Population Health Management

Why providers should sponsor health plans again

In the 1980s and 1990s it was all about integrated healthcare networks and profit taking. But it didn’t work out. Perhaps the theory was correct, but there was far too much front end cost and not enough population health management skill to help the plans turn a sustainable profit. Most provider plans ran out of time and money. Now we can see the end of fee-for-service and the advent of capitation. This time health plans are for provider survival. It’s time for providers to move from taking profit from utilization to managing behavior. That means it’s time for population health management based on big data. It’s time for the buyers of healthcare and users of healthcare to work together to take personal responsibility for health. This means moving away from punitive motivation to find benefits and rewards that manage healthy behavior. With provider sponsored health plans it’s time for providers to move into the retail space. Because when providers sponsor their own health plans their delivery systems become commodities, cost centers not profit centers. When the health plan drives the financial bottom-line retail activity is based on capturing any external cost to the health plan. The health plan is incentivized to eliminate as much of the middleman profit-taking as possible. So provider-based health plans become the sponsors of self-directed primary care along the lines of the CVS Minute Clinic, for example. And following the information uncovered in good population health management tools, the health plan enters any activity that can help prolong the health of covered lives and eliminate care related expenses. The Kaiser-Permanente health care system is an excellent model of how it can be done across a large population. My own experience at a major Texas health system and its integrated physician delivery component showed that a healthcare system can launch a successful provider sponsored health plan from scratch. Our plan grew to nearly half a million covered lives in less than five years. The Baylor and Scott & White transaction shows a different way one health system chose to acquire covered lives by merging with a smaller system that owns a health insurance license. When Sutter Health recently launched its health plan the CEO said he wished they had started sooner. His advice to other providers: plan on spending at leased $50 million. Good advice as you can never have too much time or money to get your health plan successful. The important thing to remember is that fee-for-service is yesterday and provider sponsored health plans are the future of healthcare because they are the means to achieve the providers’ mission of improving the health of communities they serve. Share Tweet Neil Godbey is President of The Godbey Group, Irving, Texas. Since 1999 The Godbey Group has been helping leading hospitals and healthcare systems negotiate favorable managed care and value-based...

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How population health management makes capitation the natural successor to fee for service

Guest blogger Rich Williams is a principal at the Advanced Plan for Health a national provider of population health management tools for employers, hospitals, healthcare systems, and health plans. After years of academic incubation the concepts of population health management (PHM) have moved to the forefront in the delivery of American healthcare. The aggregation of clinical databases and the digital tools of “big data” have brought PHM to life. Rather than just data, we now have information. Here’s how it works. PHM providers assemble clinical data from multiple sources to cover the clinical experience of patients in a defined population. This data includes claims, biometrics and other information including Health Risk Assessments. The data is then stratified by clinical and financial risk. This allows the sponsoring organization to identify its exact clinical and financial risk by individual. In the hands of PHM trained case managers and physicians the data is used to create and track interventions that help improve the patients’ health and reduce the risk of medical misadventure over time. PHM tools are also used by medical directors to oversee and evaluate the clinical effectiveness of physicians in a value-based network that have contracted to care for a defined population. Such data was once the exclusive province of health plans and Medicare. Today employers can access population health management data to help direct and determine the effectiveness of their employee based health plans. The growing availability and success of PHM tools has brought the concept of capitation back to the forefront in healthcare payment. Where fee-for-service could encourage duplication and even excess treatment, capitation produces the opposite effect. Capitation fell out of favor in the past because it was believed to succeed financially by suppressing care even when treatments were necessary. Combining PHM tools and capitated payments reduces the risk of withholding services as the accountability is swift and transparent. Given the new value-based contracts, the financial incentives among providers are fully aligned with identifying patients at risk in a population and providing them with timely and appropriate treatment. No other form of healthcare reimbursement has so successfully combined the power of population health management tools with appropriate incentives. While we do see examples today of population health management being used in fee-for-service or bundled contracting circumstances, the true power of the tools becomes apparent when combined with capitated health plans. That’s why some of the brightest minds in health care now see the industry moving towards the combination as the natural successor to fee-for-service. Reducing the temptation to do more to earn more, providers will do right, whether that involves more or less care. It’s a sea change and a change for the better. Tweet...

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Evolving from fee-for-service to capitation

A number of national health plan executives recently commented that they feel the end of fee-for-service is in sight. On that prediction we agree. But I disagree with their prediction that value-based contracting will replace fee-for-service as the dominant form of reimbursement for healthcare providers. I disagree because value-based contracting is fundamentally unfair to providers. It creates an asymmetrical relationship in which the health plans hold all the cards and can manipulate the metrics to their own benefit. We can already see the evidence of this in the 250 some commercial ACO’s that have popped up around the country. And I disagree because there is a better substitute for fee-for-service, namely prepaid health plans with capitation. The healthcare industry has an abundance of experience over many decades, some over 50 years, with how to manage care under prepaid financial circumstances. The big advantage in moving to capitated reimbursement is that it eliminates the financial incentive for over utilization. Properly designed prepaid plans encourage physician cooperation and coordination of care. The structure of financial incentives eliminates the physician incentive to duplicate tests or imaging as a source of personal income. The structure of fee-for-service, even fee-for-service value-based incentives, is to encourage providers to do more, to bill more, to earn more. If we have learned anything since the creation of Medicare in 1965 it is that fee-for-service encourages more health care spending at the personal, corporate, state, and federal level of our economy. While health care reform is still built on a fee-for-service model, albeit with quality and process measures thrown in to steer providers in certain policy directions, I believe that the only hope of success in reforming healthcare will come from a move to capitation. Reforming the compensation model for providers is an essential ingredient in the reforms that are articulated as the Triple Aim for the Affordable Care Act. Those Aims are to improve the patient experience, to improve the health of populations, and to reduce the per capita cost of healthcare. Capitation is uniquely designed to address the per capita cost of healthcare. Combined with the new tools of population health management capitation can be successful in improving the health of populations by design. In our next blog guest Rich Williams from Advanced Plan for Health will explain how populations health management tools have made capitation an even more successful way to address clinical quality and health care costs. Share Tweet Neil Godbey is President of The Godbey Group, Irving, Texas. Since 1999 The Godbey Group has been helping leading hospitals and healthcare systems negotiate favorable managed care and value-based...

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