HFMA’S Fifer on selling value
Payment model experiments a bold, significant step to transforming industry
Most of us remember management buzzwords such as “synergy” and “win-win” that generated a lot of excitement— fast—and then fell out of favor as people started looking for the next big thing. This can happen to buzzwords that are short on substance. Often, though, words just lose meaning with overuse, as “cloud computing” is on the verge of doing now. We need to make sure that value—the concept that has emerged as a guiding principle for transformation in healthcare—is not dismissed as just another buzzword.
Since the Healthcare Financial Management Association began researching value in 2010, we have witnessed the development of a broad consensus on the significance of the value transformation. Thought leaders in a wide array of public and private settings— associations, think tanks and government agencies, to name a few—have reached similar conclusions about the shift from volume to value. Healthcare and health insurance have grown increasingly difficult for consumers and employers to afford. In the absence of fundamental changes, the future holds more of the same. Healthcare expenditures under our volume-based payment system have long been projected to increase at unsustainable rates.
Nonetheless, providers are struggling to prepare for a value-based future while living in the reality of today’s volume-based healthcare payment system and understandably so. To help the industry move forward, the HFMA is wrapping up the second phase of its research on value, which has provided insights into stakeholder perspectives on how new payment methods can create value, an understanding of what purchasers and payers seek from value providers, and information about how providers are preparing for value-based payment.
In our research, we have discovered that wise healthcare leaders understand that there are many strategies and tactics for building value. Successful approaches will most likely be discovered through a process of trial and error—not by a rush to commit to any single unproven model. The key to transformation, stakeholders told us, is through experimentation. And providers who are willing to experiment now have unprecedented opportunities to do so, thanks to healthcare stakeholders’
Today, leadership in healthcare has never been easy —and it has never been more important
shared interest in collaboration and experimentation.
In many cases, hospitals and health systems are taking the initiative on collaborative experiments, and many are starting on a limited scale with specific conditions or patient populations. For example, UAB Hospital in Alabama assembled a cross-functional team that packaged a bundled payment proposal for chronic obstructive pulmonary disease and submitted it to the CMS, with plans for a similar proposal to Blue Cross. And Baptist Health South Florida recently teamed up with its state Blue Cross plan and a multisite oncology physician group to launch a shared savings, accountable care program specific to cancer treatment.
Sometimes the impetus comes from an employer or community organization. For example, Longmont United Hospital is participating in an areawide network created at the urging of its Colorado community’s school district, which sought help from area providers to manage costs and care in its selffunded plan. A total of seven provider entities, including hospitals and physician groups, are involved in the new network. Together, they are analyzing chronic disease in the district’s population and designing incentives for sav- ings to be distributed among providers.
Payers also encouraging experimentation through the use of incentives and technical support for the development of innovative care models such as patient-centered medical homes. America’s Health Insurance Plans, a national trade association representing the health insurance industry, told the HFMA that “contracts for medical homes are appearing in all states now.”
The quest for value is also moving forward within the framework of the fee-forservice system, which still represents the majority of reimbursement for healthcare services in the U.S. Fee-for-service reimbursement is not going to disappear overnight. Catalyst for Payment Reform, an organization that helps large public and private purchasers work together to get more value, is among those that have launched initiatives to improve the fee-for-service system even as they advocate for bundled payments and other new approaches.
All this being said, experimenting with value-based payment is difficult in an environment of intense financial pressure and feefor-service payments. It is important to acknowledge that no one expects these experiments to be easy. We’re not operating in medical research laboratory conditions, where we anticipate a high failure rate and can budget accordingly. On the contrary, in today’s uncertain and economically challenging environment, investing scarce resources in experimental payment models takes an emotional toll on providers and payers. But leadership in healthcare has never been easy—and it has never been more important.
As we chart the way forward during this period of transformation, we can be confident that payment model experiments guided by value are on the right track. Value is not just a buzzword; it’s a sound guiding principle and it captures the spirit of our times.