HealthLeaders Media's annual industry outlook survey asked senior healthcare leaders about the challenges their organizations are facing as they transition to value-based care models.
According to the January/February 2017 HealthLeaders Media Annual Industry Outlook Survey, healthcare leaders will rely on several key areas to fuel financial growth at their organizations over the next five years.
More than half (55%) of respondents say that expanding outpatient services is how their organization will fuel financial growth over the next five years, followed by developing or joining a shared risk, shared savings effort (50%), and executing a campaign to extend an existing market (39%).
This year's survey results are comparable to last year's, where the top three were expanding outpatient services (56%), developing or joining a shared risk, shared savings effort (49%), and executing a campaign to extend an existing market (46%).
Survey data based on industry setting indicates that a greater share of hospitals (77%) and health systems (70%) than physician organizations (40%) cite expanding outpatient services to fuel financial growth over the next five years, and a greater share of health systems (53%) and hospitals (51%) than physician organizations (44%) mention developing or joining a shared risk, shared savings effort to do the same.
Further, a greater share of hospitals (47%) and health systems (41%) than physician organizations (25%) cite executing a campaign to extend an existing market to fuel their financial growth.
The results also reveal that, based on total net patient revenue, organizational size is correlated with the degree to which respondents say their organizations will fuel financial growth through expanding outpatient services. For example, based on net patient revenue, a greater share of large (71%) organizations than small (58%) and medium (49%) organizations say they expect to grow this way.
Provider balance sheets will continue to face an uphill climb over the next year. Forty-one percent of respondents say they expect their organizations will produce positive financial results in their current fiscal year, and another 9% expect strongly positive results. Conversely, 11% of respondents indicate that their organizations have a negative financial outlook, and 4% have a strongly negative outlook. Thirty-two percent expect results to be flat.
The combined results for positive or strongly positive (50%) are seven percentage points lower compared with last year's survey (57%), and the combined results for negative or strongly negative (15%) are four points higher (11%), indicating that financial conditions continue to be challenging for many providers. The results for flat (32%) are five percentage points higher (27%) than last year.
Along with managing the transition to value-based care, provider organizations must focus on enhancing care coordination, optimizing financial performance, and driving organizational performance in order to remain viable.
As providers transition to value-based care models, they must continue to balance the demands of care continuum, financial, and organizational performance strategies, HealthLeaders Media survey data shows.
Healthcare leaders have positive expectations for growth in value-based net patient revenue in the next three years.
The January/February 2017 HealthLeaders Media Annual Industry Outlook Survey, details responses from senior healthcare leaders who were asked about the challenges their organizations are facing as they transition to value-based care.
They were also asked to examine their care continuum strategies, financial strategies, and organizational performance strategies.
Among respondents who are fully committed and underway with value-based care or have experimental or pilot programs underway, net patient revenue is currently 18% value-based and 82% fee-for-service.
Looking ahead three years, prospects for growth in value-based net patient revenue are robust, with respondents expecting value-based payment models to account for 44% of net patient revenue while fee-for-service will account for 56%.
Survey data also indicates that, based on the size of the organization’s current total net patient revenue, large organizations (24%) account for larger shares of value-based net patient revenue than medium and small organizations (17% each). Across organizations of all sizes, the trend to more net patient revenue from value-based models in three years is also evident: large (48%), small (45%), and medium (39%)
As expected, respondents who say their organizations are fully committed and underway with the transition to value-based care currently are generating a greater share of net patient revenue from value-based models (29%) than respondents who say their organizations are involved in experimental or pilot programs (18%).
Those who say they intend to pursue value-based care but have not yet begun made up 7% of respondents; 3% said they are examining how or whether to pursue value-based care.
Expectations for value-based net patient revenue in three years follows a similar pattern.
Organizations that are fully committed and underway with value-based care expect to boost valued-based net patient revenue 25 points to 54%. Respondents who say their organizations are involved in experimental or pilot programs expect an increase of 27 points to 45%; those who will pursue value-based care but have not yet begun expect a boost of 26 points to 33%; and among those who are examining how or whether to pursue value-based care, the share of value-based revenue is expected to climb 16 points to 19%.
As the healthcare industry continues its steady metamorphosis from a fee-for-service to value-based model, the stakes keep getting higher for those lagging behind.
Download the free full report, Annual Industry Outlook Survey: The Road to Value-Based Care, to read the results and a detailed analysis from senior research analyst, Jonathan Bees.
The healthcare industry faces an unprecedented number of challenges in 2017, including the move to value-based care, high infrastructure investment costs, and cost containment requirements.
This article first appeared in the January/February 2017 issue of HealthLeaders magazine.
As the healthcare industry continues its steady metamorphosis from a fee-for-service to value-based model, the stakes keep getting higher for those lagging behind. While providers at the forefront of the trend certainly have their own risks to contend with, such as the need to make large investments in both infrastructure and care delivery enhancements that depend on still-evolving payment models for repayment, providers trailing the trend run the risk of falling too far behind to catch up.
There are no quiet waters in which to seek refuge—the healthcare industry is facing a multitude of challenges. Along with managing the transition to value-based care, provider organizations must focus on enhancing care coordination, optimizing financial performance, and driving organizational performance in order to remain viable. Aggressive cost containment programs are also critical, as well as initiatives for expanding market share and increasing revenue through outpatient expansion.
Transition to value-based care
While progress is being made, the pace of the transition to value-based care is still slow moving. According to the 2017 HealthLeaders Media Annual Industry Outlook Survey, two-thirds of respondents (66%) say that their organizations are either fully committed and underway with the transition to value-based care (35%) or have experimental or pilot programs underway (31%), indicating that value-based care is a priority for most providers. Another 17% say they will pursue value-based care but have not begun yet. While 13% are not committed and only examining how or whether to pursue, only 2% of respondents say they don't plan to pursue value-based care.
Survey results reveal that financial resources play a role in successful implementation of value-based care. For example, based on net patient revenue, a greater share of large organizations (47%) than small (31%) or medium organizations (34%) say they are fully committed and underway with the transition to value-based care. Investments in infrastructure and care delivery in particular require a certain level of scale and financial health in order to be successful.
While the transition to value-based care is widespread in the healthcare industry, and 83% indicate some level of commitment, it is notable that a minority—only 35%—are fully committed and underway now. Given the long lead times for program and infrastructure development, many organizations are at risk of falling behind; although those not yet fully committed and underway expect to be there in three (49%) or five years (21%).
"I think the thing that's worrying is, you have nearly two-thirds of the folks that are nowhere near prepared to actually do anything, and the preparation to be able to fully participate is something that requires years of work," says Mark Laney, MD, CEO of Mosaic Life Care, a St. Joseph, Missouri-based health system with more than 60 clinical facilities serving a 23-county area of northwest Missouri, northeast Kansas, and southeast Nebraska, and the lead advisor for this Intelligence Report. "And so my concern would be that even if the pace of change remains slow, there's a lot of folks that are way behind in prepping for what I think is an inevitable shift."
