The Exec: How the Value-Based Care Model Works for Esse Health

CFO Robert Richman discusses how ensuring that physicians have full transparency into how value-based contracts work creates a successful VBC program.

Adopting a value-based care model can seem like a risk to some healthcare providers, but other organizations have seen success in rewarding providers with incentive payments for the quality of care they provide patients with Medicare.

One organization that has been successful with this approach is Esse Health, a Missouri-based physician organization focused on primary care. Esse Health recently merged with population health leader, Navvis, to form Surround Care, which has over $663.5 million in total revenues.

"Esse Health was formed back in 1996 when two independent physician groups joined together and even way back in 1996 were focused on value-based care," Esse Health CFO Robert Richman says. Value-based care was a much smaller arena back then. We run our business by focusing on keeping patients healthy, which of course is the best way to succeed in any type of value-based care environment."

Richman recently connected with HealthLeaders to discuss the success the organization has had with its VBC model, as well as the challenges facing the industry because of the continuing labor crisis.

HealthLeaders: How is Esse Health making value-based care work for it?

Robert Richman: Value-based care is focused on patient outcomes. And so, it is looking at the patient in their entirety over a long period of time. So, when we want to help establish a relationship with a patient it is our plan to be with that patient for the rest of their lives. Many times, value-based care is more focused on the older population. That is certainly where the majority of the spending is, as everybody knows, but we also have a large pediatric group and so we are looking at the patients from birth all the way to the end of their lives.

One of the things that Esse does to help is focus on disease recognition. We've developed an entire program where we train our physicians to understand disease recognition and what it means. I'll give a simplistic example because I'm not a clinician. Diabetes is a common disease, and the idea is that if a patient is starting to show some of the risk factors, instead of waiting until they are more unhealthy for lack of a better term, you'll start doing lifestyle changes and maybe basic medications to help that patient start to address the issue before it becomes full-blown diabetes. Value-based care is about keeping patients healthier for longer, so they don't eventually have expensive complications that are typical in a diabetic population.

HL: Why might some providers be reluctant to adopt a value-based care model?

Richman: Value-based care requires a different way of thinking. In a traditional fee-for-service, you see the patient, you treat the patient for the symptom. And then you move on to the next issue that the patient is having. Value-based care requires you to take a long-term view of the patient and requires a shift from focusing on volume. It's a cultural change and that's one of the biggest challenges.

The other piece is developing proper infrastructure. We have put a substantial amount of resources into the care management function, where we surround our physicians with the capabilities to manage these patients—it's not just about the physician and the patient. It's about the relationship between the patient and the physician's team of care. We will bring in care managers who will reach out to patients if the patient has other issues. Those care managers spend time training patients to manage their various diseases. So, there is an upfront investment to create the infrastructure necessary to properly adapt to a value-based care environment. Sometimes it's challenging for organizations to do that.

HL: Let's change topics and discuss the labor issues in the healthcare space. What is the biggest workforce challenge healthcare providers are facing?

Richman: We're not immune to the labor shortages that are affecting everybody. We've had issues, but our current open position roster is small. We're able to create an attractive environment for our employees, making them want to come work here. Because we're primary care and a specialty-focused physician organization, we hire a lot more medical assistants and patient service reps. We do certainly have nurses as well but our need for the sheer number of nurses that, say, a hospital system may have, it's going to be smaller. So, we may not be experiencing the same level of challenges.

But the biggest challenge, quite frankly, is that as we compete with all the hospitals and health systems for talent, it drives the price up of that talent. However, the nature of insurance contracting, whether it be value-based or fee-for-service, does create a bit of a dynamic because, unlike a lot of other industries, healthcare can't raise prices. So, part of the squeeze that we're all feeling is having contracts that may have a one-year, two-year, or three-year timeline, and the payers can be reluctant to change the terms of those contracts or recognize the inflationary pressures.

We have certainly, as has everybody else in the industry, reached out to payers asking for release in those contracts. Some payers have said yes, and some have not. But ultimately, that is a concern when your costs of providing good patient care are going up, but your reimbursement levels stay flat. Because then you get squeezed from both sides. So, that's a significant challenge not just finding people but then being able to pay them the going wage rate when you cannot increase prices to cover that.

HL: How do you think CFOs can take a more proactive role in maintaining the financial well-being of the organization, without losing the quality of care or talent?

Richman: As a CFO, what I'm looking at is providing the resources and tools that will allow us to be successful. Those resources and tools include making sure the physicians have full transparency into how the value-based contracts work. One of the things we figured out many years ago was to make sure that physicians understood how the value-based contracts work, and how what they do impacts the performance under those contracts. By making them partners in the financials, they understand that what they do and how they treat patients impacts the success of the value-based programs. As CFO, I make sure that information is available to my physician partners, so they are able to make appropriate decisions.