The shift toward value-based care away from fee-for-service is a powerful trend in American healthcare. This blog summarizes three market research studies of health system executives regarding their attitudes on population health management, value-based care contracts and how innovative diagnostics may improve risk stratification, inform treatment decisions and advance precision medicine.
What is Value-based care?
Value-based payment models reward efforts to achieve the Triple Aim: improve health outcomes at lower cost with better patient experience. The number of value-based contracts is increasing due to policies such as the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), initiatives from the Center for Medicare and Medicaid Innovation, state Medicaid programs and, to some extent, commercial health plans. However, adoption has been slower than originally projected, largely due to lack of robust information technology capable of benchmarking and monitoring costs within health systems.
Survey on Value-based Care
According to a survey by 3M, health system executives embrace value-based care. Results are from two different research studies, both conducted December 2016 to January 2017 by third-party research firms. Respondents were from large IDNs and were primarily C-suite and VP-level clinical, financial, and technical executives.
The Construct for Population Health Management
Under a population health model, providers manage care for a defined population, from preventive medicine to management of chronic conditions to acute and long-term care. Population health management requires diagnostics, treatment and outcomes data with analytics to risk stratify patients and to target services that improve care and/or reduce inappropriate use of expensive interventions.
Successful health systems often deploy innovative care delivery models that analyze utilization, cost and outcomes data. They bear financial risk and drive quality metrics that are embedded in value-based contracts.
Patient Segmentation and Program Implementation
Population health initiatives are designed to improve lifetime health of specific populations within a health system. Health system executives segmented patients as follows:2
- Acute Care Management is dominated by optimizing care transitions/continuum management.
- Chronic Care Management is segmented by multi-comorbidity and/or degree of control. Some executives explicitly segment patients by payor or contract type and do not offer services that are not reimbursed. Patient-Centered Medical Home models of chronic disease management are used along with coordination of care with specialists. Resources are allocated by severity or complexity of illness: Care management (intensive intervention) vs. enhanced care strategies (moderate intervention) vs. standard surveillance.
- Wellness and Preventative Care seem to be interchangeable terms. Of interest, executives think of this group as dominated by patients at risk of converting to frank disease or hospitalization for chronic disease. “Rising Risk” is another term used to characterize this group.
- Well Care tends to be a lower priority, as the cost burden is low. Check list metrics drive behavior. Basic biometrics and health assessments are cited as wellness initiatives.
Implications for Diagnostics Companies
Traditional suppliers of electronic medical records (EMR) platforms, population health software and clinical decision support software play an important role in value-based care. These health information technology products consolidate diverse data and enable clinical and financial analysis. Laboratory information is sometimes included in risk-stratification algorithms. As more innovative diagnostics are integrated into these models, one can assume that algorithms will improve, providing an important step toward precision medicine. Focus Marketing tested this hypothesis through interviews and surveys of 24 healthcare executives. The goal was to learn how they view novel diagnostics and how they make decisions on adopting new technologies.
Health Information Technology Used
Sophisticated health systems analyze EMR, claims data and laboratory data to identify cost/care gaps and prioritize programs.
A population health platform is often used to integrate these vast data sets and display dashboards.
Algorithms are applied to risk-stratify patient groups. Interventions are applied accordingly.
Tools Need Improvement
Executives rated their level of satisfaction with their tools for their ability to manage patient care. Negative to neutral ratings dominated the results, confirming that there is room for diagnostic tests to improve algorithms. ZERO respondents were satisfied with their ability to predict drug effectiveness. Three categories were tied: 26% percent of executives were satisfied with the ability to: 1) accurately risk-stratify patients, 2) predict Rising Risk progression to overt disease and 3) assign the “right” level of care management resources.
Results from Medicare on Value-based Care
Accountable Care Organizations (ACOs) started in 2012 as part of the Medicare Shared Savings Program. Performance data are now available for 2016 from CMS.4 There were 432 ACOs comprised of 1,517 hospitals, 2,560 Federally Qualified Health Centers, 1,210 Rural Health Centers and 377,515 doctors and other providers. ACOs covered 7.7 million Medicare patients, which is only about 13% of all beneficiaries. CMS paid out over $700.1 million in Earned Performance Payments. Only 32% of ACOs achieved savings greater than 2.5% of their baseline. 21% spent more than their baseline.
Challenges for Population Health in a World of Transition
With a fraction patients under value-based contracts and commercial payors lagging behind Medicare, CEOs face a challenge. Many of the CEOs surveyed by Deloitte in May, 2017 expressed concern about operating under two different payment systems.4 Fee-for-services and value-based care have misaligned incentives. Moving towards population health and bearing financial risk will require large patient populations and state of the art information technology. Few small health systems are prepared to compete in this new environment, which either means more mergers or continued slow adoption of value-based contracts.
"It only makes sense to do population health when you’re in accountable care relationships with risk contracting. It does not pay under fee-for-service."
SVP of Population Health, Regional Health System, Pennsylvania
Bringing It All Together
- Innovative diagnostics may improve algorithms derived from EMR and claims data, which may improve risk stratification, inform treatment decisions and advance precision medicine.
- Health information technology alone is inadequate to guide care decisions for an individual patient and reduce costs for the population.
- Health system CEOs believe that value-based care will overtake fee-for-service models.
About the Authors
Carrie Mulherin is CEO of Focus Marketing, offering consulting services in planning, market research, commercial execution and training to growing companies. Carrie@FocusMktg.us • 267-496-6391.
Emery Stephans is Founder and CEO of Enterprise Analysis Corporation (EAC), providing strategic consulting, business development and research services to medical, life-science and animal health organizations worldwide.
2- In-depth interviews by Carrie Mulherin, March 2017