Healthcare business leaders currently face a chess-like challenge: Playing the long game without getting blown off the board in the short term. The long game is value-based care; it requires healthcare organizations to start laying the foundation for more holistic, proactive, and population-oriented care. The short game is the current “piecework” model of fee-for-service, treating people primarily when they are sick. How can healthcare organizations survive—and even thrive—at both? For one thing, generating positive margins in the piecework model is necessary to invest in the long game. Consider these three steps to do so.
1. Understand the rules of each game
Make no mistake: Traditional fee-for-service revenue cycle management is still what pays the bills. But population health-style models of care delivery and financing are the end game. For now, healthcare organizations need to be really good at RCM fundamentals. Arguably, they need to be even better than before, since they may temporarily need to absorb penalties associated with value-based initiatives.
Moving toward population health models will require significant investments and almost revolutionary levels of change. These likely won’t pay off immediately. However, if done well, they can help organizations move toward other goals at the same time. In the short term, improving the quality of care delivery processes will benefit the bottom line in a few ways. It will allow enterprises to:
- Avoid specific, payer-assessed penalties
- Capitalize on incentives such as bundled payments and shared savings programs such as ACOs
- Manage excess utilization, such as patients remaining in acute settings longer than necessary and the overuse of emergency departments
And what about the long term?
2. Use the changing rules to your advantage
Fortunately, the goals of value-based care programs, such as bundled payments, are generally consistent with those of population health. So there are opportunities to leverage initiatives across multiple realms.
For example, patients with heart failure are one of the largest sources of readmissions and other excess utilization challenges. Imagine an initiative aimed at improving care coordination for these patients. Such a program would improve the effectiveness of care delivery for current heart failure patients and lay the groundwork for better management of heart failure in the population as a whole.
Initiatives like this will require collaboration with other organizations, such as skilled nursing facilities, community health centers, and volunteer organizations. That, in turn, requires healthcare organizations to hire new staff and create new competencies and infrastructure. Will those pay off immediately? They may or may not, but either way, they can be considered a necessary investment on the road to value-based care.
Once these “assets” are in place, they can be extended to approach issues from a population-health perspective. Goals would include identifying individuals who are predisposed to or at risk of heart failure before they acquire the disease and proactively treating comorbidities. Diabetes is a prime example: Controlling and preventing it is one of the most common targets of population health outreach programs.
At the same time, healthcare organizations cannot lose sight of the short game. They must aim to collect every last dollar of legitimate fee-for-service revenue. That’s the money that will make these long-term investments possible in the near term.
3. Build culture and infrastructure that infuse a “new way of doing things” into the enterprise
Navigating the path to value-based care is tricky, without much margin for error within either strategic decisions or everyday execution. Every choice needs to be evaluated against options, risks, and rewards using objective and reliable information. It is a big cultural change for many organizations and one that requires new ways of thinking and working.
There are a few crucial aspects to doing this. First and foremost is encouraging and facilitating a data-driven culture. Getting the measurements right is critical, since as the common business maxim states, “what gets measured, gets done.” That requires the right data: Timely, reliable, meaningful, and presented in useful ways. Having quantifiable objectives that everyone understands and can work toward will help organizations reach their goals—including performing the necessary short-term versus long-term balancing act across initiatives.
So overall, yes, it is possible—and wise—for healthcare leaders to play both the short and long games at the same time. Thoughtfully focusing on population-oriented approaches now will help optimize current fee-for-service revenue, increase returns from value-based programs, and lay the foundation for the future of population health.
