Progress in implementing population health has remained limited, according to the fifth annual “State of Population Health” survey by healthcare strategy consultancy Numerof & Associates. But lessons learned from COVID-19 suggest that may soon change, according to the firm’s analysts.
The latest Numerof report is based on an online survey of approximately 500 C-suite healthcare leaders with deeper insights gathered from open-ended interviews with selected executives. The survey, which provides a comprehensive look at the population health plans and progress of U.S. healthcare delivery organizations, was conducted between June 2019 and September 2019, approximately six months before the pandemic made its way to the U.S.
As in prior survey administrations, the median percentage of revenue from contracts linking reimbursement to management of cost and quality was 10 percent; two years before, respondents projected this figure would be three times higher.
This lack of progress stands in contrast to 94 percent of respondents saying that population health is at least somewhat important for their future success, and even more than the year prior (44 percent) saying it is “critically” important. Indeed, these figures are similar to last year’s population health progress report from the firm, which also revealed that 94 percent of respondents said they agree that population health is the future, with 99 percent predicting that in the next two years, they will have revenue in two-sided risk models. In this year’s report, too, 99 percent of respondents said they project their organization will have some revenue in models with upside gain and/or downside risk in two years. The median estimate of the percentage of annual revenues that would be at risk in two years was 26 percent to 30 percent.
A disconnect from reality
Just like in past reports, analysts see a disconnect between how healthcare executives see the future compared with how they are currently operating their businesses. One core challenge area outlined this year is that the risk of performance-related reimbursement penalties is impacting providers making a deeper commitment.
Indeed, the survey also found that respondents’ assessments of their organization’s readiness to be accountable for cost and quality is more wish than fact. Sixty-six percent said their organizations were “moderately” to “completely” prepared, but when it came to managing cost at the individual physician level, only 35 percent said their organization was better than average.
“It’s quite shocking to see that as hospitals and health systems continue to acquire independent physicians, they’re doing so without the processes in place to effectively manage physician cost and quality,” said Michael Abrams, managing partner of Numerof & Associates. “There’s been very little movement on creating care paths, flagging variation using order entry systems, equipping physicians with data, and tying physician payment to outcomes since our first survey in 2015, which points to a hugely overlooked opportunity to add value.”
In 2015, CMS announced that 50 percent of Medicare payments would be structured according to value-based models by 2018. To meet this goal, CMS introduced various programs, including bundled payment models. Commercial payers followed suit, publicly stating their own value-based payment goals and programs for achieving them. Medicare has failed to meet those goals it laid out five years, ago, the researchers noted, though the agency is still very much committed to its value-based care movement. One example of this, the report’s authors wrote, is via its Pathways to Success redesign of the Medicare Shared Savings Program (MSSP) for accountable care organizations (ACOs). However, per this report, despite CMS measures to revamp MSSP, ACO enrollment shrank by 10 percent from 2018. At the same time, those enrolled are showing increased commitment to value-based care as the number of MSSP enrollees accepting downside risk increased by 30 percent.
The COVID impact
The consultancy firm’s analysts believe that one lesson learned from the pandemic, in the context of value-based care, is about “the folly of believing that the health of any population can be independent of its most at-risk segment.” They added, “In its relentless focus on disadvantaged subpopulations and others burdened with chronic disease, COVID-19 has highlighted the inadequacy of a transaction-based approach to care. Fee-f or-service reimbursement reinforces an approach that is fragmented, provider-rather than patient-centric, that has ignored social determinants of health, and that overutilizes and under-delivers as a result. This has created reservoirs of vulnerable subpopulations among the larger society, and we are all paying a price for that.”
They further point out that because the crisis resulted in the cancellation of elective procedures to cope with the influx of COVID patients, many hospital across the country are in financial freefall. According to the report’s authors, the few provider organizations with a substantial number of patients covered by capitated contracts have continued to collect their per-member-per-month payments, but these providers are few and far between.
“One of the greatest ironies in all this is that because of COVID-19, people are realizing that there’s just as much – if not more – risk in staying in an antiquated, fee-for-service model than there is in embracing an alternative,” said Rita Numerof, Ph.D., the firm’s president. “We expect to see the sentiments surrounding risk shift significantly next year, especially as awareness of providers’ success with capitated payments during the pandemic becomes even more mainstream.”
Other trends
SDOH efforts improve. One of the most significant continuing trends over the past five years, in the eyes of the firm’s analysts, is growth in the percentage of organizations that are responding to community health needs in the areas of housing, transportation, and food insecurity. Approximately half of respondents said that their organizations offer assistance with transportation, food, and nutrition, and nearly 30 percent provide housing or community development support, most often in partnership with other community organizations.
Smaller healthcare delivery institutions lag. In the study sample, 96 percent of large hospitals and/or health systems said they had at least one at-risk contract compared to 83 percent of mid-sized institutions and 69 percent of smaller institutions. Smaller organizations may have a limited ability to absorb the impact of outliers, but they can make up for it with nimble program design and implementation. For those organizations that have undertaken risk-based agreements, smaller hospitals tend to have a lesser percentage of revenue at risk than medium and large hospitals.
Most organizations are still just experimenting with risk-based contracts. As in the last survey, over three-quarters of respondents reported some experience with an alternative payment contract, but for most (66 percent), less than 20 percent of revenue was involved. Among those who claimed experience with an alternative payment contract, a substantial portion (24 percent) didn’t risk actual loss. Their risk was upside only –not receiving a “bonus if targets were not achieved.
The potential for financial loss remains the single greatest barrier to the implementation of population health. Approximately 1 in 5respondents cited the threat of financial loss as the primary barrier to moving to a risk-based model, followed by other concerns that include issues with systems like IT, tracking, and management (15 percent), uncertainty about when to make the transition from the current model (13 percent), difficulty in modeling the cost of care across the continuum(10 percent), and difficulty changing the organization’s culture (9 percent).
Numerof conducted the study in collaboration with David B. Nash, M.D., Founding Dean Emeritus of the Jefferson College of Population Health. “The healthcare system that brought us to the edge of the abyss cannot be the system that propels us to the future; we have to transform the system,” said Nash. “Transforming the system will require new leadership structures, and because of the pandemic’s increased attention on social determinants of health, we anticipate the role of the Chief Population Health Officer to evolve to the Chief Health Officer.”