Although respondents indicate a degree of optimism with regard to their value-based timeline, these expectations may not hold up to operational realities. Among respondents not currently fully committed and underway with value-based care, nearly half (49%) say they expect to be fully committed and underway in three years, one-fifth (21%) expect this in five years, and a small number (4%) say 10 years. A significant number of respondents indicate that they don't know (26%) when they expect this will happen.
Survey responses reveal that it is mostly small and medium organizations that plan on playing catch-up in the shorter term. For example, based on net patient revenue, a greater share of small (53%) and medium organizations (58%) than large organizations (33%) expect to be fully committed and underway with a value-based model in three years, and a greater share of large organizations (40%) than small (22%) and medium organizations (13%) expect this to happen in five years.
"The challenge for hospitals and health systems is that it takes a tremendous investment to be good at this," says Laney. "It takes a lot of experience and talent to be good at this, and there's a lack of appreciation that this is something that you can't just pivot quickly into. It's something that requires careful foresight, careful planning, and years of implementation and practice to be good at it."
Providers facing the necessity of making large investments in value-based care must reconcile this requirement with uncertainty around new payment models and incentives, leading them to proceed with caution. In fact, revenue stream uncertainty (44%), inadequate payer incentives (42%), and inadequate IT infrastructure, tools (36%) are the top three barriers respondents cite as preventing their organization from pursuing the transition to value-based care with more vigor. Clearly, the financial side of value-based care is a concern.
Care continuum and postacute care
It comes as no surprise that respondents say that the top element considered very important to respondents' organizational care continuum strategy is primary care (84%), due to the critical role it plays in value-based care. This is followed by specialty care (70%), and then a second tier of responses consisting of acute care (58%), home health (54%), and skilled nursing (51%).
"I think the importance of primary care is right on, because it's really about the right care at the right time, the right place at the right cost, and that all starts with really strong primary care," says Laney.
Note that home health and skilled nursing are also key components of a value-based care approach, something that health systems have identified early on in the transition to this model. For example, a greater share of respondents from health systems (73%) than hospitals (61%) and physician organizations (26%) cite home health, and a greater share of respondents from health systems (65%) than hospitals (47%) and physician organizations (27%) mention skilled nursing as a very important element in organizational strategy when considering the care continuum.
When asked about care continuum and postacute care organizational plans, respondents mention looking to develop stronger relationships (67%), followed by looking to partner with providers (55%) and looking to acquire providers (22%). Interestingly, responses are inversely correlated with the level of commitment required by their organizations, indicating that respondents see value in more informal relationships and recognize that care continuum and postacute care plans don't necessarily require spending financial resources or entering into complex agreements.
"This shows that folks understand that to move to value you have to have better handoffs, better coordination of care, but the other thing is, you don't have to own everything," says Laney. "It's a great realization that there's a lot of ways to provide seamless care and you don't necessarily have to own all of it."
However, financial resources may also play a role in the degree to which respondent organizations seek to acquire providers in the care continuum. For example, based on net patient revenue, more large (31%) and medium (27%) organizations than small organizations (17%) say they are looking to acquire providers. And financial resources also impact the degree to which respondents say they are looking to partner with providers, with more large organizations (69%) than small (57%) and medium (51%) organizations saying this.
Interestingly, respondents who cite looking to acquire providers indicate they have a greater share of value-based net patient revenue (27%) than those who mention looking to partner with providers (19%) and those looking to develop stronger relationships (18%). Respondents who say care continuum and postacute care plans are not a significant part of their business have the lowest value-based care percentage (7%). This indicates that as providers make increasingly greater commitments to value-based care, such as owning parts of the continuum associated with postacute care, there is a corresponding increase in value-based net patient revenue.
Note that internal investment priorities reveal a focus on value-based care delivery. For example, respondents say that the top investment areas over the next three years are data analytics (71%), care redesign efforts (65%), patient experience improvement (61%), and care coordinators (60%).
Financial resources are also correlated with future investment, with responses for health systems and large organizations receiving the highest responses. For example, a greater share of respondents from health systems (87%) than hospitals (65%) and physician organizations (63%) cite data analytics as an investment their organization will begin or increase over the next three years, and a greater share of health systems (76%) than hospitals (69%) and physician organizations (59%) mention care redesign efforts. Further, a greater share of respondents from health systems (73%) than hospitals (58%) and physician organizations (51%) cite care coordinators.
Based on net patient revenue, a greater share of respondents from large organizations (83%) than small (69%) and medium (76%) organizations cite data analytics as an investment their organization will begin or increase over the next three years, and a greater share of respondents from medium (73%) and large organizations (72%) than small (63%) organizations mention care redesign efforts.
Financial results
According to the survey results, 18% of respondents report negative operating margin for the most recent fiscal year, and 65% posted positive margin. These results are relatively comparable to last year's survey in which 15% reported negative operating margin and 70% positive margin. Three percent report that results are flat.
Hospitals and small and medium organizations appear to be having the most difficulty financially. For example, a greater share of hospitals (25%) and physician organizations (18%) than health systems (9%) report a negative operating margin, and based on net patient revenue, a greater share of small (17%) and medium (19%) organizations than large (4%) organizations say this. Likewise, a greater share of nonprofit organizations (21%) than for-profit organizations (13%) have a negative operating margin, and a greater share of rural organizations (39%) than non-rural organizations (16%) say this.
Laney points out that low levels of margin performance may spell trouble for some providers as they make the journey to value-based care. "I'm not surprised that there's 21% who responded in the survey zero or below regarding operating margin. The worrisome thing is that when you go from volume to value, it is my belief that you take a dip in your financial performance, because it's not as profitable to share savings versus get 100% of fee-for-service.
"It's different than if we just went to capitation and you got 100% of the shared savings. So for these folks that are barely hanging in there, it's going to make their situation worse, and they're not going to be able to make the journey. They're not going to make the investment in the infrastructure to make the journey, and ultimately, they are going to either merge or go under."
The financial outlook for the current fiscal year is roughly the same. Forty-one percent of respondents say they expect their organizations will produce positive financial results in their current fiscal year, and another 9% expect strongly positive results. Conversely, 11% of respondents project a negative outlook for their organizations, and 4% have a strongly negative forecast. Thirty-two percent expect results to be flat.
The results indicate a slightly negative trend compared with last year's survey. For example, the combined results for positive or strongly positive outlook (50%) are seven percentage points lower compared with last year (57%), and the combined results for negative or strongly negative outlook (15%) are four points higher (11%), indicating that financial conditions continue to be challenging for many providers. The results for flat (32%) are five percentage points higher (27%) than last year.
Financial targets and growth
Nearly half of respondents say that cost control (49%) is among the top three areas having a positive influence on their organizations' efforts to reach financial targets over the next three years, followed by care models (e.g., population health, medical home; 39%) and strategic partnerships with providers (37%).
The results reveal some important differences compared with last year's survey—while cost control remained relatively flat from last year (up three percentage points), care models increased eight percentage points from the 31% level reported in both the 2016 and 2015 surveys, and physician-hospital alignment declined five percentage points from last year's survey and is down 11 points overall from the 2015 survey level of 44%. The response for care models is an indication that the trend toward value-based care is expected to start paying dividends in the relatively near future.
