Survey: Only 10 Percent of Revenue Tied to Risk-Based Contracts

Dec. 1, 2022
‘Entering the population health waters has unfortunately been more of a toe dip than a real commitment for many health systems,’ says consultant Rita Numerof, whose firm conducts the annual survey

A report released by consulting firm Numerof & Associates found that more than 80 percent of healthcare executives surveyed continue to say population health will be “critically” or “very important” to the future success of their organization. However, only 25 percent felt “very” or “completely” prepared to transition to a financial model linking payment to patient outcomes and utilization.

The threat of financial loss (21 percent) remains the biggest obstacle standing in the way of moving toward a population health-based approach, the survey found. 

The report, conducted online and fielded from October 2021 to March 2022, summarizes responses from approximately 300 C-suite executives. For at least five years, respondents to Numerof’s annual survey have predicted that a population health approach will be a critical component of healthcare delivery moving forward. Yet this seventh annual “State of Population Health” Survey Report continues to show that we are not there yet. Respondents in the 2019 survey predicted that a median of 30 percent of total revenue for their organizations would be through risk-based contracts. As in years past, the 2021 report found that the median amount of reported revenue flowing through risk-based contracts was only 10 percent.

With respect to capitated contracts, more than half of those surveyed said their organizations had none. While 85 percent of respondents said their organization was in at least one agreement with a payer that included upside gain and/or downside risk, just 32 percent of respondents reported that their organizations received more than 20 percent of its revenue from risk-based contracts. 

“Healthcare delivery in the United States is failing and has been for a very long time, thanks in large part to a fragmented and inefficient fee-for-service model that incentivizes providing more services to patients without any link to resource management, patient outcomes or experience,” said Rita Numerof, Ph.D., president of St. Louis-based Numerof & Associates, in a statement. “While the Covid-19 pandemic highlighted some of the system’s gaping holes and accelerated the need for an organizational course correction, institutional change is incredibly difficult. Entering the population health waters has unfortunately been more of a toe dip than a real commitment for many health systems.”      

“Clearly, the road toward population health management has been a bumpy one, with adoption and progress slower than executives’ expectations,” added Michael Abrams, managing partner of Numerof & Associates, in a statement. “However, the report does show significant progress being made by providers in a number of key areas, including doing more to address social determinants of health (SDOH) and expanding their presence across the healthcare continuum. But until there is more transparency and accountability for cost and clinical outcomes, we expect further challenges to widespread adoption of population health.”

Other key finds of the survey include:

• 60 percent of respondents agree that at-risk contracting will increase post-COVID, up from 39 percent. 

• Asked whether the pandemic will accelerate acceptance of capitated models, 38 percent now agree, up 2 percent from 2020. 

• 31 percent of those surveyed said controlling clinical costs and clinical quality is the primary reason for pursuing population health.

• Surprisingly, only 1 percent of respondents felt adding predictability to their revenue model was a reason for pursuing population health.

• While 71 percent of respondents believe their organizations are slowly improving in their ability to manage variation in clinical quality at the physician level, more than 60 percent believe their organizations’ ability to manage variation in clinical cost at the physician level is “average” or “below average.” 

• Healthcare organizations are offering more services to address SDOH, including: food pantries/nutritional programs (55 percent), transportation (57 percent) and housing/community development support (35 percent). These numbers are significantly up from 2016 findings.

• Nearly 80 percent of respondents said implementing more joint efforts with payers to apply population health practices was at least somewhat probable for their organizations post-COVID, up from 10 percent last year.

• In a new high for the survey, 41 percent say payers are reportedly “very” or “completely” willing to enter into agreements with payments tied to outcomes — up 10 percent from 2020.