It was fascinating to read the recently-released fourth annual “State of Population Health” report—conducted by healthcare consultancy firm Numerof & Associates, along with David Nash, M.D., dean of the Jefferson College of Population Health in Philadelphia—that uncorked an array of insightful findings related to the progress healthcare stakeholders have made in moving their business operations to a value-based care model.
As the researchers, who generated feedback from 500 C-suite healthcare executives, stated, “As U.S. government policy grows more focused on moving to a value-based model, population health management will be increasingly seen as a key part of the solution for realigning the healthcare industry to deliver better care at lower costs.” Importantly, the researchers stated in the report’s executive summary, “Progress toward implementation of population health as a model for organizing healthcare delivery appears to have stalled in 2018…nevertheless, executives agree population health is the future.”
As I dug further into the data, what stood out to me as the biggest takeaway was the disconnect in how healthcare executives once envisioned the future of their care delivery models—and how they continue to see the future—with how operations are currently being run.
For instance, in the 2016 rendition of this survey, nearly one in three respondents projected that by 2018 their organizations would have at least 40 percent of their revenue in risk-based agreements, but only 14 percent of respondents in the most recent survey met that threshold. And still today, healthcare executives believe in the importance of moving to value-based care; 94 percent of respondents said they agree that population health is the future, and 99 percent predict that in the next two years, they will have revenue in two-sided risk models.
I spoke with Rita Numerof, Ph.D., the consultancy firm’s president, last week, following the release of the report, and she believes that healthcare leaders were more confident even just a few years ago that they would be taking on downside financial risk than they are today. “People were optimistic about where they thought they would be relative to their ability to take on risk, and managing variation, cost and quality. What we have seen over the years, though, is they continue to moderate their expectations downward. That is the biggest ‘aha’ for me from this data,” Numerof said in our interview.
Indeed, as the data revealed, healthcare organizations are simply not as ready as they thought they would be—or as they’d like to be—to move to a value-based care model. Other survey findings that back up this statement include:
- The overwhelming agreement by executives that population health will be important to future success represents a clear contrast with their organization’s progress in operationalizing it. In the 2016 survey, over half of respondents (61 percent) predicted they would be at least “very prepared” to take on risk in 2018. In the current survey, however, barely 25 percent felt they had achieved that mark.
- Though their prediction to move toward risk-based contracts remains, the majority of respondents have failed to meet their 2016 forecast of having nearly one-third of revenues in risk-based contracts by 2018. Respondents’ median percentage of revenue in models with either upside gain or downside risk has flatlined at 10 percent for three years now. And, expectations for the future have also moderated as respondents’ median projection for the percent of revenue in risk-based models has fallen slightly from 30 percent to 25 percent.
Adding to the value of the research, the report also included several instances of respondents expanding on their thoughts in open-ended interviews. Many of the comments were in regard to the plethora of challenges that healthcare organizations face today as they continue forward in their value-based care transitions.
Last year, one executive director of population health at a mid-sized academic system said that “[P]laces where the academic environment runs counter to our population health goals have created institutional challenges. For example, our organizational structure and budgets aren’t set up to support population health objectives. This has made us focus on small, proof-of-concept initiatives, but the results are encouraging even within the limited framework.”
One COO at another hospital system pointed out that thus far their population health efforts “are all over the place and have grown organically without the benefit of a master plan. Our performance isn’t where it needs to be given the amount of time we’ve invested, so we are beginning to redesign our strategy to put all the necessary pieces together across the continuum.”
And there is also the issue that different members of an organization view “population health” in different ways. One respondent said last year, “Switching to the new models is interpreted differently by doctors than by administrators. We know it will take the participation of both to move toward the new models in an efficacious manner.”
What’s more, there is also the ongoing challenge that due to organizations’ historical success in fee-for-service business models, adapting to a value-based care structure can be a harsh reality to face—even if they know it’s critical to their future success. According to the report’s testimonies, “One executive at a healthcare system in the South with “huge margins” that is “flush with capital” for investment noted that “Healthcare is local and value-based payment models are here to stay.” Despite this recognition, this same executive shared that they are experiencing obstacles in moving to a population health model given “their challenge to keep up with heavy fee-for-service volume in a growing and largely commercial market where demand for their services exceeds supply.”
Another key element to consider is how the federal government has recently accelerated the speed at which it wants providers to take on two-sided risk. One prime example of this is a recent final rule on the MSSP (Medicare Shared Savings Program), a federal ACO (accountable care organization) initiative, that made sweeping changes to the Medicare ACO program, with the goal to push these organizations more quickly into two-sided risk models.
Numerof herself told me she still thinks the country is “moving entirely too slow,” but at the same time, it would be unfair to not give providers the necessary tools and resources they need to build the infrastructures that will allow for successful value-based care transitions. I think back to a discussion I had with Clif Gaus, president and CEO of NAACOS (the National Association of ACOs,) about a month before that MSSP final rule was dropped. Gaus, speaking specifically about ACOs, said that these care models are voluntary in nature and that “[Providers] are making a bet of their capital, that they can invest that capital in cost containment, in care transformation, and [in return], they will get back in the shared savings more than they invested. It’s almost like buying stock—you made the investment and you hope the return is worth it,” he said.
I see this as an important observation because as this report clearly reveals, healthcare executives are experiencing significant roadblocks as they forge ahead into population health initiatives. The potential for financial loss remains the single greatest barrier to the implementation of population health, according to the survey’s findings.
To this point, Numerof noted to me several times in our conversation that the industry is in an obvious state of transition, and when this occurs, most organizations will often make changes to their business margins, but they will not make the kinds of investments needed to get to a different model. In the report, the president of one of the nation’s largest healthcare networks was quoted as saying, “Is there a safe place for us to land once we make the transition [to value-based care]?”
It’s become undeniable that the fear of short-term financial loss, coupled with the uncertainty of what the future will look like, is hampering population health progress. But there is also reason for optimism, as there is close to unanimous agreement in the need to continue down this path, as it will be critically important to bending the healthcare cost curve.
I brought up to Numerof that it feels as if the industry is the “dip their toes in the water” stage of taking on financial risk. She responded by noting, “No one learns how to swim by dipping their toes in the water.” So, the hope is that in a few years from now, this report shows that healthcare executives will no longer be treading water; rather, they will be fully submerged in their value-based care efforts.
