Taking on risk

BOSTON— The fee-for-service model continues to dominate, but an increasing number of organizations are plunging into more risk-based payment schemes.

Steward Health Care System, a Mass.-based community-based Pioneer accountable care organization (ACO), “burned boats and went hog wild into global risk,” said its president, Mark Girard, MD, speaking at the Digital Healthcare Innovation Summit on Nov. 4.

State providers achieved high marks in quality and access when healthcare reform took off in Massachusetts in 2006, but “what we were noticing was that healthcare costs were spiraling out of control and accelerating at a rate much greater than the rest of the country.”

In terms of value, or quality over costs, “we figured out a strategy to drive the quotient up,” Girard said. For example, care in community hospitals could easily be done in ambulatory spaces, reducing costs by 10 percent.

For those moving to risk-based models, change isn’t easy. “Like the media going from print to web, it requires cultural change,” said Frank Williams, CEO of Evolent Health, which helps providers move to more risk-based payment models.

Change must touch upon people, processes and technology to achieve success, and must incorporate analytics of clinical and financial data to get health executives focused on delivering value, he said.

The organizations that take on risk successfully for its patient population are culturally oriented toward change from the top down. But there is a challenge in getting organizations onboard, especially as hospitals are doing financially well in the current environment, Williams said.

Healthcare organizations still struggle to think like businesses. When his company meets with hospital executives, he gets “blank stares” when asking basic questions on the financial risks for their patient population, he said. 

He advises companies to focus on the 4 percent of patients who are “churning and burning” through resources, and provide a population health program in which a nurse manager becomes “a best friend” to these super high utilizers. For congestive heart failure patients, it’s as simple as knowing how much you weigh every day. “Nurses managers keep their eye on it. Using technology in a way to engage those 4 percent can really drive your model.”

But culture matters. “We’ve seen success when CEOs have vision and it is driving the strategy. If you don’t have that, it’s diffused and it doesn’t work,” said Williams. “We’ve invested in classic change management competencies. These launches are hard and you need to be prepared to build your case and blast through obstacles.”

As one of the top Pioneer ACOs in the country, Girard attributed Steward Health Care System’s success to its culture. “We did it because it was a core part of our mission.” The system drove value in two ways: (1) “We’re physician led, we turned over the keys to care to the provider"; and (2) Economic value is a main focus, with the model positioning providers to cut unnecessary costs and improve quality and efficiency of care.

Making the switch to risk-based payments “is a massive lift,” he said, and requires new competencies that many old-school hospital executives have not learned. One of these competencies is the ability to work with physicians, and build the case for change “again and again,” he said.

Also, understanding of actuary, financial and clinic analytics and how to develop strategies around populations and sub populations are necessary for success, he said.

One early lesson was the challenge of getting providers on board. That was mitigated a bit by putting them in leadership positions on the governance structure. “That was the biggest hurdle, it took a year for providers to get comfortable with the concept.” Education played an important role, especially imparting the importance of engaging patients who want convenience, access, quality and integration.

“A lot of healthcare boils down into information flow and people flow. You hope they are happening at the same time.”

Another challenge was retention of patients. “We spent a year trying to reduce leakage. You can’t do that if you don’t have a quality product.”

Accountable care is here to stay. “I don’t think we’re going back to the fee-for-service model. I think that train has left the station,” Girard said.