More than half (55%) of respondents say that expanding outpatient services is how their organization will fuel financial growth over the next five years, followed by develop or join a shared risk, shared savings effort (50%) and a campaign to extend an existing market (39%). This year's survey results are comparable to last year's, where the top three were expand outpatient services (56%), develop or join a shared risk, shared savings effort (49%), and a campaign to extend an existing market (46%).
Organizational performance
To successfully execute on their mission, provider organizations must run at optimal levels at all times. Performing at optimal levels is an especially complex organizational undertaking because of the industry's transition to new care delivery and payment models. The good news is that respondents generally report positive reviews of organizational performance.
Exemplary organizational performance starts at the top, and the results are encouraging. When looking at the current overall performance of groups and individuals in healthcare organizations, 43% of respondents rate their CEO's performance as very strong, making them the top-performing group/individuals. The result is up four percentage points over last year's survey (39%). Thirty percent of respondents rate the leadership team's performance as very strong, giving them the second-highest response.
The groups receiving the lowest responses for very strong are data analytics staff (10%) and IT staff (15%). While only 6% of CEOs and 11% non-CEOs say data analytics staff performance is very strong, 46% of CEOs and 26% of non-CEOs indicate that performance is strong, leading to an overall rating of 28%. Last year, the response for data analytics for very strong was just 8%, indicating that progress in this important area has been slow in coming.
In a similar vein, while only 17% of CEOs and 15% of non-CEOs say IT staff performance is very strong, 46% of CEOs and 35% of non-CEOs indicate that performance is strong, leading to an overall 36% rating for strong. Last year, the response for IT staff for very strong was 11%, four percentage points lower than in this year's survey.
Looking at organizational performance more broadly, nearly three-quarters (71%) of respondents say that their prospects for growth are very strong or strong, with responses for fiscal management (67%), collaboration/relationships with providers (62%), and strategic planning (61%) following closely behind. A greater share of CEOs (80%) than non-CEOs (70%) say their organization's prospects for growth are very strong or strong, and a greater share of CEOs (80%) than non-CEOs (65%) rate their organization's fiscal management as very strong or strong.
The area receiving the lowest response for very strong or strong is price transparency (33%), which continues to be a challenge for the industry. Based on net patient revenue, a greater share of small organizations (37%) than medium (28%) and large (26%) organizations say price transparency is strong or very strong. And a greater share of rural organizations (44%) than nonrural organizations (14%) say this.
The organizational performance results for healthcare functions are very positive. Eighty-five percent of respondents say that their organizations' performance on dedication to mission is very strong or strong, with responses for clinical quality and patient safety (82%) and patient experience (64%) completing the top three.
The function receiving the lowest response for very strong or strong performance is population health (30%), which is perhaps an indication that providers are still in the early stages of developing competency in this area. A greater share of health systems (40%) than hospitals (26%) and physician organizations (14%) say their organizations' performance on this is very strong or strong.
The healthcare industry faces an unprecedented number of challenges, including the move to value-based care, high infrastructure investment costs, cost containment requirements, and a new administration in Washington. Providers will have their work cut out for them in 2017.
While 41% of executives are generally positive about the potential impact of a Trump administration, nearly as many (37%) are generally negative about the prospects. The figures regarding Tom Price at HHS and Seema Verma at CMS are similar in a HealthLeaders Media survey.
This is part of a series covering the Shaping of Healthcare's Future in the Trump era.
As the Obama administration exits the stage in Washington and the Trump administration takes its place, healthcare industry executives are collectively holding their breath as they anticipate the changes to come. It is a unique moment in history for the industry: Will the healthcare policies of the past eight years remain in place and continue to evolve, or will they be discarded and replaced?
"Healthcare in the Trump Era," a new HealthLeaders Media survey, provides a snapshot from healthcare industry leaders of what they view as needed by the new administration as it formulates and revises healthcare policy.
Survey respondents are divided about the impact a Trump administration will have on the healthcare industry. Forty-one percent say that they expect the administration to have either a very positive (14%) or positive (27%) impact, and 37% say that they expect either a very negative (18%) or negative (19%) impact. Another 10% say that the administration will have a neutral impact, and 13% don't know.
A greater share of respondents who say the Trump administration will have a very positive or positive impact on the healthcare industry are from the South (50%) than the Midwest (41%), Northeast (34%), and West (34%).
Conversely, a greater share of respondents who say the administration will have a very negative or negative impact on the industry are from the Northeast (42%), West (41%), and the Midwest (39%) than the South (27%).
Regarding Health and Human Services Secretary nominee Tom Price, MD, a plurality (43%) of healthcare leaders expect that he would have a positive/very positive impact on the industry, while 34% expect a negative/very negative impact, 10% expect a neutral impact, and 14% don't know.
There is more uncertainty regarding Centers for Medicare & Medicaid Services Administrator nominee Seema Verma. One-third (33%) of healthcare leaders expect that she would have a positive/very positive impact on the industry, while 21% expect a negative/very negative impact, 24% expect a neutral impact, and 22% don't know.
The uncertainty about Trump administration policies is having an impact on the strategic planning of most healthcare executives.
Half of respondents (50%) say they are putting some things on hold until they know more with regard to their organization's strategic planning. Another 18% of respondents indicate they are revising and updating some plans, and only 3% say they are making extensive changes to their plans. Twenty-nine percent say they are making no changes to their plans.
While much is unknown about the incoming Trump administration's healthcare plans, this much is certain: Healthcare providers—and, indeed, much of the country—remain divided on the best course forward for healthcare.
The silver lining is that there are areas of consensus, and with that comes the hope of a workable solution. Two-thirds of respondents (65%) in this survey favor reducing regulations, but within reason as some regulations are needed, and two-thirds (66%) say the best option for the Patient Protection and Affordable Care Act is to make some changes, but otherwise retain it. Both of these results are an indication that broad consensus is possible. However, as always, the devil is in the details.
Healthcare leaders prefer seeing changes to the Affordable Care Act rather than a wholesale repeal and replace. The results are from a new HealthLeaders Media survey that explores healthcare in the Trump era.
This is part of a series covering the Shaping of Healthcare's Future in the Trump era.
As the Trump administration officially begins later this week, a new HealthLeaders Media survey shows that healthcare industry leaders support changes to the existing law rather than replacing it. Two-thirds of respondents (66%) say the best option for the healthcare industry regarding the Patient Protection and Affordable Care Act is to make some changes but otherwise retain it.
At the opposite ends of the spectrum, 27% favor full repeal and replacement, while only 7% of respondents say keep it as it is, indicating the extent of dissatisfaction with the PPACA.
Interestingly, a greater share of health systems (78%) than hospitals (66%) and physician organizations (65%) favor making some changes to the PPACA.
On the other hand, a greater share of hospitals (28%) and physician organizations (27%) than health systems (17%) prefer full repeal and replacement. This is perhaps an indication that health systems are less able than other providers to accept full repeal and replacement because of their greater complexity as organizations.
