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Where Healthcare Execs Plan to Increase Risk

Article

Healthcare providers are ready and planning to assume increased levels of risk through commercial payer and Medicare contracting models and Medicare Advantage.

doctor and scribe
Rich Bajner

Rich Bajner

Kai Tsai

Kai Tsai

Healthcare providers are ready and planning to assume increased levels of risk through commercial payer and Medicare contracting models and Medicare Advantage, according to a survey.

Navigananalysis based on a survey conducted by Healthcare Financial Management Association (HFMA) of 170 hospital and health system senior finance executives suggests 72% both believe their organizations have the capabilities needed to support increased levels of risk and plan to take on additional risk in the near future across the following:

  • Commercial payer contracting models: 64%

  • Medicare value-based models: 57%

  • Medicare Advantage: 51%

Furthermore, 44% of respondents say their organizations are already part of a provider-sponsored health plan (25%) or plan to launch one (19%) as a part of their risk-assumption strategy.

When asked in what areas they’re planning to increase investments (financial, labor) to enhance collaboration with payers and support increasing levels of risk, 62% of respondents suggested technological capabilities with more than half citing physician (57%) and member (56%) engagement.

Among executives suggesting their organizations will not pursue increased risk levels, 56% cited a lack of local market demand. In addition, 42% of executives suggested operational processes, such as contract execution and care coordination and management, as the top challenge with maintaining risk-based capabilities.

Related: Driving Value-Based Care As A Health System

“With most providers anticipating continued downward pressure on margins, accepting risk can represent a lever for revenue growth-as long as providers clarify internal accountabilities and commit enough of their resources to risk,” says Rich Bajner, managing director and healthcare value transformation practice leader at Navigant, a global professional services and consulting firm headquartered in Chicago.

While providers will inevitably continue to operate in a market primarily driven by fee-for-service (FFS) payments, the path forward does not have to be an either/or scenario. Providers can drive revenue and margin growth in both FFS and value-based worlds through strategies focused on engaging physicians on clinical standardization, targeted cost of care reductions in areas such as post-acute care, and building tight provider network relationships, the analysis suggests.

“Sharing risk must be a collaborative pursuit between payers and providers,” says Kai Tsai, managing director, Navigant. “It’s clear that providers are building the capabilities needed to support enhanced levels of risk and are planning to increase their risk assumption. Both entities need to partner more closely to lessen the gap between the supply of and the demand for risk arrangements in markets nationwide.”

While Medicare and commercial payers are increasing their value-based contracting offerings, there remains varying levels of engagement on risk arrangements in local markets, according to Navigant’s 2018 CEO Forum executive panel. 

“The ACA left many providers assuming that risk-based models would be the new normal, but the transition has not been as successful or widespread as anticipated,” says Bajner. “These results show the value-based movement may be coming full circle, and this time providers will benefit from previous experiences in designing their approach.”

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