Jessica Walradt is vice president of value-based care contracting and performance at Northwestern Medicine, where she leads execution and performance of Northwestern's value-based care portfolio. At the recent fall meeting of the National Association of ACOs (NAACOS), she highlighted some of the challenges involved in building a value-based care return-on-investment business case and how her team works to overcome them.
Northwestern Medicine is an 11-hospital health system located in northeastern Illinois with a flagship academic medical center in downtown Chicago. It has more than 2,800 employed physicians and operates two MSSP ACOs, between which it has about 82,000 assigned patients.
Walradt reports directly to the health system chief financial officer, but she reports on a dotted line to a clinical leader who wears many hats, including president of one of the physician groups and president of the clinically integrated network. “I think it is a really great reporting structure,” she said, “and it reflects the fact that my team does partner really closely with a lot of different system functions and clinical service lines.
In building a VBC business case, she identified three main buckets of revenue: fee-for-service revenue, incentives from quality measures and downstream shared savings.
“The challenges with making a business case with these types of revenue definitely increase as you move down the line, especially with incentives and shared savings,” Walradt said. “They are grounded on really complex financial methodologies, and not only do you need to make sure that your team understands those methodologies, but you have to figure out a way to communicate them to leadership — people who rarely think in terms of a VBC payment model.”
Another issue, she stressed, is that there's a huge time lag between implementation, scaling and seeing the return on your investment. “It can be one to five years, depending on what the intervention is and how quickly you scale. Convincing your C-suite to invest and be willing to be patient can be pretty challenging.”
Finally, Walradt noted that you’re not making a business case in a vacuum, especially for health systems that are multi-specialty health systems, but whose organization is not just built on an ACO. “Your business case could be really compelling, really robust, but it's being weighed against hiring a new oncologist or expanding clinic space, or investing in a new IT vendor.”
How Northwestern deals with these complexities
To cope with these challenges, the first thing Walradt’s team does is simplify as much as possible. “For people who live in this space, their inclination is to have all the details ready and put them in a slide to show their thinking. But your ultimate decision maker wants to know the bottom line up front,” she said. “If we do this intervention, we will increase our A1C control by x amount and that results in y quality incentive dollars. Be ready to speak to all the details that underlie that business case. But don’t walk them through the whole thing, unless asked, or you're probably going to lose them, and they'll stop listening.”
She also recommends thinking through who you need to engage ahead of time and reviewing your business case with them and getting their buy-in. “When you go to the ultimate decision maker, you can say, I've already talked to so-and-so and this team and that team, and they're all on board. They agree with my assumptions; they agree with the recommendation. That can also expedite conversations.”
Walradt said be your own harshest critic. “You don't want to be caught off guard when you're presenting a business case and have someone challenge your assumptions and not be able to defend them,” she said. “Our team both produces business cases, but also will be the first line of review for other teams who produce business cases. One of the big things I look out for is a too-good- to-be true scenario. If someone says this intervention is going to decrease readmissions by 60%, there's probably something off in their logic. Otherwise, they would have sold it to a VC firm already, right?”
Another difficult challenge is time lag. "The No. 1 thing to do is come prepared with interim outcome metrics and/or process metrics that you'll be tracking in real time,” Walradt said, “so you can tell your leadership to be confident that this process is working. You can say, ‘We’ll be tracking this XYZ monthly, and we'll share it with you so we know if this is leading to the ultimate outcome that we think it will.’”
It is important to recognize the health system’s competing priorities, she said. “Show how your proposed investment aligns with the organization's broader priorities, a big one being capacity and access. If your intervention could help reduce ED visits or readmissions, that's going to resonate with leaders who rarely think about value-based care. The first thing our CFO asks when someone brings forth a budget ask is: Can we do this with existing resources?”
She recommends being prepared to show that you've already thought through that issue and have already pursued optimization. “You can show here's what we tried, here's what it yielded. There's nothing more to yield. So if we want to get any better, we do have to invest.”
Her advice is don’t be deterred by an initial “No.”
“I think I basically expect a no for anything,” she said. “And it's just the first offer. I think that the vast majority of things that we've successfully funded have been no’s initially. It's just really important to understand why it's a no, so you can then go back, massage your business case or talk to whomever, and then come back with a stronger proposal.”