Among the 66% of respondents who say that the best option for the PPACA is to make some changes, the top three changes they advocate are adding a public health insurance option (61%), eliminating the excise tax on high-cost employer health benefit plans ('Cadillac tax') (50%), and eliminating the individual mandate and noncompliance penalty (37%).
The two changes receiving the fewest responses are eliminating Medicaid expansion (10%) and abandoning the focus on value-based care and reimbursement (16%).
Among the 27% of respondents who say that the best option for the PPACA is full repeal and replacement, the top response by a large margin for key elements of a replacement law is full voluntary coverage to ensure individual choice (62%).
Responses forming a distant second tier are full universal coverage to ensure an adequate risk pool (17%), complete elimination of government-sector insurance companies (e.g., Medicare/Medicaid) and benefits managers (14%), and complete elimination of private-sector insurance companies and benefits managers (13%).
Among the 7% of respondents who indicate that the best option for the healthcare industry regarding the PPACA is to keep it as is, coverage for preexisting conditions (95%), coverage for children up to age 26 on parents' insurance (84%), and Medicaid expansion (76%) topped the list of components that are most important to keep.
Responses for the remaining items are also strong, falling in a range between 68%–76%, indicating that this particular group of respondents sees value in nearly all aspects of the PPACA.
Asked to identify the model that offers the best solution for the healthcare industry, the majority of respondents (52%) favor models with less governmental involvement such as consumer-directed healthcare (38%) and employer-sponsored healthcare (14%), approaches that generally represent politically conservative views.
On the other hand, 39% prefer government-based solutions such as government-funded universal single-payer healthcare (25%) and government-mandated universal health insurance (14%), models that are generally aligned with liberal views and include the current Patient Protection and Affordable Care Act.
Perhaps not surprisingly, among respondents who say the Trump administration will have a very positive or positive impact (41%) on the healthcare industry, a greater share say consumer-directed healthcare (64%) and employer-sponsored healthcare (56%) are the best solutions for the industry than government-mandated universal health insurance (1%) and government-funded universal single-payer healthcare (2%).
Conversely, among respondents who say the Trump administration will have a very negative or negative impact (37%) on the healthcare industry, a greater share say government-mandated universal health insurance (70%) and government-funded universal single-payer healthcare (66%) are the best solutions for the industry than consumer-directed healthcare (10%) and employer-sponsored healthcare (20%).
Nearly two-thirds of respondents (65%) say that the Trump administration should reduce regulations, but within reason, as some regulations are needed. This cautious approach runs somewhat contrary to the rhetoric surrounding the issue of overregulation of the healthcare industry.
At the two opposite extremes of the regulation question are respondents who say regulations should be reduced and that most are unnecessary and burdensome (20%), and those who say they should not be reduced and that most regulations are needed (15%).
A greater share of physician organizations (28%) than hospitals (18%) and health systems (13%) say regulations should be reduced and that most are unnecessary and burdensome, and a greater share of health systems (20%) than hospitals (15%) and physician organizations (13%) say they should not be reduced and that most regulations are needed.
When asked to identify just one governmental regulation that respondents would eliminate, responses covered a broad range of governmental regulations. The top three were to eliminate the individual mandate and tax penalty (10%), simplify and reduce provider documentation regulations (9%), and a broad grouping of other health plan–related items, such as eliminating Medicare regulations, eliminating mandates for care that violate religious conscience, eliminating closed networks, eliminating bundled payments, and ending value-based purchasing (8%).
The results of this open-ended question suggest that there is no single regulation that is considered so onerous that it generates a majority response, or even a large plurality.
Ambulatory and outpatient care strategy is being driven by many different industry factors, including the need to listen to the voice of the consumer.
This article first appeared in the December 2016 issue of HealthLeaders magazine.
Ambulatory and outpatient care expansion continues to be driven by a broad range of industry factors. In fact, there are few healthcare activities that don't, in some form or another, provide momentum to the trend.
The transition to value-based care, the ongoing battle to improve quality outcomes, and population health management can all be seen as contributing to ambulatory and outpatient growth. Likewise, provider business initiatives that focus on expanding market share and increasing revenue also play a role.
However, healthcare is ultimately about doing what is best for the patient, and as consumers, patients are increasingly seeking care closer to home, without having to wait to see a physician, and in more cost-effective settings. Improvements in medical technology have made some of this possible, but a change in provider thinking is also driving the trend. More and more, providers are listening to the voice of the consumer as they develop and execute their ambulatory and outpatient strategy.
"I think the reason for this is we're looking at it through the eyes of the consumer," says Pam Nicholson, chief strategy officer and senior vice president at Centura Health, a Centennial, Colorado-based health system with 17 hospitals, 12 affiliate hospitals, and numerous urgent care centers, emergency rooms, and clinics, and the lead advisor for this Intelligence Report. "And with technology changing for medical care and how much can be done on an outpatient basis, and then looking at the convenience factor, you're going to find consumers want it faster, closer, and right away, and that doesn't always happen at an inpatient hospital."
Ambulatory/outpatient care strategy
Survey respondents indicate that two of the top three factors driving their organizations' ambulatory and outpatient care strategy—increasing revenue (49%) and expanding market share (45%)—are key aspects of a fee-for-service model. However, the top response for factors driving organizations' ambulatory/outpatient care strategy is improving quality and outcomes (54%), with responding to consumer-driven trends (40%) ranking fourth and population health management (35%) ranking sixth, which are all factors indicative of a value-based care model. Ambulatory and outpatient growth is clearly impacted by both models.
Interestingly, the response for population health management is down eight percentage points from last year's survey, where it ranked fourth. And although population health management makes the top three factors driving ambulatory/outpatient care strategy for approximately one-third of respondents, it remains a second-tier factor in this year's survey.
For the most part, ambulatory and outpatient care strategy is proactive in nature. Only 14% of respondents say that protecting market share is one of the top three factors behind their strategy, and over three times as many respondents mention expanding market share (45%). This is consistent with results in which 82% of respondents say that the industry shift to ambulatory/outpatient care represents an opportunity and only 11% see it as a threat.
Ambulatory/outpatient care tactics
It is apparent from survey results on ambulatory/outpatient care tactics that respondents are paying particular attention to physician organizations as they look to expand their networks. For example, the top tactics respondents use to expand their ambulatory/outpatient network are to partner with physician organizations (52%), acquire or establish physician organizations (50%), and partner with community-based organizations (47%).
The responses for ambulatory/outpatient tactics such as acquiring or establishing urgent care clinics (32%) and convenient care clinics (26%) fall in the middle of the range. Interestingly, respondents show a preference for acquiring or establishing their own versus forming a partnership with an existing clinic, with responses for partnering with urgent care clinics (16%) and convenient care clinics (15%) having nearly half the response rate.
Ownership of clinics appears to be fairly stable. While 37% of respondents say they currently participate in convenient care clinics through ownership or partnership, only 14% not currently participating say they plan to in three years; nearly half (46%) have no intention of pursuing that tactic. Likewise, while 57% of respondents say they currently participate in urgent care clinics through ownership or partnership, only 10% say they plan to in three years, and 33% say they will not adopt that approach.
