Ready To Take On Risk? Most Hospital Finance Execs Say Yes, Per New Report
More than seven in 10 hospital and health system senior finance executives believe their organizations are ready to assume increased levels of risk through commercial payer and Medicare contracting models, and Medicare Advantage, according to a new survey from consulting firm Navigant and the Healthcare Financial Management Association (HFMA).
The survey, which included 170 hospital and health system senior finance executive respondents, also showed that providers are partnering on or launching provider-sponsored health plans (PSHP) as part of the risk-assumption strategies. In fact, 44 percent of respondents say their organizations are already part of a PSHP (25 percent) or plan to launch one in the future (19 percent).
The findings revealed that 72 percent of these executives both believe their organizations have the capabilities needed to support increased levels of risk and plan to take on additional risk in the next one to three years across the following:
- Commercial payer contracting models: 64 percent
- Medicare value-based models: 57 percent
- Medicare Advantage: 51 percent
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.
“Sharing risk must be a collaborative pursuit between payers and providers,” said 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.”
What’s more, the researchers noted that having the appropriate technology underpinning is essential to payer-provider risk arrangements. 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 percent of respondents suggested technological capabilities with more than half citing physician (57 percent) and member (56 percent) engagement.
Among executives suggesting their organizations will not pursue increased risk levels, 56 percent cited a lack of local market demand. Further, 42 percent of executives suggested operational processes, such as contract execution and care coordination and management, as the top challenge with maintaining risk-based capabilities.
However, even with their increased risk-assumption interest, providers will inevitably continue to operate in a market primarily driven by fee-for-service (FFS) payments, according to researchers. “But the path forward does not have to be an either-or scenario. Hospitals and health systems 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 suggested.
“The Affordable Care Act 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,” Richard Bajner, Navigant managing director and healthcare value transformation practice leader, said in a statement. “With most health systems 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 models. 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.”
