Payment reform represents perhaps the most widely discussed trend in healthcare. The Centers for Medicare and Medicaid Services (CMS) have pushed forward this development with bold claims that by 2018 at least 50 percent of its payment reimbursement will be value-based instead of relying on the traditional fee-for-service payment framework. Similarly, commercial payers such as UnitedHealth, Aetna and others have publically placed bets on the shift to value-based care. Beyond bold and public statements by payers, we are carefully tracking how provider organizations are reacting to this trend and positioning themselves for success. A variety of technology and services companies are seeking to help health systems manage this transition. But the real question is how ready is the provider community to adjust internal processes and align physicians in order to accommodate the move to value-based care?
A recent survey, representing 190 hospitals, suggests most provider organizations are significantly behind, with nearly two-thirds of respondents saying that currently 10 percent or fewer of their contracts are tied to value-based care initiatives versus CMS’s target of 30 percent by the end of 2016. Indeed, TripleTree has found most providers are hesitant to make the transition from fee-for-service to fee-for-value on their own. Consequently, an emerging marketplace of essential vendors is rising to assess provider organizations’ current capabilities and design work plan solutions to facilitate the transition.
Provider organizations face challenges both largely outside their control as well as ones relating to recent infrastructure and investment decisions. For example, hospitals and physicians have become accustomed to treating acute patient needs rather than managing populations which is necessary for success under value-based contracts. Additionally, the healthcare system has historically established barriers between payers and providers, effectively discouraging these parties from sharing relevant, accurate and timely data. Finally, provider organizations’ existing case management models are not well suited to meet the new demands of coordinating care beyond the acute care setting and they lack infrastructure and technology-enabled tools needed to interact with patients outside of the traditional care settings. Because so much recent technology investment has been focused on electronic health records, there is generally limited budget and appetite for investing in additional technology solutions.
Provider organizations do, however, have a variety of trusted advisors available to help guide them through the inevitable shift to value-based care. Conifer Health, Evolent Health, Optum and Valence Health are a few vendors currently offering integrated, end-to-end solutions for health systems ready to make the full leap to value-based care. However, TripleTree has found certain provider organizations prefer a more gradual shift for a variety of reasons. The framework below is helpful for considering an orderly transition to value-based care:
The first two steps necessary to facilitate a shift to value-based care include appropriately Assessing a provider organization’s capabilities and then Designing the proper physician strategies/network solutions and care models to fit the specific needs of the provider. These services are generally project-based, multi-month engagements ranging from $200K-2+ million based on the complexity of the work involved. Following the first two steps, certain of the advisory vendors will Build and Manage the solutions on behalf of the provider organizations through either partnerships with or ownership of technology solutions.
We have heard repeatedly from the provider community that the front-end Assess and Design competencies are in high-demand, but there are limited vendors capable of executing complex projects. For instance, C-suite support and key physician group buy-in are critical for any successful project. Given such, we believe the Assess and Design phases require a team of talented executives with a mix of both clinical and administrative experiences. One such company that leads with C-suite relationships and leverages physician alignment tools is Navvis & Company. Navvis has gained traction and credibility with a national footprint of provider organizations. Examples of other strong vendors TripleTree has come across include Beacon Partners (purchased by KPMG), BDC Advisors, Camden Group (purchased by GE Healthcare) and ECG Management Consultants.
We believe the transition to fee-for-value is here to stay and a number of companies will ultimately be successful employing models that include services and technology components. In addition to the companies referenced above, we are following a number of others in the space and are eager to watch how these companies continue to differentiate themselves in this important market.
Let us know what you think.