Note that, according to respondents, participation in urgent care clinics (57%) is greater than convenient care clinics (37%), and this is highest in health systems and large organizations.
Urgent care clinics are attractive to these organizations because they admit patients with higher acuity levels, thus earning correspondingly higher reimbursement. They are also a more cost-effective alternative to an emergency department, a benefit to both hospitals and health systems. And for health systems and hospitals, this is an environment in which they have ample expertise.
Greatest financial contribution
According to respondents, the ambulatory/outpatient care areas offering the greatest financial contribution today are surgery centers (25%), specialty care (24%), and primary care (19%). Surgery centers and specialty care provide significant contributions because they provide care for patients with higher acuity levels than the other ambulatory/outpatient areas, which can result in higher reimbursements.
Looking out three years, the top three areas making the greatest contribution remain the same, but the order is different. Notably, primary care (28%) has the highest response, followed by surgery centers (27%), and specialty care (20%). The response for primary care is up nine points from 19% today, the largest increase of any area. This is perhaps an indication of the impact of healthcare reform and the trend toward population health.
On the other hand, headed in the opposite direction is the response for imaging centers, which is down nine percentage points to 7%. This likely reflects the ongoing provider emphasis on cost containment initiatives.
"We're seeing a large shift to outpatient, and we see that also in a lot of our systems of care, especially around oncology," says Nicholson. "In orthopedics, we're starting to see same-day surgeries that are pretty intense that have always been inpatient. So we are definitely seeing that shift."
Greatest competitive threat
Survey responses indicate that the greatest competitive threats to respondent organizations in three years are physician practices and organizations (23%), retail medicine (15%), and surgery centers (13%). The results are somewhat similar to last year's survey: retail medicine (21%), physician practices and organizations (20%), and convenient care clinics (13%).
Respondents overwhelmingly say that the industry shift to ambulatory/outpatient care represents an opportunity for their organization (82%), and only 11% say it is a threat. Note that a greater share of health systems (16%) and hospitals (10%) than physician organizations (4%) say it is a threat.
The strong response for ambulatory/outpatient care as an opportunity suggests that few providers see the shift as a disruptive trend. Interestingly, physician organizations, which exist almost exclusively in the ambulatory/outpatient care domain, see little cause for concern despite all the outside interest (4% see it as a threat and 4% don't know). In fact, they are among the most bullish on the trend—92% see it as an opportunity.
"We're building solutions that meet consumers' needs," Nicholson says of Centura Health's ambulatory/outpatient care strategy. "We are partnering with our providers to optimize health value and changing the way that patients are engaging by educating and empowering them across the care continuum and supporting them in their health journey."
Executive compensation strategy is changing as providers realign their plans to reflect the impact of value-based care on their organizational goals.
This article first appeared in the November 2016 issue of HealthLeaders magazine.
The shift from fee-for-service to value-based care is impacting executive compensation along several different tracks. Change is occurring along financial and clinical lines, as compensation models evolve to mirror a greater focus on value and quality. Incentives and total compensation are being modified to account for risk-based models and to better align them with organizational strategy. And total compensation is being adjusted modestly upward to ensure that healthcare providers are able to attract executive talent with the types of new skills that value-based care requires.
Executive Compensation: Aligning Clinical and Financial Strategy for Value-Based Care
The good news for the industry is that the majority of providers are embracing the need for executive compensation realignment in light of the fundamental changes engendered by value-based care, and momentum is building. In fact, 51% of respondents in the 2016 HealthLeaders Media Executive Compensation Survey say that they have modified or expect to modify their group or team incentives in consideration of the shift from fee-for-service to pay-for-value, up from 37% in our 2015 survey.
Looking at executive compensation more broadly, it is also encouraging that only 2% of respondents indicate they have made a change regarding both financial or patient care objectives, and say that this change is in the wrong direction. When change has been made, it has generally been on the right track.
Executive compensation strategy
Traditionally, executive compensation discussions usually begin with financial objectives, given that this is a core responsibility of senior leadership. But the changes being wrought by value-based care influence both financial as well as patient care/clinical strategy in important ways, and the two aspects are more closely linked than ever before.
According to the majority of respondents in our survey, executive compensation is clearly in need of an adjustment. Seventy-five percent say that change is needed or have made a change to executive compensation strategy to address the financial objectives of healthcare now, and only 17% say that no change is needed. The data reflects the extent to which the industry is changing, and the corresponding need to refine executive compensation to maintain optimal alignment.
Perhaps because of the uncertainty surrounding these industry changes, approximately one-third (30%) say that their organization's executive compensation strategy needs to change but have no plan in place. The good news is that 21% of respondents say that change has been made and that it's in the right direction. The jury is still out for 9% of respondents, who have made a change and don't know yet if it's in the right or wrong direction.
The responses for executive compensation strategy that address the patient care objectives of healthcare now are somewhat similar to the results for financial objectives. Seventy-eight percent of respondents say that change is needed or have made a change, and only 17% say that no change is needed. Industry uncertainty also exists in the patient care area, with 26% saying that their organization's executive compensation strategy needs to change, but they have no plan in place.
Note that a greater percentage of respondents say that their organization has made a change in the right direction for executive compensation strategy to address patient care objectives (27%) than a change in the right direction for financial objectives (21%), an indication of the more challenging nature of achieving financial objectives in the current healthcare environment.
Incentives and compensation
The survey results for incentive compensation show a mix of old and new influences, evidence that the transition to value-based care is still in its early stages. As one would expect, responses for individual executive incentive payments show that the majority of respondents (69%) have operating margin or cash flow targets among their individual incentives, down from 76% in last year's survey. However, population health management targets (23%) and growth in lives under risk contracts (6%) receive the lowest responses, an indication of the deliberate pace providers are taking in the adoption of value-based models and their use as incentives in executive compensation.
As with individual incentives, the results for team executive incentive payments indicate that nearly three-quarters (73%) of respondents have operating margin or cash flow targets among their incentives, showing similar results (71%) to last year's survey. The results for team executive incentive payments are close to those for individual executive incentive payments, and the two sets of incentives have the same order of categories for the top five responses: operating margin or cash flow targets (73% team vs. 69% individual), patient engagement or satisfaction targets (66% vs. 62%), clinical performance targets (59% vs. 57%), staff engagement or satisfaction targets (53% vs. 48%), and financial growth targets (52% vs. 47%).
As with individual incentives, population health management targets (26%) and growth in lives under risk contracts (6%) had the lowest survey responses for team executive incentive payments, suggesting that the adoption of value-based models and their use as incentives in executive compensation are still in the early stages.
Mike Wiltermood is president and CEO at Enloe Medical Center, a nonprofit hospital with 225 staffed beds located in Chico, California, and the lead advisor for this Intelligence Report. Interestingly, not all executive compensation change is related to value-based care, and sometimes more fundamental adjustments to strategy become necessary. For example, in 2009, Enloe Medical Center opted to eliminate individual incentives, and now relies only on a team-based incentive plan.
