Engaging with payers in collaborative arrangements is critical for achieving quality outcomes at lower cost, while ensuring financial health for providers during good times and bad.
As we look toward brighter days post-pandemic, we would be remiss to not reflect on how COVID-19 has challenged healthcare providers, both clinically and financially. While COVID-19 infections have declined, providers have learned from the turbulence of the past year that being prepared to think strategically about their business is critical to providing affordable, quality care, while also achieving their financial objectives.
Engaging with payers in collaborative arrangements is critical for achieving quality outcomes at lower cost, while ensuring financial health for providers during good times and bad. While alternative payment models have been in place for many years, providers who already had more collaborative arrangements in place with payers, such as some value-based care arrangements, generally fared better than those in fee-for-service models during the pandemic.
Success, in the form of quality care and lower spend, will take time. However, the lessons of the last 18-months offer valuable insight for greater provider-payer collaboration to move the focus towards quality rather than quantity, while helping healthcare professionals navigate the challenges along the way.
Delivering Affordable Care While Also Meeting Financial Objectives
COVID-19 created severe financial pressures for hospitals, health systems and physician practices. With safety top of mind for all, hospitals cancelled non-emergency procedures and many consumers delayed routine care while social distancing measures remained intact, meaning fewer patients in physicians’ offices. A recent AHA report estimates the total losses for the nation’s hospitals and health systems to be at least $323.1 billion in 2020.
While providers were stretched thin financially, hospitals and health systems in certain value-based care arrangements, such as capitated models, generally experienced more consistent cash flow than providers in fee-for-service models. Value-based care models align incentives towards patient health care outcomes and help to provide sustained impact and savings over time. Capitation arrangements provide a pre-arranged monthly payment to physicians, clinics or hospitals per patient enrolled in a health plan – they share in savings when metrics are met and share downside risk when they are not.
Alternative payment models are not only a viable option during times of crisis but also during normal times when delivering affordable, preventative care helps improve patient health and, in turn, meet providers’ financial goals.
Overcoming Challenges Through Value-Based Care Models
To successfully implement value-based care arrangements, providers must understand the barriers to success when moving along the risk continuum, including having the right organizational culture. Moving from fee-for-service arrangements to value-based care models requires providers to shift their mindset from the old measures of success, such as volume of services, and commit to measuring based on health care outcomes.
Payers also need to ensure the financial model includes the right support structure for the provider. For example, models that incentivize improvements in quality and outcomes need to be supported by strong care coordination to facilitate proactive and timely patient engagement.
Payers need to equip providers with both technology and actionable data to support their ability to engage patients and deliver outcomes. Through increased data sharing, payers can help providers identify patients' health issues more quickly and close gaps in care – improving patient outcomes and saving significant costs associated with long-term treatment of chronic conditions.
Not every value-based model will fit every provider’s needs and objectives. Payers and providers should focus on the right model for the provider, based on their current ability to be successful in it. It’s no longer about strict, contract-driven relationships. Instead, the focus should shift to building deep partnerships that create trust, provide support and advance providers’ ability to deliver high quality care.
Focusing on Strong Partnerships for Increased Adoption
Creating strong provider and payer relationships is critical to successful value-based care arrangements. By partnering with a payer who is equipped with data-focused analytics that can identify the holistic needs of the patient, providers can better address the capabilities, staffing and infrastructure needed to effectively transition from fee-for-service to value-based care arrangements.
While there is still work to be done, we expect to see an increase in adoption of value-based care as the health care system adjusts to the shock waves sent by the COVID-19 pandemic. Because of the events of the past year, both payers and providers are recognizing the cracks in traditional payment models more than ever before. We must work together to achieve the shift in mindset that is required to improve delivery of quality of care for patients at an affordable price.
Angie Meoli is senior vice president of Network Strategy and Provider Experience at Aetna, a CVS Health company.