New Revenue Models Poised for Success if Stakeholders Collaborate

For providers and payers to partner effectively, they must understand each other and have an excellent knowledge of their markets. Building trust and managing expectations early on in any partnership is crucial to long-term success. In order for this to occur, all stakeholders must be aware of their partners’ mindsets. Presenter John Harris, MBA, spoke about these different mindsets in his presentation, “New Payer-Provider Partnerships: How to Succeed.” Here are some of the highlights from his presentation.

The Hospital CFO Mindset

According to Harris, the health system CIO tends to be concrete, and knows that most of their success will depend on volume and payment rates. With that in mind, here are some of the potential reasons for motivation when it comes to CFOs caring about population health costs that could potentially drive down utilization:

• Possibility of gaining market share to offset utilization reductions; this doubles as an opportunity to use new tools in an effort to align with providers.
• The risk of losing market share if doctors opt to join other hospitals.
• The end result will be global budgets anyway, so why not start building those skills and working on transition.

Harris also mentioned that health system CFOs have a number of other variables to worry about, such as constrained Medicare fee-for-service (FFS) payments, quality penalties, electronic medical record (EMR) costs, etc.

The Health Plan Mindset

The main priority of the health plan is to engage providers and encourage them to drive down costs while simultaneously increasing the quality of the results. The mindset is that only providers can drive the cost reductions needed to compete in health insurance exchanges. A key question that health plans must consider is whether they should partner with physicians or health systems. Additionally, says Harris, these health plans are preparing for health insurance exchanges, dealing with administration/profit caps, and other Affordable Care Act regulations.

The Provider Mindset

Although physicians drive healthcare decisions and may reap the rewards, they are often not unified, says Harris. Currently, it looks as though primary care physicians (PCPs) may gain significant rewards if they are able to manage care effectively. Even though specialists are typically included in health system partnerships, they stand to be excluded if payers decide to focus on PCPs in their physician-only strategies. Because of this, specialists worry about using volume, and some use large single specialty groups to secure market positions, whereas others look to hospitals to offset their losses. Finally, physicians also must deal with many of the issues that hospital CFOs do, such as constrained Medicare FFS payments and EMR costs.

The Patient Mindset

Seeking quality while becoming increasingly concerned about costs, patients value convenience. As Harris put it, they expect providers and payers to “get their act together” and even may become suspicious of providers as incentives begin to change.

So, what do all of these mindsets mean? In short, it means that a convoluted healthcare system is becoming more and more complex as time passes by. It also means that new revenue models must be considered to survive in a highly competitive and regulatory environment. No matter what side, healthcare professionals must now evaluate all of their options to see what makes the most sense for them/their organization. These options include pay-for-performance, patient-centered medical homes, bundled payments, accountable care organizations (ACOs), and even narrow network products.

As Harris cautioned during his presentation, not all revenue models are easy to implement, so selecting the right one is the key to success. For instance, Medicare ACOs may create ready-made partners for commercial plans, whereas narrow network insurance products may find success in health insurance exchanges. Healthcare professionals must base their decisions on local market dynamics, established payer programs and capabilities, and by how much payers are putting on the table. No matter what the selection, building a foundation of trust will be essential to long-term success. Payers and providers will need to overcome an “adversarial history” and review their data while keeping in mind each other’s businesses. Doing so will help both sides effectively manage expectations.