Healthcare providers appear willing to embrace the new model of population health, but the first order of business for many is to sort out the financial issues.
This article appears in the October issue of HealthLeaders magazine.
At its most basic, population health involves improving the health status of a given population by ensuring that members of the population are receiving the healthcare they should be receiving. How? First, one has to define the population. Then one must know what care the population is receiving. Next, identify gaps by comparing the care the population is receiving with the care the population should be getting. Finally, the care delivery system must be able to address care gaps.
Although the tactical implications of these simple statements are considerable, the first order of business for many healthcare providers is to try to sort out financial issues.
With 61% of respondents to our Population Health Survey saying they have selected a patient population and are working to improve the health of that population, it is clear that healthcare leaders recognize the importance of population health management.
However, improving the health of a defined population requires a complex set of activities, many of which are new to healthcare providers. As one might expect with an initiative that seems to have the flavor of a concept rather than a business plan, our research demonstrates that providers have more command over disciplines that have a ring of familiarity, and we see lower comfort levels with newer tasks.
For instance, more than half of respondents (57%) are offering a wellness program now or within the next 12 months. But fewer (48%) expect to take on data analytics functions, a task that most would consider to be more challenging than data integration.
Reduced utilization
Providers face a set of finance-related decisions, mostly having to do with the risk-sharing assumption that gives healthcare reform its foundation. "Health reform is all about practicing population-based medicine. And the only way we're going to bend the cost curve is by keeping people out of the hospital, reducing unnecessary utilization," says advisor David B. Nash, MD, MBA, founding dean of Philadelphia-based Jefferson School of Population Health—one of six schools and colleges that constitute Thomas Jefferson University, which partners with Thomas Jefferson University Hospitals to care for its patients along with healthcare education and research. "So that means we have to be in the health business, not the sick business. To do that, we're going to have to think about what our community connections are like."
What Nash is talking about has consequences beyond building better relationships along the care continuum; the implications are that acute care facilities may have reached their limits of growth. "It's all about care outside the four walls of the hospital. We're talking about no new buildings, no new towers, no new cath labs," he says.
According to report advisor Earl P. Steinberg, MD, MPP, CEO of xG Health Solutions and executive vice president of innovation and dissemination for Geisinger Health System of Danville, Pa., a not-for-profit rural healthcare provider with 1,363 licensed beds in six hospital campuses, the key question is, "How do you deal with the fact that reduced utilization is going to hurt you in your financials?"
Examination of costs
Overall, 29% of respondents identify payer risk or cost sharing as the vehicle most likely to provide a financial incentive to pursue population health management, the top-mentioned item.
Along with the risk-sharing aspects of population health comes the requirement to extend the examination of costs beyond internal costs. Says report advisor Marion McGowan, RN, executive vice president and chief population health officer for Lancaster General Health, a 631 licensed–bed not-for-profit health system serving Lancaster County, Pa., "In the past, we only knew what it cost for patients in places that we owned and operated. If a patient were to go to a skilled care facility for care after a knee replacement, we didn't understand what that cost was, even though we were referring them there."
Obtaining an understanding of costs (and provider productivity and clinical outcomes) incurred by partners and others in the care continuum assumes a level of data interoperability that few have in place today.
Recasting your market potential
Health systems facing reduced utilization may pursue additional admissions to try to solve the problem. The drive to maximize admissions is hardly a new activity, but when considering population health management, one must examine the competitive landscape with an eye toward potential partners and potential competitors.
"You have to have the ability to attract patients to fill those beds," says Steinberg. When they can, some organizations can backfill to compensate for attrition with patients needing higher-value, higher-margin services. But the task in the future will be more involved than a conventional review of services and service lines because it will be important to anticipate how newrelationships might change the competitive landscape in postreform markets.
"You have to be strategic about what your program development efforts are," Steinberg warns. "There may be a limited number of key partners. In certain markets, you're going to see teaming relationships, or you will see payers establish narrower networks."
Fair share of value created
Part of the accommodation for lost patient revenue should be negotiated on the basis of lower overall costs that will be the result of improving the health status of the population. Says Steinberg, "Providers will have to contract with payers in a way that gives them a share of the value that they create."
And while healthcare providers may have a thorough understanding of how to deliver care, they will find themselves negotiating with payers who understand populations and risk inside and out.
Nash points out, "The payer community, especially the managed care payer community, has been on this gig for 30 years. They are the only ones with an economic incentive aligned for prevention and wellness."
If it sounds like providers might be at a competitive disadvantage, that's going to be the case for many. But providers can make moves now that will help them become better informed and stronger at the negotiating table. Two-thirds of survey respondents (68%) say they are well positioned to be among a payer's population health management partners, including 73% of those from health systems.
