Stuck in the Middle? Frontline frustrations and fun in the journey to value-based payments

Although most health systems have begun restructuring their care models to accommodate value-based reimbursement, a large proportion are still paid on the traditional fee-for-service model. Many health system leaders are finding themselves "stuck in the middle" — attempting to align incentives and behaviors that support success under value-based reimbursement while still predominantly paying providers based on productivity.

"Everyone has a foot on the dock and a foot on the boat when making the transition," William Jessee, MD, FACMPE, managing director and senior medical advisor of physician services at Integrated Healthcare Strategies (Gallagher Integrated), said during an executive roundtable at the Becker's Hospital Review 8th Annual Meeting in Chicago.

This content is sponsored by Integrated Healthcare Strategies. 

Preparing for value-based medicine is a top priority for hospital leaders. But actually transforming a multientity organization from the top down is easier said than done. Hospital leaders working to redesign care delivery in their organizations have encountered a number of challenges, from workplace culture to physician engagement.

During the roundtable, Dr. Jessee moderated a panel discussion with health system leaders and healthcare consultants on the challenges they are facing as they navigate the transition, as well as strategies to overcome them.

1. Cultural inertia. "We do feel stuck in the middle," said Thomas Schrup, MD, physician vice president at CentraCare Health in St. Cloud, Minn. "Our CEO would say we're trying to retool an aircraft while we're flying. We have to balance in the middle but it's kind of exhausting."

The sensation of being "stuck" between two models of reimbursement can take its toll on an organization's culture. Dr. Schrup said the biggest obstacle his health system is currently facing is cultural inertia.

"It's the, 'We've-done-it-this-way-for-so-long'" mentality that makes traversing from a culture that promotes productivity to one that promotes value difficult. To address this issue, CentraCare has made substantial investments in reshaping its culture. For instance, the health system has poured $5 million in two-day culture improvement workshops to help clinical staff become more receptive and adaptive to changes.

"It sounds a bit fluffy, but when you see [the effects] playing out in work meetings — people are blaming each other less, spending less time on turf battles or protecting hierarchy … it goes a long way," said Dr. Schrup. "We see that as the best way to position ourselves to be more nimble. Investing in your people equips them with the tools to make the necessary changes in structure and compensation."

2. Value-based ideals vs. productivity-based payment. Health system leaders across the nation are struggling with how to encourage physicians to change their approach to care delivery to support success under value-based reimbursement models while still paying them largely based on productivity, according to Rob Lenio, a senior consultant with Gallagher Integrated.

One solution some organizations have employed is increasing physicians' base salary as a means to decrease emphasis on productivity. According to the Gallagher Integrated Physician Compensation and Production Survey of 35,000 respondents, 88 percent of compensation for physicians making median salaries corresponded with base compensation and productivity in 2017, down from 91 percent last year. "The value-based portion is increasing, albeit slowly," said Mr. Lenio. "Production still makes up the majority of compensation earned by physicians."

The task of incorporating value-based goals into a predominantly productivity-based model can be challenging. "At the end of the day, productivity pay is so much higher, so physicians only focus on that," said Mary Heymans, managing director and senior advisor of physician services at Gallagher Integrated. "Where we're seeing the most effective compensation plans are in markets where commercial payments are starting to share the premium dollar. Then it's easier for the medical group to get behind [risk-based contracts]." However, when insurers don't want to take on a greater share of risk, the providers are wary of doing so, too.

3. The ACO conundrum. Even ACOs that have high performance in quality and cost savings can suffer from poor return on investment, according to Davin Turner, DO, MS, president of Mosaic Life Care Clinics in St. Joseph, Mo.

"We went all-in to the ACO world five years ago," he said. "We jumped straight into [Medicare's] Track 2 ACO program, made big investments and scored high on quality. We received several million dollars back and shared it with providers. But we found out you're spending $3 to $4 to get $1 back. We didn't know that right away."

Dr. Turner attributes this poor ROI to payers — both government and commercial — who don't want to "play ball." "Insurers are saying they're pulling out of market exchanges — they aren't making as much as they want. They have no incentive now to share that premium dollar with us," he said. And "if the government won't punish those in the volume world and reward those who move forward, you can't make this work."

Mosaic Life Care has successfully improved its value equation, and it has not had a readmissions penalty in three years. Despite these successes, the health system will take steps to scale back its ACO. "We can't afford the poor ROI," he said. "We have to right-size some of that."

4. Forging new partnerships to address social determinants of health. Health system boards have begun "drinking the Kool-Aid" when it comes to exploring new partnerships in the community to support population health management efforts addressing socioeconomic determinants of health, according to James Rice, PhD, FACHE, managing director and senior advisor of the Gallagher Integrated Governance and Leadership practice.

He suggested board members consider three thoughts when approaching community-based partnerships. First, be open to partnering with those who may have traditionally been "strange bedfellows," he said, such as schools, the fire department and police, religious groups, youth groups and others.

Second, while the hospital can "play a catalyst role in [establishing] a community partnership, it shouldn't assume total control" over the relationship, said Dr. Rice. By throwing its weight around, a hospital could alienate established community groups that have worked for decades to alleviate the socioeconomic disparities contributing to poor health. Hospitals should also not try to be a "champion and do it all," he added. This can be the "kiss of death." Instead, all stakeholders must participate and take ownership for their roles within the partnership.

Finally, these partnerships are not just about sharing resources: they're about engaging the community and educating people about how to make healthy lifestyle choices.

Being "stuck in the middle" of the transition from volume- to value-based reimbursement models is a challenging position, as health system leaders must reconcile how to promote care redesign and cultural changes while still paying providers predominantly based on productivity. While the government and commercial payers benefit from the cost savings associated with outcomes-based care delivery, they have yet to pick up as much risk as they're asking providers to adopt. In the meantime, health systems must continue to emphasize initiatives such as population health management and cultivate a culture that supports better coordination, team-based care and partnerships with community entities.

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