Intermountain wants a 'prepaid' model for care

The pay incentives in healthcare are misaligned.

Fee-for-service remains the dominant payment model in many markets, and hospitals are seeing costs rise faster than reimbursement, all while the demand for healthcare services increases. Intermountain Health is developing a new approach. The Salt Lake City-based health system wants to upend pay models and expectations with innovative solutions for a more sustainable care delivery system.

"The model of payment has to change so there's a long-term economic return for health," said Dan Liljenquist, chief strategy officer for Intermountain, at the Becker's 11th Annual CEO+CFO Roundtable on Nov. 13-16 in Chicago. "Short of that, everything we are doing as health systems is on the margins and it will not be sufficient to actually change the course and trajectory of what we need to change. We are focused first and foremost on figuring out how to wrestle away the economics, because we're spending more money than any society in the history of humankind on healthcare and are getting worse results because we're spending it all at the wrong end of the spectrum."

Healthcare is built around the acute care setting, and particularly focused on end-of-life care. Millions of dollars are spent on tests, treatments and therapies at the end of life, and often when it's too late for the patient. Disease prevention and wellness have taken a back seat, and efforts to keep patients healthy aren't reimbursed well, if at all, Mr. Liljenquist said.

"Unless we're focused on changing the way the payment flows first, all of the stuff we're doing is on the margins. And by the way, there aren't nearly enough people coming through because these interventions at the end are extremely human resource dependent," said Mr. Liljenquist. "It takes a lot of effort to take somebody in an ICU and try to patch them up and send them home. What do you send them home to? We are focused at Intermountain on changing the payment model."

Healthcare is now very transactional, Mr. Liljenquist said, and organizations can use tools to manage costs. Why not convert services to a prepaid model for patients to access services needed quickly and easily, needing fewer clinician resources? Would patients stay well longer and avoid preventable diseases?

"Intermountain's mission is to help people live the healthiest lives possible, and the best expression of that mission to us is when we take full clinical and financial accountability for populations of people and work to keep them well," said Mr. Liljenquist. "We are very focused on changing the economic model of what we're facing if we're prepaid. Prepaid gives us essentially the freedom to do the right thing and to adopt new technologies and approaches to care delivery that frankly, transactional medicine doesn't allow to happen."

As Intermountain has grown, Mr. Liljenquist said the system has tried to build new networks of care to take full clinical and financial accountability for patients.

"We are working very hard to make sure that the economics of healthcare actually flow to healthcare delivery, and that requires market essentiality with payers to insist on appropriate value-based payments and full capitation arrangements," he said.

Last year, Intermountain acquired Broomfield, Colo.-based SCL Health, adding eight hospitals to the system. Since then, Intermountain has been focused on creating partnerships and clinically integrated networks, as well as new arrangements with former competitors to create new care models with the prepaid strategy in mind.

"When you're prepaid, every dollar of cost reduction is a dollar of value creation," Mr. Liljenquist said.

The ability to reduce costs and create value will be essential as the physician and nurse shortages grow while the demand for healthcare providers accelerates. Medicare Advantage plans are also growing, much to the chagrin of many providers, who may opt out and create additional access challenges, Mr. Liljenquist said. The higher demand for care coupled with fewer clinicians may also increase the cost of care.

"We're focused on, if we can be prepaid, how do we create new models of care that allow somebody to get the services they need without having to see a provider," Mr. Liljenquist said. "If you think about it, we have a lot of business that's flowing through doctors that is transactional in nature, where the doctor has to see a patient to generate a code to generate a bill, and there just will not be enough doctors. At the end round, we're leaning heavily into a system-patient relationship trying to figure out what are the components of healthcare we can offload to a system that doesn't have to flow to a doctor to see a patient."

Basic healthcare services can be streamlined into virtual care or completed through a technology-driven solution, he said. The prepaid model supports value-based care transitions as well, giving physicians the freedom to provide the best care possible for patients and try new treatments.

"When you're in a transactional world, what are the tools to manage costs? You cut your rates and question everything the provider does. But if we're prepaid, there's a way for us to open up new models, and we need new models to emerge," said Mr. Liljenquist. "If our strategy just focuses on care coordination at the tail end of the process, it will not be sufficient to build a health system that's sustainable in the long term."

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