train and avoid getting left behind on the platform. Population health tools can’t guarantee that a provider organization will be successful in taking on risk, but they can at least give the organization a leg up. Is your organization ready to take the next step?