The True ROI of Population Health Management

By Sanjay Seth, MD, Executive Vice President, HealthEC
Twitter: @HealthEC_LLC

In most parts of the United States, the use of value-based care (VBC) arrangements are growing, and health systems today typically participate in a diverse VBC portfolio. Nevertheless, the proportion of total net patient revenue derived from these programs is usually small. Based on CHIME’s Most Wired Data, an average of 26% of hospital revenue in the US comes from VBC contracts. And some organizations are still questioning what the ROI is for their VBC investment

I believe that health systems can still achieve short- and long-term ROI by focusing on three key strategies:

  1. Better aligning VBC programs with health system operations
  2. Managing the overall network performance more effectively
  3. Continuing to transform care delivery

Additionally, these strategies deliver benefits that can strengthen provider performance under fee-for-service (FFS) contracts. Health systems should regularly evaluate their portfolio of commercial and government VBC contracts to identify improvement opportunities and to check for alignment with VBC programs and overall Health system operations. Because the VBC component of overall contracts is often small, many systems agree to contract terms without getting input from both their clinical and operational leaders. This can lead to a number competing VBC arrangements with payments tied to metrics. As a result, clinical and operational leaders are often unaware of the breadth of these programs and do not have access to performance data, nor is it accounted for in the providers current workflow.

In this case, a poorly negotiated VBC program in a high-performing clinical organization may not achieve positive results due to unfavorable benchmarks on cost and utilization, as well as the quality metrics and performance. Accelerating or slowing down to risk-based agreements without a cultural change in operation and patient management by the clinical team could be demoralizing on the revenue end, leading to questioning ROI.

2019 Medicare Shared Savings Program Report Highlight

With better understanding of VBC program performance (e.g., dollars at risk, performance compared with achievable amount), providers can more thoroughly negotiate future VBC payments and prioritize clinical and operational tactics to gain value in both the near and long terms. This is the type of ROI both providers and health systems should be looking for in their investment in a PHM solution, but they must also be willing to “invest” themselves from the top down.

This article was originally published on HealthEC and is republished here with permission.