The population health management (PHM) journey for provider organizations is not paved in gold, nor silver – it’s actually not paved at all – more of a dirt path with a steep climb. It is far from smooth and the ability to show demonstrable return on investment remains elusive. This is but one of the many findings from a nearly yearlong study Chilmark Research performed in 2019 in cooperation with a major EHR vendor.
Over the course of 2019, we conducted an in-depth web survey followed by a series of focus groups with organizations at virtually all levels of adoption PHM technology and strategy in support of their value-based care (VBC) programs. This research concluded in a final report that we released earlier this year.
Our methodology allowed us to have long, in-depth conversations with organizations both on the bleeding edge of PHM/VBC with eight or more years of experience and managing a wide array of VBC contracts, to those organizations that are just getting started. This provided a broad cross-section of opinions and perspectives from those that see the migration to VBC as imperative with strategic intent to those who are taking a very tactical approach with no broad, overarching strategy.
Despite these differences, we did uncover key findings and recommendations that had overall consensus across the numerous organizations that participated. Those findings and recommendations are:
- Value is defined at local level
- Definition of value remains in flux
- Few organizations are on strategic path to VBC
- Factoring for return on investment in PHM remains off-radar
- Primary care network is the fulcrum of VBC
- Begin VBC journey with Medicare Advantage
- Establish a separate Population Health Service Organization (PHSO)
- Chosen PHM platform vendor must become strategic partner
- Work from a position of strength – payers adopt your metrics
- Value is elusive but organizations continue to make significant investments
The bottom line is that while there is definite progress towards VBC and more sophisticated approaches to PHM, the industry remains at an immature stage of development, with highly variable models due to localization issues (payer, provider, employer mix) leading to inability to establish best practices that can be deployed at a national level. This in turn makes it difficult for vendors to provide commercial, off-the-shelf solutions resulting in higher service costs to customize solution to local conditions.
There is Value
In light of this immaturity, the report concludes with the presentation of a value chain model for adoption by organizations on the path to VBC regardless of their stage in the adoption process. The value chain for VBC encapsulates the critical core competencies and data-driven functions that an organization must develop to be successful. It is our hope that such a model will assist all healthcare organizations in developing successful PHM/VBC strategies to improve care delivery for the communities they serve.
While all organizations that participated in this research have yet to show a demonstrable ROI, most organizations did state that they were deriving value from their PHM platform to support their VBC programs. This value was typically defined as meeting the various metrics for their VBC contracts and subsequently receiving bonus payouts.
However, those bonus payouts have yet to accumulate to the point of covering their investments to date in PHM. But that certainly does not mean they do not see a future wherein ROI is realized. For example, one large provider organization is on a multi-year strategic VBC plan and sees the path to PHM/VBC as imperative to better serve their community. One area where they see strong potential for value realization is in addressing uncompensated care, which today costs the organization in excess of $1.2B/yr. A savings of just one percent of that by better managing such patients and steering them to lower-cost venues equals 1.2M/yr – a hefty savings and certainly obtainable.
As with any major shift in payment models there are significant leadership challenges. Chief among them for large hospital systems is getting alignment across the organization that the migration to VBC is the path forward as there may be winners and losers. A key tenet of VBC is to lower costs of care by reducing ED admissions, length of stay and using lower-cost venues to deliver care (e.g. avoid hospital). This will crimp existing service lines (fiefdoms) and see significant pushback. Strong senior leadership is an absolute requirement. Secondarily, among the recommendations received, an organization would be wise to form a Population Health Service Organization (PHSO) at the beginning of their journey with distinct P&L and reporting to the most senior staff within the organization (CEO, CFO, etc.)
This was a fascinating study for us to perform and we welcome your feedback and critique of this report and its findings. You’ll find me at email@example.com.