Healthcare providers received a jarring reality check last year as the rapid spread of COVID-19 caused millions of patients to delay lucrative elective procedures. The aversion of patients to medical facilities during a pandemic gutted the revenue of health systems and laid bare the economic risk inherent in the “fee for service” (FFS) reimbursement model historically preferred by providers.
While some healthcare organizations already are moving away from FFS and experimenting with alternative payment models, the coronavirus wakeup call has made many realize they need to accelerate their transition to a value-based care (VBC) model in which providers are paid based on patient health outcomes and the cost of care delivered.
Transitioning to VBC, however, isn’t always a smooth process. This is in large part because many providers have no experience in cost or utilization control. Even health systems that have implemented alternative payment models may not be operating under downside risk contracts in which they would face financial penalties should costs and utilization exceed the amount agreed upon with the payor.
But as payors increasingly push downside risk onto providers, hospitals and health systems would be wise to learn how to control costs and utilization. For provider organizations that have focused solely on improving their quality ratings and paid little or no attention to cost or utilization, this is a genuine challenge. Further, given that cost and utilization control are a significant component of most risk-based contracts, providers have high bars to clear before qualifying for quality bonus payments.
Their lack of financial negotiating experience relative to payors puts hospitals and health systems at a disadvantage in understanding the implications of VBC contracts. Provider organizations also may not know how to model and predict performance or comprehend the impact of that performance on those contracts.
Many provider organizations lack confidence in their ability to balance quality and cost. And no wonder! Since quality and cost never have been priorities in the fee-driven model, many hospitals and health systems simply lack any visibility into these critical VBC performance indicators. Yet the ability to access and analyze this data would empower provider organizations to improve care quality while boosting cost and utilization performance.
Data analytics helps providers glean insights from performance management metrics that allow them to be financially viable under at-risk and pay-for-performance contracts. Using data analytics, hospitals and health systems can accelerate their path to value.
How providers can gain control
Many health systems are dependent on information or reporting from the payor, much of which comes solely from claims data. If that’s not bad enough, this data may be three or four months old by the time it reaches the provider organization. It’s hard to improve performance based on moldy data.
If, on the other hand, providers used analytics to measure quality and performance metrics, they wouldn’t need to rely solely on payors for data. Instead they would know their status relative to performance incentives through their own data. On the clinical side, analytics can suggest improvements to clinical workflows and generate models to determine the impact of a proposed change on care gaps and revenue.
Analytics typically is considered a technology solution. But a platform that provides transparency into clinical, operational and financial data clearly is more than that – it’s a business solution. Using analytics, payors and providers can be more closely aligned regarding incentives and shared objectives. In a VBC contract, those shared objectives center on the patient’s health and effective management of costs and utilization.
Finding the right partner
Accelerating the path to value through analytics requires an advanced cloud-native platform that includes AI and machine learning capabilities, automation of configuration, and delivery of insights. Many health systems, unfortunately, can’t afford the kind of capital investment required for an in-house system.
For many hospitals and health systems, partnering with an experienced healthcare technology solutions vendor whose platform has been successfully implemented by other providers is the most sensible way to accelerate the path to value. An experienced vendor will bring experience, a set of proven best practices, effective analytics models, and experienced support.
The trend toward VBC and other alternative payment models will put increasing pressure on provider organizations to deliver quality care while optimizing resources and controlling costs. Engaging a partner with an analytics platform that provides transparency into clinical and operational performance allows healthcare organizations to focus on what they do best: deliver patient care.
Interested in learning more about how analytics can accelerate your path to value? Download this Gray Matter Analytics white paper: Leveraging Analytics and Process Optimization: Critical Elements to Elevate Healthcare Quality and Delivery in the U.S.