"All of our goals are team-based. But we develop individual goals that form the basis for those broader issues," says Wiltermood. "There's certainly times, of course, when one executive might do yeoman's work in a particular area on a team goal, but the collaboration that this has achieved has been extraordinary. I just don't have people on my team that aren't willing to sacrifice for the success of somebody else, and this compensation model really encourages that team approach."
"When we had individual goals that were tied to bonus compensation, it was just too easy for some people to lowball goals in order to achieve a certain bonus. And it just wasn't effective at all."
In general, the current alignment between executive compensation and organizational strategy is a positive one, with 61% of respondents reporting that their organization's executive compensation packages are either perfectly aligned (8%) or pretty well aligned (53%) with their organization's strategies. However, this is down from 68% in last year's survey, and the response for seriously misaligned (14%) is up five percentage points, perhaps indicating that executive compensation is lagging behind changes in organizational strategy.
It is worth noting that among respondents who say their organization's executive compensation packages are perfectly aligned, a greater percentage say their organizations have modified group or team incentives in consideration of the shift from fee-for-service to pay-for-value (19%) than those who expect to modify incentives (5%) and those who have not modified them (6%).
Likewise, among respondents who indicate that their organization's executive compensation packages are pretty well aligned, a greater percentage have modified group or team incentives in consideration of the shift from fee-for-service to pay-for-value (67%) than those who expect to modify incentives (55%) and those who have not modified them (44%).
These results point to value-based care as one of the main alignment challenges for executive compensation.
Value-based impacts
As stated earlier, 51% of respondents say that they have modified or expect to modify their group or team incentives in consideration of the shift from fee-for-service to pay-for-value, up from 37% in our 2015 survey. The response breakout is 19% of respondents indicate that their organization has modified its group or team incentives, and 32% say their organization expects to modify them. Clearly, the transition to value-based care is gaining momentum, and executive compensation is being refined to reflect the new reality.
As an example, among respondents who have modified incentives to reflect the shift to value-based purchasing, nearly half (48%) say their organization's executive compensation packages are perfectly aligned with their organization's strategies, and one-quarter (25%) say this is pretty well aligned. Only 5% of this group say their organization's executive compensation packages are seriously misaligned and 9% say this is slightly misaligned.
A closer examination of team-based incentives is revealing. The top three group or team incentives in which respondents say their organization has made, or is expected to make, modifications to align executive compensation with the shift to pay-for-value are patient engagement or satisfaction targets (87%), clinical performance targets (86%), and staff engagement or satisfaction targets (65%). Note that finance-related incentives did not make the top three responses: operating margin or cash flow targets (60%) ranked fourth, financial growth targets (50%) tied for sixth, and business expansion targets (34%) was seventh.
Another aspect of executive compensation impacted by value-based care is the amount of compensation exposed to risk. Nearly half (47%) of respondents indicate that 10% or more of their total compensation is at risk for value-based activities that have exposure to profit and loss, and 70% have at least some portion of total compensation at risk. Thirty percent have no compensation at risk at all.
Interestingly, there appears to be a correlation between organizations that offer risk-based compensation plans for value-based activities and increases in total compensation when trying to attract and recruit executive leaders with value-based purchasing expertise. For example, among respondents who say they have at least some portion of compensation at risk for value-based activities, a greater percentage report that their organizations have experienced an increase in total compensation (80%) than those who have not (60%). Alternatively, among respondents who say they have no compensation at risk, a greater percentage report that they have not experienced an increase in compensation (40%) than those who have (20%).
Note that 38% of respondents indicate that their organizations have experienced an increase in total compensation when trying to attract and recruit executive leaders with value-based purchasing expertise, and 44% say they have seen no increase. Organizations appear to be split as to whether it is necessary to pay more when looking outside the organization to acquire value-based talent.
"For an organization such as Enloe, the emphasis on trying to bring outside talent into the organization, we've really cranked that down," says Wiltermood. "We're thinking that, for the real top talent, the big systems can get them. But we're looking at this [situation] and saying, 'If they're experts, they're going to be making more than the CEO.' And so we're coming to the conclusion that we're going to have to grow our own skills in some of these new areas. Maybe that's shortsighted, but it could be an indication that some people are giving up on trying to fix their knowledge deficits by recruiting outside."
In a broader context, survey results reveal that total compensation is experiencing modest increases on a year-over-year basis. For example, 59% of respondents report that their total compensation is $200,000 or more; in last year's survey, 54% of respondents said this. Further, 42% of respondents report that their total compensation is less than $200,000; in last year's survey, this figure was 48%.
Executive compensation challenges
Approximately two-thirds of respondents say that balancing quality and financial goals (65%) is among their top three challenges in executive compensation, evidence of the difficulty organizations face when trying to integrate new care models with long-standing financial goals and practices. In addition, roughly half of respondents cite determining metrics for pay-for-value tasks (46%), ranking it second in survey responses for the top three challenges.
Responses are grouped in a tight range for third position, with accommodating long-term goals with compensation programs (36%), determining goals for pay-for-value tasks (34%), and attracting executives with the right skill sets (33%) rounding out the group. Interestingly, the response for attracting executives with the right skill set ranked fifth in this year's survey, but had ranked third in last year's survey (41%). This runs against conventional wisdom that says providers are being challenged to find executives with value-based skill sets.
"I think there's a perception that things are really shifting under our feet, and to retain and attract good leadership we may all have to get a reality check on the compensation structure."
Wiltermood says that his organization uses a system that helps manage the challenge of balancing quality and financial goals. "We have a balanced scorecard methodology and every year we decide what effort is going to be made where and what constitutes a successful year. Bonus compensation is tied to these balanced scorecards, but you don't [receive a] bonus if one element of the balance scorecard falls below the previous performance target of the year before. This forces us—on a tactical day-to-day basis—to consider the impact of everything that we do in the context of the entire organization, rather than just focus on the fire that's in front of us."
Respondents have been remarkably consistent in their views over the last three years regarding the outlook for executive compensation structures. This year, 33% of respondents indicate that their organization's executive compensation structure needs major enhancement in order to attract, retain, and engage leaders. This response is nearly identical to the survey results in 2015 (31%) and 2014 (33%). Likewise, the response for needs minor enhancement (53%) is also similar to the results in 2015 (55%) and 2014 (49%).
It is apparent that the industry is undergoing dramatic change, which necessitates that executive compensation be continuously refined in order to maintain alignment. Wiltermood sums up the prospects for providers this way: "I think there's a perception that things are really shifting under our feet, and to retain and attract good leadership we may all have to get a reality check on the compensation structure."
C-suite skills
According to respondents, the top three skills or experience sets that will help a CEO succeed in the next five years are physician alignment experience (63%), optimizing results along a continuum of care (56%), and cost containment ability (40%). The latter is followed closely by value-based purchasing expertise (38%). The top three skills are the same as in last year's survey and the percentages are relatively comparable, with the exception of cost containment ability (49%), which was nine points higher then.
