The move to value-based care (VBC) is indicative of the industry’s realization that we cannot continue to approach healthcare in the same way we have over the past 30 years. As providers turn to VBC initiatives, it’s clear that simply purchasing a population health management (PHM) solution doesn’t check the box for success—the shift from volume to value requires a new way of working and thinking.

Here are five essential changes in mindset for a successful PHM initiative:

1. Data patterns are important, but PHM is about the outliers

Differentiating between the true signals in the data versus inherent noise is mission critical for success; especially when factoring in the opportunity cost associated with limited time and resources. Subsequently, it is important to develop strategies within the context of “actionable” data points and navigate resources appropriately.

For example, it is well documented that approximately only 20% of Medicare Shared Savings Programs (MSSPs) have been successful as defined by a decrease in the cost of care and receiving shared savings dollars. However, executives responsible for managing these MSSPs have been left scratching their heads when, for example, the data shows that the strategies they deployed were successful in decreasing hospital inpatient and emergency department (ED) utilization. Yet, the cost of care went up. Consider a scenario where inpatient utilization decreased 6% and ED visits decreased 3% but the per member per year cost increased by 5%.

Leadership may have invested $1 million in resources and operational costs, however, there is zero return on that investment. There are a few reasons why this could have occurred. It could be an issue of outlier data, a result of variables that were not accounted for, or the data may have been inherent noise which was misinterpreted as a signal (i.e., inpatient utilization could have decreased due to an increase in the use of the observation status code by hospitals). These possible scenarios would mean that a reduction in inpatient and ED utilization alone do not result in a cost of care reduction. Simply, the scenario could be due to attribution mismanagement, where a few outliers that weren’t managed well could spell doom for the total cost of care performance.

The key takeaway is to look at the data thoroughly, understand the high-level focus points, and then drill down into the details to develop the right strategy. What you don’t want to do is see a decrease in utilization but then see costs go up or stay the same because something else was actually the issue.


2. Interoperability means more than data aggregation

With the dawn of the technology age and an industry-wide adoption of value-based payment (VBP) models, there are an abundance of technology solutions available. Many of these tools are not much more than bright shiny boxes, but a few of them have proven industry-wide value, specifically through seamless integration with other technology initiatives.

Here’s an analogy. In golf, the regulation number of clubs allowed is 14 and all of them fit into a bag (i.e., a healthcare platform with 14 different applications, with multiple vendors). Professional golfers have excelled in the craft of using their clubs; they know exactly how to use all of them at exactly the right time, regardless of the circumstances. Sometimes they will use the driver, while other times a seven-iron will do. However, players that are new to the game may not know how to use all of the clubs in the bag, or when to use them. Even if they do, they may still hit a poor shot. Bringing this back to healthcare technology solutions, many of these are new and staff members haven’t yet perfected the craft of using them. In addition, many of the data points are also new—like playing at a new golf course—so staff don’t necessarily know how to interpret the data or what to do with it. As healthcare leaders, it is important to define success, whether that’s shared savings, increased revenues, etc., and provide actionable data to the right person, at the right place, at the right time, in order to achieve success.


3. Social determinants must be taken into account

Behavioral health is a critical part of a whole-health approach, though it’s an area that is often overlooked due to stigma, underfunding, misunderstanding of what to do about it, or insufficient supply of behavioral health providers. There are several agencies and providers in the marketplace that can support this area, and knowing how to leverage these providers to create mutually meaningful partnerships is critical. While there has been an abundance of data shared by payers and other entities, behavioral health-related data is highly protected and not always accessible. This, in turn, affects the ability to develop analytical insights, develop a health risk profile, and proactively engage this population.

An example of behavioral health-related opportunities has been found in frequent ED users, such as patients with more than 40 ED visits in a 12-month period. An understanding of the social and behavioral determinants causing these frequent admissions can significantly reduce the problem at the root cause. A comprehensive understanding and evaluation of such patients and a proactive patient engagement strategy result in a win for all parties—the payer and provider via reduced cost of care, and the patient via improved quality of care and life.


4. A payer mindset is key

The healthcare industry is primed for the creation of partnerships that were previously considered off the table, and we’re already beginning to see this across the country through the development of clinically integrated networks (CINs) and payer-provider relationships. In a sense, the ACA acted as a reset button for the industry, with an attempt to align collective interests.

With the shift to VBP, there is an alignment in objectives between the payer, providers, and patients who now have more at stake through benefit design changes and the adoption of high-deductible health plans (HDHPs). The Center for Medicare & Medicaid Innovation (CMMI) bundled payment models are prime examples of experimental, voluntary initiatives that train providers to think like payers. Just this year, the Oncology Care Model launched on July 1st, and the Million Hearts Model will launch later this year.

These changes necessitate a mindset challenge for payers, too, as pricing transparency is at the pinnacle of the VBP barrier hierarchy. Commercial payers often claim contractual rates to be intellectual property, which creates an obstacle to ensuring patients receive care at the highest quality with the lowest cost. Unlike other industries where there are readily available menus and price points for each service, healthcare prices are not transparent and are subject to many different variables. These include insurance type, benefit design, and provider contracted rates, to name a new. For example, if a patient goes to an office visit today, they will be asked for a co-pay. But if they ask the provider what their total cost will be, the answer will most likely be “I don’t know.” Where else can you find such an anomaly in a service business? Change won’t come easily, but providers will need to work with payers and build trust in order to have pricing transparency, driving VBP.


5. You can’t succeed without a can-do attitude

Finally, nothing will ever change if, after identifying an issue from the data, executive leadership responds with, “We can’t do anything about that.” Success takes many different forms, and physician or executive leaders must be willing to initiate change. In this shifting healthcare environment, success can be defined in several different ways such as market share, shared savings in payer programs, FFS payment stability as an on-ramp in preparation for VBP success, and alignment of interests between payer, provider, and patient.

Work with executive and physician decision-makers to set goals and create a plan because, first and foremost, executive leadership needs to have consensus on what is defined as short-term and long-term success, develop a strategic plan, and execute to achieve goals.


A forward-thinking approach will enable practice transformation

Without these changes in mindset, it will be difficult for providers to successfully act on the insights from a PHM initiative, driving value-based care for patients. An understanding of these new ways of thinking will be critical to driving population health management as part of a broader VBC initiative—sustaining independent physicians and other provider organizations as the industry rapidly evolves. The next-generation physician enterprise will be defined by its ability to break from today’s status quo and take advantage of the rewards that come with practice transformation.


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