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by Ryan Hamilton
Published on October 18, 2017

The health care industry is under extreme pressure. With declining reimbursements, health care reform, provider shortages, aging populations and rising consumer expectations, organizations of all sizes are feeling squeezed under the weight of the shifting market. One of the key issues for many organizations is appropriately timing their transition from fee-for-service to value-based care.

For a lot of health care organizations, fee-for-service is still dominating, making up the largest percentage of incoming hospital revenue. That said, nearly every organization today is operating under some form of value-based care - whether that is through the Centers for Medicare and Medicaid Services (CMS), commercial payers, narrow networks or their own employees. Which leads us to one of the industry's biggest questions: What's the right time to start the shift to value-based care?

That's a hard question answer, and it comes with a large degree of regional variation. The industry predicts the largest shift will occur between 2018 and 2020. CMS supports this timeline: By 2018, the Department of Health and Human Services aims to tie 90 percent of all Medicare fee-for-service to some kind of value metric, and 50 percent of Medicare fee-for-service payments to alternate payment models. Additionally, there are reports suggesting that by 2020, large commercial organizations want to have the majority of their payments in a value-based care model.

In reality, the pace will vary greatly from one health care organization to another based on where they're located and what's happening locally.

Value-based care: early adopters vs. late adopters

We're seeing two sets of "buyers" for value-based care: The innovators, who wanted to get ahead of the curve and made early investments in leadership, tools, technology and processes, and the early majority, who followed the innovators. Many of the "innovator" organizations are successfully operating with scalable value-based care strategies, but it took time to build proficiency often through trial-and-error. Typically, an organization will take three to six years to build the organizational skills to do this.

We're now hitting a chasm in the innovation adoption lifecycle, where the early majority is coming to market. These are the organizations that tend to not want to be first of a kind - rather, they're looking to leverage the lessons learned from innovators and early adopters. The early majority organizations want value-based care to work, and they want it to work straight out of the box.

For those organizations, the key consideration is when to get started. Most organizations are using the percentage of their revenue in the value-based care arrangement as the metric to determine when to engage. The challenge (and risk) for them becomes factoring in the pace at which their organization can change.

When do they need to be operating with value-based care at scale? If the answer is by 2020, then the next step is to understand how long it's going to take their organization to develop the muscle memory and the techniques necessary for value-based care to work. From there, those health care organizations can begin to develop a strategy for adoption and implementation. Many organizations will find they are off to a late start and need to play catch-up.

There is hope. For emerging organizations, there is a lot to learn from the innovators and early adopters. Population health technologies are maturing to enterprise platforms that allow organizations to start small and scale as their abilities and needs grow. Many offer advisory services to assist organizations with strategy development and organization readiness plus operational services that allow an organization to scale faster.

6 key considerations for value-based care strategies

Successful organizations demonstrate competency in six aspects of population health which emerging organizations can model. The order and pace of each may vary from organization to organization, but all are fundamentally required to close the loop on value-based care.

#1: Organizational structure and proper governance

Managing an organizationwide shift away from fee-for-service is a tall order as leaders look to align their organization and network of providers around a shared business model. The winners in this landscape will be those who develop a sustainable business model focused on lower costs and better outcomes.

Success in value-based care models begins with leadership and their commitment to establish the necessary governance and shared decision-making. Value-based care models require network alignment on core vision and strategy, pace of transition, efficient decision-making, shared care processes, information sharing, outcomes and incentives.

#2: Unified value-based care platforms

Innovators and early adopters were the first organizations to build value-based care organizational structures and adopt technologies to support them. When they selected technologies, they chose the best available at the time, which was largely a niche solution approach to supplement their core electronic health record. These organizations are now returning to market for a platform-based approach to eliminate issues of technology sprawl, high cost of ownership, data complexity and fragmented user experiences.

