Not ready for pop­u­la­tion-health risk

Modern Healthcare - - COMMENT - By Nathan Kauf­man

The con­cept of pop­u­la­tion health man­age­ment is nec­es­sary, im­por­tant and good, but the health­care in­dus­try’s cur­rent as­sump­tions about the ben­e­fits of as­sum­ing global risk is déjà vu all over again.

As the in­dus­try sprints to take global risk, I hear­ken back to 1993 when much of the in­dus­try was con­vinced that health sys­tems should em­ploy physi­cians to strate­gi­cally po­si­tion the sys­tem to profit un­der very com­pet­i­tive cap­i­tated rates.

Twenty years later, the pro­jected growth in cap­i­ta­tion did not ma­te­ri­al­ize. In the end, many of the health sys­tems that adopted th­ese strate­gies hem­or­rhaged tens of mil­lions of dol­lars. Some were per­ma­nently crip­pled by the losses.

Many pop­u­la­tion health man­age­ment com­pe­ten­cies will im­prove care and should be pur­sued re­gard­less of whether cap­i­ta­tion be­comes a dom­i­nant form of pay­ment. Th­ese skills in­clude pop­u­la­tion strat­i­fi­ca­tion, case man­age­ment, care co­or­di­na­tion, etc. But there is lit­tle ev­i­dence that the ob­ses­sion with tak­ing global risk for the man­age­ment of the health of a pop­u­la­tion will end any bet­ter than it did in the ’90s. Con­sider:

Many health­care ex­perts are again es­pous­ing cap­i­ta­tion as the pay­ment model for the future with­out any em­pir­i­cal ev­i­dence to sup­port their po­si­tion.

Most health sys­tems lack the com­pe­tency to de­liver op­ti­mal value-based care to the rel­a­tively small cap­tive pop­u­la­tion of pa­tients that flows through their in­sti­tu­tions.

In Medi­care fee-for-ser­vice, health sys­tems bear fi­nan­cial risk for per­for­mance. On av­er­age, hos­pi­tals op­er­ate at neg­a­tive 5.6% mar­gin un­der this FFS.

Few health sys­tems have demon­strated the abil­ity to op­ti­mize the health of their own em­ployee pop­u­la­tion.

A sig­nif­i­cant per­cent­age of med­i­cal and sur­gi­cal spe­cial­ists and hos­pi­tal­based physi­cians have no in­ter­est or de­sire to change how they de­liver care.

Many sys­tems have spent mil­lions cre­at­ing a “clin­i­cally in­te­grated net­work.” The re­sult is a net­work struc­ture that lacks the func­tion­al­ity to be suc­cess­ful.

Much of “value-based” pay­ments are rel­a­tively small with­holds from tra­di­tional fee-for-ser­vice pay­ments, which do not ap­pear to have a ma­te­rial longterm im­pact on qual­ity of care.

One can­not suc­cess­fully op­ti­mize the health of a pop­u­la­tion un­less there are as­so­ci­ated public health poli­cies, sup­port­ing bet­ter nutri­tion, hy­giene, etc., and in­cen­tives for per­sonal re­spon­si­bil­ity—nei­ther of which ex­ist at this time.

Any ob­jec­tive anal­y­sis of the Shared Sav­ings ACO pro­gram high­lights the afore­men­tioned lack of com­pe­ten­cies and prob­a­ble fail­ure should pop­u­la­tion health man­age­ment pro­grams take risk.

Carl McDon­ald, Cit­i­group’s highly re­garded man­aged-care an­a­lyst, has stated that the “vast ma­jor­ity of hos­pi­tals don’t have any­thing close to the sys­tems and in­fra­struc­ture nec­es­sary to take risk suc­cess­fully and most who have tried in the past have not suc­ceeded.”

To be suc­cess­ful, sys­tems need to de­velop the com­pe­ten­cies nec­es­sary to man­age pop­u­la­tion health over time, at a re­al­is­tic, log­i­cal pace, pro­gress­ing through clearly de­fined mile­stones for com­pe­tency devel­op­ment, while stay­ing fo­cused on man­ag­ing their fun­da­men­tals. Th­ese mile­stones in­clude:

Pro­vid­ing great care/ser­vice while break­ing even at Medi­care rates.

Sup­ple­ment­ing the core mea­sures with more rel­e­vant qual­ity mea­sures, which are rou­tinely mon­i­tored and re­ported to the public.

Op­er­at­ing highly dis­ci­plined, ev­i­dence­based hos­pi­tal­ist and in­ten­sivist pro­grams.

Ma­tur­ing the em­ployed physi­cian group to func­tion as a group prac­tice, fo­cus­ing on care co­or­di­na­tion, ef­fi­ciency and pa­tient sat­is­fac­tion.

Run­ning an emer­gency depart­ment that achieves best-in-class per­for­mance.

Demon­strat­ing that “pa­tient-cen­tered” means easy-to-un­der­stand, ac­cu­rate, rea­son­able charges and billing.

Having the abil­ity to pre­de­ter­mine the ac­tual cost and price for an episode of care.

Af­fil­i­at­ing with a dig­i­tally con­nected net­work of physi­cians, com­ply­ing with hun­dreds of of­fice-based and in­pa­tient pro­to­cols, along with a physi­cian hi­er­ar­chy hold­ing col­leagues ac­count­able.

Re­design­ing care to make it more af­ford­able, ac­ces­si­ble, co­or­di­nated and ev­i­dence-based, es­pe­cially for the frail el­derly and chron­i­cally ill.

In­stalling an elec­tronic health record that adds mea­sur­able value to care de­liv­ery and does not dis­rupt clin­i­cal pro­duc­tiv­ity, qual­ity and fi­nan­cial per­for­mance.

Col­lab­o­rat­ing with pay­ers to of­fer af­ford­able, high-qual­ity care through a “pre­ferred” nar­row net­work.

By def­i­ni­tion, pop­u­la­tion health man­age­ment will re­duce the use of ex­pen­sive hos­pi­tal ser­vices. Health sys­tems must de­velop the com­pe­ten­cies to con­sol­i­date ser­vices and re­duce the cost of the care they pro­vide, or find them­selves in a de­clin­ing fi­nan­cial spi­ral.

There’s an adage that says, “His­tory does not re­peat it­self, but it rhymes.” The con­cept of pop­u­la­tion health man­age­ment is di­rec­tion­ally cor­rect, but tak­ing global risk has proven to be cat­a­strophic for most. Bolt­ing a pop­u­la­tion health global risk plat­form on top of a dys­func­tional de­liv­ery sys­tem will not work. The key to suc­cess­ful pop­u­la­tion health risk is to first ex­cel at the fun­da­men­tals and then de­velop es­sen­tial new com­pe­ten­cies over time.

Nathan Kauf­man is man­ag­ing direc­tor of Kauf­man Strate­gic Ad­vi­sors, San Diego.

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