Given the important role that physicians play in the transition to value-based care, it's not surprising to see a requirement for skills such as physician alignment experience and optimizing the continuum of care, both of which involve managing physicians and physician organizations.
The top three skills or experience sets that will help a non-CEO C-suite executive succeed in the next five years are cost containment ability (54%), optimizing results along a continuum of care (51%), with value-based purchasing expertise (41%) and physician alignment experience (41%) in a tie. The top three skills are the same as in last year's survey: cost containment ability (64%), optimizing results along a continuum of care (55%), and physician alignment experience (42%). Note that value-based purchasing expertise was not offered on the response list in last year's survey.
It's worth mentioning that while cost containment ability is reported as the top skill for non-CEOs, it only ranked third for CEO skills. It also receives a higher response (54% non-CEO versus 40% CEO). This is perhaps evidence that cost containment responsibility is delegated by the CEO to his or her team, and that this responsibility is central to the team's overall mission. Although skills such as risk-management experience and payer or insurance experience are also important, they are more specialized and, therefore, received lower responses from respondents.
Wiltermood says that the results reflect a traditional view of the CEO as physician leader. "For CEOs, the docs make or break us. It's been that way for years, and now we need their leadership so much more in achieving CMS goals. It's even more important that we have alignments and relationships built."
Healthcare leaders are committed to population health management, yet are cautiously moving forward to implement risk-based financial models.
This article first appeared in the October 2016 issue of HealthLeaders magazine.
Population health management continues to be a work in progress for the healthcare industry, with the majority of providers involved in investigating risk-based financial models, exploring strategic initiatives, and investing in patient engagement and IT infrastructure. In fact, a significant number of healthcare organizations appear to be doing their homework in this area: A combined 76% of respondents in our survey say that they are either fully committed and underway or have an experimental or pilot program underway for managing the overall health of a defined population. Another 11% of respondents are planning to pursue population health but have not begun, and 9% are examining how or whether to pursue this type of health management. These responses are indications that population health is top of mind for healthcare leaders.
However, while many providers are engaged in evaluating the feasibility of population health programs and some have initiated programs, few have managed to reap meaningful financial rewards because most are still in the early stages of implementation. One indicator of this modest financial progress is net patient revenue from risk-based population health management activities that have exposure to profit and loss: Nearly half of respondents (48%) say they have risk-based revenue of less than 10% (some have no risk-based revenue at all).
The adoption of risk-based financial models is an essential aspect of population health, and it is not to be taken lightly. Healthcare providers that take on exposure to financial risk face real consequences if they misjudge their capabilities or lack insight into the quality of their risk pool. And it is for these reasons and more that many providers are taking a cautious, steady-as-she-goes approach.
Managing health of a defined population
As stated previously, approximately three-quarters (76%) of respondents say that they are either fully committed and underway or have an experimental or pilot program underway for managing the overall health of a defined population, up seven percentage points over last year's survey. The results are higher this year for fully committed and underway (47% versus 41%) and basically flat for experimental or pilot programs (29% versus 28%). Only 2% say they do not plan to pursue this, an indication that population health has crossed a tipping point.
Perhaps because of the complexity of the undertaking and the scale of the investment, there is a correlation between organizational size and respondents who indicate they are fully committed and underway with population health management. For example, a greater share of health systems (56%) than hospitals (43%) and physician organizations (38%) say they are fully committed and underway, and based on net patient revenue, a greater share of large organizations (59%) than medium (46%) and small organizations (42%) is fully committed. This correlation also holds true for number of beds, number of sites, and number of physicians.
Bertram Scott is senior vice president of population health at Novant Health, a nonprofit integrated healthcare network with 2,585 licensed beds, 14 medical centers, and more than 1,380 physicians in 530 locations as well as numerous outpatient services, headquartered in Winston-Salem, North Carolina, and the lead advisor for this Intelligence Report. He agrees that the industry has likely passed a tipping point for population health.
"I think there is an increasing realization by physicians and hospital systems that population health is going to be inevitable, and they want to try to get ahead of the curve and get some learning in," says Scott. "I believe that this is also driving the need and desire for them to begin thinking about risk contracts. You don't want to have the switch turned on two years from now and you've had no experience in that space, right?
"I would also say the impetus for that tipping point is the coming together of several things at one time. For example, the most recent MACRA changes—the Medicare changes to physician reimbursement—are going to be a huge catalyst for change."
Revenue and compensation
Net patient revenue from risk-based financial models is one of the indicators that separates basic forms of population health management from the more robust versions. As such, it serves as a barometer for the level of progress providers are making in embracing risk in their organizations.
Interestingly, while survey results indicate that participation in population health programs has increased since last year's survey, the percent of net patient revenue attributed to risk-based population health management activities has remained fairly flat. Twenty-two percent of respondents say that 25% or more of their organization's net patient revenue is attributed to risk-based population health management activities, down from 27% in last year's survey.
Further, nearly half (48%) say this activity is less than 10% of net patient revenue, which includes 11% that report no at-risk revenue of this type. This response is up six percentage points from last year's survey (42%). The results indicate that respondents are taking a cautious approach when it comes to risk-based population health activities.
Another barometer of population health adoption is the extent to which employed physician compensation is at risk for quality-based outcomes. Responses indicate that only 16% of respondents say that 100% of their employed physicians have at least some portion of their compensation at risk for quality-based outcomes; more than one-third (38%) have between 50% and 100% of employed physicians with at least some portion of their compensation at risk. On the other hand, 31% of respondents report having no compensation at risk for quality-based outcomes.
"In my experience, most physicians believe in the quality element of this and they want to participate," says Scott. "If they are improving outcomes for patients and for large swaths of populations, they would like those dollars to increase for them versus the payers."
Strategic initiatives
The responses for strategic initiatives that healthcare organizations are engaged in or exploring to improve the health of a defined population are nearly identical to last year's survey, an indication that the scale of population health activities is likely incompatible with sudden changes in direction. For example, respondents indicate that the top three strategic initiatives are clinically integrated networks (63%, down one percentage point), patient-centered medical home–related activities (57%, identical to last year), and alliance of providers (45%, down four percentage points).
One exception is the response for merger with or acquisition of providers (31%), which is 11 percentage points lower than last year's result. This suggests that, while the industry is currently experiencing heavy merger and acquisition activity, population health is not necessarily the biggest driver.
Financial risk structures
Survey results for financial risk structures that organizations currently use in caring for an identified population continue to show a reluctance to assuming downside risk on the part of respondents. Bundled payments and shared savings programs with payers are tied at 43% as the top financial risk structures mentioned by respondents by a large margin; they are followed by capitation (23%) and direct contracting with employers (22%). Note that results are relatively comparable to last year's survey, except that the response for bundled payments increased nine percentage points, which moved it into a tie for the top position.
The response for shared profit and loss arrangements with payers (18%) shows little change from last year's survey (17%), an indication that respondents are in no hurry to adopt risk-sharing financial models with downside risk.
