5 Myths Surrounding the Business of Population Health Management

Joan Moss, RN, MSN, chief nursing officer and senior vice president at Skokie, Ill.-based Sg2, and Robert Sehring, chief ministry services officer of Peoria, Ill.-based OSF HealthCare, spoke about common misunderstandings surrounding population health management Tuesday at the Society for Healthcare Strategy and Market Development conference in Chicago.

Mr. Sehring oversees OSF HealthCare's Pioneer accountable care organization, which covers about 34,000 Medicare beneficiaries. Although OSF is perhaps best known for its Pioneer ACO, as it was one of the original 32 named in 2011, the eight-hospital system is also taking on other accountable care arrangements with payers, including a shared-risk PPO and capitated HMO with Blue Cross that will cover approximately 40,000 members, effective Jan. 1.

Mr. Schering says value-based payment streams currently account for about 25 percent of OSF's revenue and 150,000 covered lives, but he sees that growing to about 60 percent of revenue and 400,000 covered lives.

Based on OSF's experience and Sg2's work with hospital and health systems, Ms. Moss and Mr. Sehring discussed five myths floating around hospitals and health systems about population health management.

1. Myth: Population health management is a strategy. It's a mistake to confuse PHM with strategy, says Ms. Moss. Rather, PHM is a sophisticated delivery model requiring competencies that aren't found in most of today's hospitals. Many factors affecting a population's health extend beyond the realm of traditional hospital operations. "Think of PHM more as a competency," said Ms. Moss. "One that takes a long time to master." She used an example of hospitals helping asthma patients obtain air conditioning units to improve the air quality in their homes and reduce their risk of respiratory attacks. Functions like this are not familiar territory for acute-care hospitals that traditionally focus on inpatient care.

2. Myth: PHM is what hospitals have already been doing, except now they will just need to do more of it. Under PHM, most of an organization's work takes place outside of the hospital, said Ms. Moss. It also presents some new demands on hospitals. The first question comes down to who the health system will manage, which is often defined by the payer. There is no standardized model, and Ms. Moss highlighted various modes of PHM: "Sometimes it's a self-insured employer or your own employees. Sometimes it's an underserved population or a county contract," she said.

PHM is also different from hospitals' traditional way of caring for patients in that organizations now have to assess the health and risk of patients who may not visit the hospital or physician's office often. Hospitals are caring for not only the patients touching the health system in terms of planned interactions, but also patients the provider is less likely to see. This is where preventive services, lifestyle coaching and transitional care programs can really make an impact.

3. Myth: Every market is ready for PHM. This is not the case. Not every market and not every organization is ready for PHM. Ms. Moss highlighted some factors that suggest readiness.

Signs of a ready market include:

    • Health plans are interested in funding care delivery innovations
    • Self-insured employers are willing to partner for population-based payment models
    • Provider partners in the market are willing and able to collaborate
    • A favorable population density and long-term growth rates in the market
    • Clinical expertise and technical resources are available in the marketplace

Signs of a ready organization include:

    • A culture willing to experiment and learn from mistakes
    • A leadership team that is well-versed in change management
    • Physicians and nurses interested in using novel care delivery and workforce models
    • A robust aligned primary care network that is integrated via information technology
    • A history of strong financial performance and the capacity to make ongoing investments

4. Myth: Hospitals can manage population health on a small scale. Scale is a must-have, said Ms. Moss, and it will take years for organizations to fully realize the economic benefits of PHM. The minimum number of covered lives for a stable risk pool ranges from 40,000 to 50,000, but the general goal for many organizations is between 250,000 and 500,000, said Ms. Moss. "In more matured managed care markets, most of those organizations are talking about a million covered lives," she said. "I'm not sure our point of view would tell you that you need to set that as a target, but I think 250,000 to 500,000 lives is a reasonable target and one we've seen around the country."

5. Myth: All hospitals can be population health organizations. The vast majority of health systems don't have the capital or scale to be PHM organizations today, said Ms. Moss. There are simply too many barriers to widespread industry adoption, including operating scale, population scale and financial resources.

As Mr. Sehring said, becoming a population health organization or, in his case, a Pioneer ACO is "not for the faint of heart." He said the change management and clinical transformation are challenging, while Ms. Moss echoed another health system executive who once said organizations cannot merely "dabble" in population health. It's a commitment that takes a substantial amount of time, resources and intellectual capital.

More Articles on Population Health:

Could Hospitals Succeed In Population Health by Acting as "Demanding Brands?"
Commentary: Development of Population Health Payment Models Needs to Accelerate
3-Part Approach to Population Health Improvement

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