Executive roundtable: Strategies for making the shift from fee-for-service

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There is a lot of talk about the shift to a value-based healthcare system, but in reality many healthcare organizations are still stuck in a fee-for-service world.

Some systems haven't started to migrate away from fee-for-service because of the uncertainty of some of the value-based payment models and the lack of guidance provided for others.

As part of the Becker's Hospital Review 6th Annual Meeting in Chicago, 26 hospital and health system executives gathered for a roundtable discussion on planning and executing strategies for stepping into a value-based environment. Emeryville, Calif.-based MedeAnalytics sponsored the roundtable.

The roundtable discussion was led by Richard Ferrans, MD, former CEO of Presence Health ACO who is currently a Senior Consultant with VOV Enterprises, which specializes in accelerating the ACO learning curve for their clients. Dr. Ferrans was joined by Vicky Viglucci, founder of VOV and former CIO of GRIPA and Lisa Smith, founder of Eagles Wings Consulting and former GRIPA CFO. Dr. Ferrans identified several trends his company is seeing in the shift to value-based care and population health management.

"We continue to see significant diffusion of the ACO model," said Dr. Ferrans. He referenced several reports showing the increasing popularity of ACOs, including one that stated up to 56 million patients are served by these types of organizations. Dr. Ferrans made several observations on the ACO model and noted, "We're seeing ACOs not make money for reasons other than performance. The converse is also true, some made money for reasons other than performance." This point was important for the executives to hear, as many are already involved in ACOs or are considering creating one. One of the non-performance factors Dr. Ferrans identified as influencing whether ACOs make money is geographic location.

For organizations interested in forming an ACO, Dr. Ferrans said the Medicare Shared Savings Program is the most popular route. "The majority of people getting into the game now are looking to create an MSSP ACO as the path to get to value-based care," he said.

However, regardless of the type of ACO, not all are going to make money and that is something Dr. Ferrans is not surprised by. "When we see a lot of ACOs that aren't making money it's because they are basically start ups within large organizations and there is a very compressed time frame to get them operational," he said. "Going from 0 to effective is actually very hard." The variables associated with shared savings that go beyond geography have to do with compressing that time frame.

After Dr. Ferrans provided his insight on some of the issues and shared the trends he's seeing, the floor was opened up to the roundtable participants. One of the executives was from an inner-city hospital in New Jersey where there is a large population of charity care, uninsured and Medicaid patients. She said her hospital is stuck in fee-for-service and she was interested in getting advice on the baby steps her organization could take to get into the value-based model. One of the other participants, a CMO from a hospital in Connecticut, provided her with a great deal of advice.

He began by recognizing not all ACOs are the same by pointing out that his organization has seven ACOs that are designed seven different ways. However, for a hospital located in an area with a high uninsured and Medicaid population he said the first step that needs to be taken is recontracting managed care. He also said applying for a Medicaid waiver was another option for a hospital with that payer mix.

An executive from a health system in Louisiana also shared his insight. He said his organization took its first steps into value-based care by focusing on the organization's employees first by using an ACO model with only its workers.

With any type of accountable care arrangement, Dr. Ferrans said it's important to look at what organizations are spending to achieve their shared savings. For instance, if a health system spent $7 million to get $1.5 million in shared savings then it really didn't have a gain. However, Dr. Ferrans noted this type of information isn't readily available.

ACOs are not the only mechanism for transitioning to value-based care, and Dr. Ferrans discussed some of the other options available such as bundled payments. Specifically, he discussed the oncology bundled payments coming this summer. "The oncology bundles are going to be of great interest because it will be extremely attractive to commercial payers," he said. "We predict that is going to take off."

Outside of specific value-based payment models, the group also discussed what is needed for successful population health management. Patient engagement was one of the top factors identified as vital for population health management; however, Dr. Ferrans said there has been some blurring of the lines with that topic. "We are seeing a lot of confusion between patient engagement and patient notification," he said. "They are not the same thing."

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