When it comes to healthcare, the government, employers and consumers demand more value. To provide this value, healthcare providers and payers increasingly negotiate payment contracts that are laden with payment incentives to reward higher quality. But is this approach working?
Not yet. It is much too soon to reach a consensus on any given delivery model that consistently controls costs and enhances quality of care. Payers and providers need to agree on quality metrics to use when determining bonuses or penalties and decide the details of shared savings agreements. This may be easier said than done.
Accountable Care Organizations (ACOs) are one of many initiatives emerging from the Affordable Care Act (ACA), with somewhat mixed results. ACOs seem to be a move in the right direction when it comes to care coordination efforts. However, I’m very skeptical about contractual arrangements between providers and payers that claim to solve a more deeply-rooted issue that fundamentally plagues our care delivery ‘system’ – disparate work environment cultures that do not foster a patient-centered mindset. Ultimately, it is the ‘culture of care’ that must be addressed before we can make inroads on quality and cost components.
Due largely to the ACA, there appears to be greater cost and reimbursement pressures on health systems to move toward ‘population’ health management – spurring health providers to think differently about their business models.
One initiative gaining interest is for health systems to launch their own health insurance plans within the markets they serve. According to a 2013 report by The Advisory Board Company, a Washington, D.C.– based research firm, 34 percent of 100 hospitals surveyed said they already own health plans, while another 21 percent indicated they plan to launch a health insurance plan by 2018. This is a small sample size, yet the results are, nonetheless, revealing.
In his recent book, ‘America’s Bitter Pill,’ Steven Brill writes that “Hospitals are already consolidating. It is happening all over the country…let’s let them continue. More important, as they continue, let’s encourage them to become their own insurance companies…so they can cut out the middleman and align these incentives. Let’s harness their ambition to expand, rather than try to figure how and when to contain their ambition.”
As the healthcare system continues to shift from fee-for-service care to value-based payments that bundle care in one sum amount, the financial risk associated with patient care may shift from insurers to providers. In other words, hospitals may eventually look more like insurance companies. But to do so, it will be in the best interest of hospitals and health systems to control the costs by pursuing long-term patient wellbeing.
So, can this work?
Health systems first need to hone their delivery skills to produce higher-quality outcomes BEFORE considering a whole new revenue source. Wearing too many hats without having laser focus on their core business objectives (e.g. delivering safe, quality care) will only cause greater problems than we already have today.
In our 2015 survey, we ask Iowa employers to sound off about hospitals having a greater incentive to control health costs (and ultimately premiums) they would charge to employers. Those results will be revealed in the next few months.
In theory, Brill’s comments may make sense, but can large health systems CONSISTENTLY deliver affordable care with (badly needed) high-quality results? To date, they haven’t been very successful. Like ACOs, this too will require more time to assess the desired outcomes, and – just as importantly – the unintended consequences that may follow.
One thing is for certain, in addition to covering more Americans, the premise of the ACA was that it would spur new approaches for care delivery models by thinking outside the box. Our fingers remain crossed.
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