Becker's Hospital Review

55 PRACTICE MANAGEMENT THOUGHT LEADERSHIP How we can turn value-based expectations into reality By Carter Dredge, Chief Transformation Officer, SSM Health W hile examples of val- ue-based innovation clearly exist in the market today, nationwide adoption has been slower than many of us would have hoped. There are multiple complex reasons for this, but for the sake of simplicity, I will address three of them. 1. Business models vs. services. In healthcare we talk a lot about services, but we typically don't talk enough about business models, which encom- pass much more than just individual services. Business models include rev- enue and pricing models, operating strategies, enabling technologies, and staffing models, among others. To cre- ate and fund transformative new busi- ness models, we need to do more than just add or subtract a few new services. Here's an example to help illustrate the difference: A more incremental services expansion approach would be to add a transportation service to ensure that patients can get to their appointments in the current model. A new business model approach would be to rethink the entire access ques- tion altogether by entering into a pre- paid risk-based contract and launch- ing an engagement solution powered by artificial intelligence coupled with a complete set of virtual capabilities. While there is clearly a need for both new services AND new business models, without more of the latter we will likely continue to see only incremental, as opposed to game- changing, improvements. 2. Care and payment misalign- ment. There is a powerful and insepa- rable connection between innovative care redesign and innovative pay- ment reform. To change the way that health systems provide care at scale, we also need to change the way we pay for care at scale. If not, the most progressive organizations will also be the most penalized by current payment systems. As leaders for higher quality and more efficient health care systems, we must continue to believe that assuming broader financial risk is a key enabler to achieving a better, more responsive, care delivery system. Taking on the right types of healthcare payment risk can create a virtuous cycle of innovation — one that rewards, instead of penaliz- es, those providing higher value care (and in some cases less care); as some of the most progressive models of val- ue-based care are not easily implement- ed under the current payment models. Additionally, it's important to note that not all alternative/risk-based pay- ment models accomplish the same objectives. Therefore, we should be- gin by taking a step back and asking ourselves a very important question: What problem am I trying to solve? By answering this question, we can determine which of our underlying business models need to change, and, as a result, which of our payment models must also change. Different payment models solve different prob- lems. For instance, bundled payments are a great way to integrate an epi- sode of care and reduce variation in the post-acute setting; however, if the primary problem is potential over- utilization of the service itself, bun- dled payments are not likely the best solution. Choosing the right payment model is essential, but that does not cover everything. 3. Managing complexity of support- ive components. When designing value-based models, other business functionality must change as well. For example, the way organizations compensate physicians, prioritize and measure efficiencies and process improvements, design EMRs, and perform multiple other administra- tive and support functions. It's about much more than the overall care and payment models themselves, it's also about the many other supportive com- ponents to make it all work. It takes a coordinated team effort to effectively manage risk. Organizations must also have scale within their respective patient pop- ulations if they want to successfully assume more risk. The greater the number of patients covered in a risk arrangement, the higher the absolute risk, but the lower the relative risk. Sig- nificant outliers in a small population can dramatically skew results, which can make small-scale pilots quite risky on a relative-risk basis. As an industry, we need more larger-scale, program- matic approaches tackling head on the core gaps and challenges of our current care delivery model. When it comes to scale, partnerships are also essential. Even for the largest incumbent health systems with signifi- cant scale, it is important to realize that sizable portions of every healthcare dollar is spent outside any one system — even for those with their own health insurance plans. There is simply not a mergers and acquisitions strategy big enough to meet the entire needs of a population. When you are taking on risk, a coordinated network of part- ners is absolutely needed. Lastly, to drive all of these elements, it is critical to identify the key group of engaged team leaders or "champi- ons." To help, we need to ask: "Which progressive clinicians feel the most lim- ited by the current systems in place to- day?" and "Which ones are passionate enough to push for real change?" Think of the individuals who keep producing solid and innovative ideas expected to produce significant savings, but who keep running into the problem of "we don't have a CPT code for that." Overall, I am an eternal optimist re- garding the potential for macro in- dustry change. Our leaders and numerous partners are innovative, committed, and hard-working. By building truer business models, trans- forming the way we get paid, and managing the key supportive com- ponents in concert with one anoth- er, we can truly deliver better, more compassionate, and higher-quality value-based care for our patients. n

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