Another risk structure that receives an equal level of response is owning insurance companies (18%), which is down four percentage points over last year, where it was in the top three for financial risk structures. According to Scott, many providers think about having their own insurance company as a way of participating more actively in risk-sharing, but they may be overlooking some of the difficulties.
"It is not for the faint of heart. It is a difficult business. I think sometimes providers believe that it looks pretty easy from the outside. But it is a difficult thing to do—to govern and police yourself when you're that close to the action. Because if you think about it, you're both the manufacturer as well as the distributor of the product."
Looking ahead three years, respondents are fairly bullish about their tolerance for risk. They expect that bundled payments (61%) and shared savings programs with payers (61%) will remain the top financial risk structures their organizations use in caring for an identified population, and they expect direct contracting with employers (41%) to also play an important part in their financial risk structure.
Significantly, capitation (32%) is no longer in the top three responses. Shared profit and loss arrangements with payers (36%) increases to the fourth position on the list of responses, an indication that respondents expect to gradually take on more financial risk in the next three years. Another indicator of respondent interest in risk are the results for none (6%), down 12 percentage points from what financial risk structures organizations use in caring for an identified population now.
Biggest barriers to population health
Respondents indicate that the top three barriers to successfully deploying population health programs are up-front funding for care management, IT, and infrastructure (42%), engaging patients in their own care (39%), and aligning independent physicians/providers (38%). Responses for financial risk assessment capabilities (36%) and getting meaningful data into providers' hands (34%) follow closely behind.
Making up-front investments in infrastructure while facing uncertainty about risk-based reimbursement models requires providers to make a certain leap of faith that the numbers will work out in the long term. This explains why so many are investing in analytics, with the hope that analytics will generate meaningful data to guide strategy.
According to respondents, the top IT infrastructure capability investments that are directed toward population health management are analytics using payer claims data (62%), analytics using population data (58%), patient registries (56%), and data warehouses (55%). Respondent interest in analytics is increasing; in last year's survey, analytics areas held the third, fourth, and fifth positions for responses. This year, they occupy the first, second, and fifth positions.
Within three years, respondents indicate that the top five investment areas fall in a narrow range between 63% and 76%. The top IT infrastructure capability investments directed toward population health management are expected to be analytics using population data (76%), analytics using payer claims data (71%), patient registries (67%), analytics to identify gaps in care (64%), and data warehouses (63%).
Respondent expectations for future IT infrastructure capability investments show the greatest increase compared with the results for now for analytics using population data (up 18 points), analytics to identify gaps in care (up 15 points), and risk stratification (up 15 points).
As mentioned above, patient engagement received the second-highest response for barriers to population health. Note that the top three patient engagement areas in which respondents say their organizations are investing in population health are patient portals (83%), wellness- or condition-related outreach programs (64%), and patient access to medical records (64%). Responses for all engagement areas show a moderate to high level of investment interest and support, with no area falling below 31%.
While traditional approaches receive the highest responses, large organizations in particular are looking to technology to enhance their patient engagement efforts. For example, based on net patient revenue, a greater share of large organizations than medium and small is investing in technology-supported techniques such as telemedicine for clinician-patient consults (80%, 53%, and 44%, respectively), social media (59%, 43%, and 41%, respectively), remote monitoring (57%, 28%, and 22%, respectively), and telehealth to track patient health status (54%, 32%, and 21%, respectively).
"Patient engagement is hugely critical because patients' out-of-pocket expense over these last few years has increased," says Scott. "So they want to be much more active consumers, but we have to find ways to get patients engaged in decision-making—decision-making about their own health, and how they want to gather, collect, and discuss their own information.
"It's improving dramatically, but providers are still more inclined to tell them how to receive stuff versus listening to how they want to engage with us and then reacting."
Delivery of care redesign
Care redesign is an important element of population health management, and the majority of respondents are engaged in some form of this activity. Care management with risk-based patient panels (55%) receives the highest response, followed by systems to identify gaps in care (50%) and team-based care in patient-centered medical homes (50%) in a tie, clinical programs organized by disease state (48%), and care goals, incentives aligned across the continuum (44%).
Provider financial resources appears to play a role in care redesign. For example, based on net patient revenue, a greater share of large organizations than medium and small has redesigned the delivery of care for all areas mentioned in the survey. The results are: care management with risk-based patient panels (71%, 62%, and 48%), systems to identify gaps in care (61%, 52%, and 45%), team-based care in patient-centered medical homes (69%, 48%, and 43%), clinical programs organized by disease state status (63%, 52%, and 40%), care goals, incentives aligned across the continuum (54%, 40%, and 45%), and care registries organized by disease state (44%, 40%, and 26%), respectively.
As with the results for care redesign now, the responses for the top five delivery-of-care areas intended to support population health management in three years are clustered in a narrow range. Care management with risk-based patient panels (67%) receives the highest response, followed by systems to identify gaps in care (65%), care goals, incentives aligned across the continuum (63%) and clinical programs organized by disease state (63%) in a tie, and team-based care in patient-centered medical homes (61%).
While the results are clustered in a tight group, certain areas had large increases in response rate compared with the results for what areas organizations have redesigned delivery of care with the intent of supporting population health now. For example, the top three increases are found for care goals, incentives aligned across the continuum (up 19 percentage points), with systems to identify gaps in care (up 15 percentage points) and clinical programs organized by disease state (up 15 percentage points) in a tie.
The strong response rates and relative parity among care redesign areas indicates that respondents are considering all options when it comes to population health. Because there is uncertainty as to the best tactics, there is an opportunity for analytics to help focus activities going forward.
Triple aim goals
Another method for evaluating the current state of population health competency is to look at respondent strength on its triple aim goals. Respondents indicate that their level of strength is stronger for improving patient experience of care (85% very strong or somewhat strong, and only 15% very weak or somewhat weak) than improving the health of populations (66% very strong or somewhat strong, and 35% very weak or somewhat weak), and reducing the per capita cost of care (54% very strong or somewhat strong, and 46% very weak or somewhat weak).
The results for improving the patient experience of care are not surprising given the attention that providers and the Centers for Medicare & Medicaid Services have given patient experience in recent years, and the results for improving the health of populations also indicate that positive progress is being made. This is particularly true given that the population health trend is still in its early stages. However, results for reducing the per capita cost of care indicate that lowering costs remains a challenge for many providers, and that there is still work to be done.
Scott has some general guidelines for providers to consider as they take on population health. "One, get your staffing right. Go identify and bring in the resources you need to be successful at this. Don't presume that people in your organization have the right skill sets to do this work. You wouldn't go out and begin to do surgery and not bring in a surgeon, right?
"Number two, be really clear about what you're trying to achieve. When you say 'population health,' what exactly do you mean? Because there's a lot of things that could go under that umbrella. The third thing is take on risk at the same rate that you build the infrastructure to manage risk. This requires behavioral change by many and particularly the physicians. Make sure that when you take on risk, that infrastructure and physician change is analyzed, because it's big.
"And go talk to people who have done this and have done it successfully. Don't exclude people because they are either a competitor or they're a payer and you've had a bad relationship. This is the time when we should be trying to learn as much as we can, and everybody's a resource for that."