Lancaster General's McGowan includes payers among her resources for learning. Lancaster General has been in touch with national payers, managed care organizations, and regional and local health systems with their own health plans. "Our discussions have been very rewarding," she says, "and have given us insights about whether this is even financially doable. They're sharing more openly so we can understand what is meant by assuming risk while advancing care."
Pace and scale
The pace and scale of the shift toward population health management have financial implications.
>Pace of change. McGowan identifies the pace of change as an important variable, cautioning about becoming financially vulnerable by shifting away from fee-for-service too early. "How do you migrate from a discounted fee-for-service environment, where you're paid for production, to one where you're paid for value while assuming a certain level of financial risk? It's not just how you do it. It's at what pace. The question of sustainability through the transformation process is a big one."
>Scale requirements. Hospitals and health systems are examining their served markets and admission levels to glean insight into scale requirements. Lancaster Health serves a community of 500,000, and counts annual admissions at just under 40,000. "We have about 18,000 patients in fee-for-service Medicare," says McGowan, "patients who are managed by primary care physicians who are fully aligned and employed by us. Some may say that may not be enough scale to take financial risk like the health plans take, because they spread the risk over a region or over the nation."
Among the options to consider for increasing scale are partnerships and joint ventures, mergers and acquisitions, and becoming more integrated with care partners. McGowan observes, "Some think that you have to be really big. Some think that you have to be fully owned and integrated with a health plan like those providers that own a plan." She notes that in Pennsylvania, where Lancaster competes, two high-profile health systems are developing scale by acquiring additional hospitals.
Providers know healthcare
Payers may know the data, the population, risk, and risk assessment. But healthcare is the domain of providers. Early steps toward population health can yield valuable learning about both the nature of risk and the nature of the changes required to deliver healthcare in a more efficient fashion.
"Payers are not well orchestrated across the care continuum. Providers have touch points with patients throughout their lives, within the community," McGowan says.
Providers working together in an ACO agreement, for instance, can align themselves with population health objectives while gaining exposure to delivering care in a shared-risk environment, she says. Working toward population health objectives means that partners will modify care delivery in concert. For instance, nearly half (49%) expect to deploy health coaches or patient navigators within the year, a sign of willingness to invest along with partners in the care continuum. Respondents expect to improve access to primary care through outreach with community organizations (45%), primary care redesign (42%), and pursuing relationships with clinics and walk-in centers (40%).
According to McGowan, providers should expect to make some investments to enhance the care-delivery system. "There will be a number of things like the care processes and the support associated with managing high-risk patients or people with chronic conditions." She sees the patient-centered medical home as an environment that is adaptable to population health management, possibly evolving out of primary care practices. "Providers can expect to help rebuild the primary care office, perhaps reengineering primary care into patient-centered medical homes, so that care providers can do a better job at managing panels of people and spend more of their time on health promotion."
Data and analytics
Two-thirds of survey respondents (66%) expect to invest in integrating clinical data across the care continuum, and 53% expect to add to their data analytics capability. While the investments are likely to be substantial, Steinberg observes that access to data is a necessary component of population health management. "It's not just the expense," he says. "There has to be cooperation from the payers. Providers need data from payers. Some payers are providing it, some payers aren't. Some payers are providing it in a form that's usable; others are providing it in a form that winds up just chewing up time while you try to make sense of it."
More than half of the respondents (56%) say their organizations need training in data analytics, and 44% need training in population statistics. Nash describes how physicians might be guided by a system with well-developed registry and reporting functionality. "As a physician, I ought to be able to assess instantly and graphically how I'm doing in the care of a population of patients and how my care compares to a peer group at the local, regional, and perhaps even national level." Getting useful functionality requires more than buying and installing software. "I'm going to need a whole new type of information technologist," Nash says.
The expectation that IT tools will be available to monitor and guide population health activities on several levels is what will help Lancaster General's pending ACO function as a population health training ground. Says McGowan, "The accountable care organization serves as the vehicle, but we are doing it because of the new intelligence we will gather around the opportunity to improve not only value, but quality." Still, McGowan is concerned about software costs. "Because they're just becoming available, the tools are very costly."
Population health management presents many challenges, particularly with data and data analytics, new and unfamiliar partners or working relationships, and pressure to reduce costs and increase efficiency. But the overarching requirement when examining population health is that healthcare institutions have to prepare themselves to bear risk. And at its core, the requirement to bear risk is financial in nature, so all of the tendrils of population health management must be examined first from a financial perspective. For some, the financial examination may be the grim task of examining sustainability.
Reprint HLR1013-3
This article appears in the October issue of HealthLeaders magazine.
Michael Zeis is a research analyst for HealthLeaders Media.