Organizations at scale are looking for unified enterprise platforms and partners that offer a broad range of solutions and services, based on consistent longitudinal records that include not only clinical and financial information but the social, environmental and behavioral determinants of health. They want partners whose solutions are source-agnostic, support both fee-for-service and value-based care models, are programmable to their unique needs and provide an open ecosystem that allows for deep integration into the provider and consumer workflows.

#3: Optimizing the venue of care

Successful value-based care strategies must demonstrate proficiency on optimizing the venue of care to improve outcomes, lower costs and increase consumer access and satisfaction. They must be able to predict the unique needs of each individual and appropriately match them to the skills of their network.

This can be accomplished by leveraging a variety of strategies and techniques, including lowering inappropriate utilization, targeting high utilizers, preventing network leakage, optimizing transitions and referrals, adoption of telehealth (including e-visits, video visits and remote patient monitoring) and new age care management and coordination services (such as digital concierges and health coaches). By digitizing a personalized plan for each individual, organizations can separate the intervention from the physical venue and innovate new models of engagement.

#4: Consumer engagement

Consumer engagement is not unique to value-based care models, but spans fee-for-service and the rising consumerism driven by high-deductible health plans. Organizations are looking to recruit new consumers to grow their revenue, provide convenient and cost-effective access and keep patients in-network to ensure appropriate care coordination.

However, success in value-based care models depends on changing consumer behavior through engagement and activation - and that could mean adherence to therapy, utilization and improving healthy behaviors.

More and more, health care organizations are striving to create living relationships with their consumers that provide them transparency, appropriate access to service and efficient communication while connecting with them in their daily lives. Consumers want a trust-based relationship with their health care provider: Whether they're focused on wellness and prevention or treatment of a chronic condition, they want to know that they have an engaged partner that cares about them.

For organizations, this means assessing the role of technology in a broader consumer strategy. We can expect mobile health technology and wearable apps to continue to rise as consumers continue to seek empowerment what increasingly resembles a "digital concierge" for their health and wellness. Progressive health care organizations will identify services to increase patient engagement and satisfaction, as well as tools needed to support individuals in managing health risks, managing illness and staying well.

#5: Health IT provider partnership

Hospitals and HIT providers must band together in clinically integrated networks to provide a full suite of services that increase under a single payment or at-risk model. Successful organizations are implementing strategies, processes and tools to identify, recruit and manage a high-performance network of HIT providers.

For value-based care to work, organizations must create sustainable partnerships with HIT providers that allow both parties to work together to better serve the population. This means aligning partners on a vision and strategy for data sharing, care workflows, outcomes and incentives. A key to engagement is open enterprise solutions that enable the integration of the longitudinal record and personalized into the provider workflow at the point of care.

#6: Health and prevention

Successful value-based care organizations have demonstrated not only an ability to provide improved care coordination, but also a purposeful focus on health and prevention. Chronic conditions account for 85 percent of total health care spend, and the top six cancers are said to be preventable. Prediction, prevention and proactive intervention can play a key role in reducing costs.

What can health care organizations do now?

My advice to health care organizations on the verge of value-based care: Start building the governance and skills of your organization. The journey to value-based care is not a sprint - it's training for a marathon. The winners in this landscape will be those who develop a sustainable business model focused on lower costs and better outcomes. Enterprise analytic strategies, preventing network leakage, improved adherence to therapy and engaging consumers in their own health and care pays dividends regardless of the business models. Many organizations are looking at their own employee population to start.

Organizations need to develop skills that will allow them to use emerging payment models to win their ZIP code. What's interesting is that the same skills that serve organizations well in value-based care models can be used to optimize revenue in fee-for-service models - the primary difference is matching patient needs to the venue of care. The most important piece is starting the value-based care journey now, so that organizations have time to evolve and hone their strategies.

We're focused on connecting traditional venues, the health continuum and advanced information about a person's lifestyle to empower individuals in their health and care. Learn more about Cerner's population health management solutions.

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