Business as Usual is Comfy for Healthcare Providers and Payers

by | May 31, 2017

Merely talking about the strategic importance of a particular initiative, and actually investing organizational capital in it, are two distinctly different things.

Industry polls consistently indicate that we are inching toward 40 percent of providers participating in some form of value-based care (VBC), though less than 15 percent receive a majority of their revenue through such arrangements. Early adopters of VBC and Population Health Management (PHM) models trend toward integrated health systems, academic medical centers (AMCs), and “advanced” large group practices. What differentiates these advanced organizations from the great many still on the fence about deploying VBC and PHM?

The differentiating factors that influence each and every organization contemplating PHM are many, as outlined in our upcoming report, Driving Speed to Value: Three Diverse Approaches to PHM. (We recently hosted a webinar that highlighted one of the three case studies from this report. You can watch a replay of the webinar or download the slide deck.)

A sizable number of these factors are within the control of the healthcare organization (HCO), such as deciding which type of VBC contract to participate in and operating with business discipline. Other factors are outside the control of the organization, including local market readiness and changing federal regulations. While myriad factors contribute to the speed of adoption and speed to value, the contribution of HCO culture and leadership can never be overlooked.

HCO leadership determines the mission, vision, goals, appetite for business risk, and subsequent strategies. Will you partner with organizations that have historically been adversaries or competitors? Are you willing to cannibalize your business in the short term to enable potential long-term gain? Or, will you stand unmoving, tied to current revenue streams and current investment tracks because they’ve worked up to now? When we look to other industries, Netflix and Blockbuster stand as vivid indicators that the latter strategy is actually the riskier of the two. Strong, steady leadership can help push an organization through the inert comfort stage of conducting business as usual.

We do have strong leadership in this industry. Providers and payers are trying to move outside their comfort zones, and are now working more closely together than at any point in recent history, but still not terribly close. Consumers still receive duplicative outreach from both entities. Providers and payers still yearn for the data the other has in possession. Claims for services that required prior authorization could get paid faster. Quality gaps could get closed quicker.

As with all business decisions, greater convergence to optimize PHM strategies requires purposeful capital allocation by both providers and payers. Capital is necessary for project resources and any applicable technology that would enable providers and payers to increasingly collaborate and share responsibilities, while maximizing their own unique core competencies.

Such capital is being allocated in priority order by providers and payers alike. As a New England Journal of Medicine commentary noted, the majority of investment dollars continue to be funneled to traditional core operations—business as usual. For providers, that’s continued feeding of the EHR. For hospitals, that’s continued capacity management. For payers, that’s continued claims administration and business operations. The majority of providers and payers still hesitate to invest adequately in VBC transformation.

Fully recognizing it’s easier said than done, providers and payers are encouraged to take greater risk beyond funding traditional core operations. At the end of the day, if no organizational capital is invested in PHM infrastructure, then PHM people, process, and technology will likely not appear.



  1. Duncan Gallagher Leads Healthcare into Value-Based Era - […] 2017 Chilmark Report states, “healthcare is inching toward 40 percent of providers participating in some form of VBC, […]
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