Will academic medical centers accept the value challenge or get left behind?

The movement to value-based healthcare is accelerating as public and private payers and employers intensify their push for care models that improve quality while containing costs.

Many academic medical centers (AMCs), however, are struggling to transition from fee-for-service to value-based models of care.

AMCs are widely recognized for being on the forefront of research and innovation. However, AMCs have unique characteristics that present unique challenges – as well as opportunities – on the road to value. The most significant difference between a regular health system and an AMC is that the AMC’s mission extends beyond care delivery to encompass medical education and research. Their tripartite mission can result in organizations with three separate silos, each with their individual strategies, goals, culture and management approach, as well as ingrained behaviors and entrenched interests. This unique structure can make AMCs resistant to change and slow to react to developments in the healthcare marketplace.

In particular, AMCs often lag behind community health systems when it comes to care delivery innovation around population health. AMCs offer innovative and cutting-edge treatments that attract the most complex patients. This creates an increased emphasis on specialty care over primary care – and reinforces their reliance on the fee-for-service model over value-based models that promote preventative care and disease management across patient populations. AMCs also tend to have a shortage of non-physician clinicians serving in roles that typically take the lead in following patients through the continuum of care, such as nurses, nurse practitioners, and nurse navigators.

In short, AMCs often struggle to create the organizational, operational and care-delivery transformation necessary to succeed in a value-based world. However, AMCs do have an opportunity to shake up the status quo by embracing a strategy that takes into consideration their tripartite mission, emphasis on specialty care, high cost base, and quality and cost performance.

Adapting the Tripartite Mission to a Value-Based Mission
To achieve value-based care success, AMCs must start by breaking down the walls between their education, research and care delivery enterprises. Stakeholders across the organizations must align to create an organizational strategy that leverages the strengths of each entity to bolster the others’ abilities to work toward their new, intertwined goals.

For example, researchers could develop and test care-delivery and physician engagement innovations that support value-based care. Revenues from care delivery could help fund the education mission, while the academic curriculum could expand to encompass payment models, social determinants of health, data analytics and other subjects that drive success in a value-based environment.

Focusing on Both Specialty Care and Primary Care
The drive to value is pushing more care out of the hospital and into the outpatient setting. To maximize rewards under value-based payment models, providers must proactively manage the health of populations and increase their primary care presence – although this can be particularly challenging for AMCs that have traditionally focused heavily on specialty and inpatient care.

As AMCs take measures to reinforce primary care, they must simultaneously foster care teams in which specialists are able to use their expertise as consultants and provide treatment for patients with needs beyond the scope of primary care. In addition, physician compensation must be properly aligned to drive practice change and provide financial rewards for specialists who meet care quality and cost targets. Updated compensation policies, along with organizational realignments can drive physician engagement and ultimately lead to the successful transition to value.

Balancing the High Cost Base
Most AMCs have a higher cost base than their non-teaching counterparts due to the expenses associated with teaching, training and research, and as their role as safety net providers. This structure makes it more challenging for AMCs to meet lower-cost care objectives under value-based care models. AMCs thus must incorporate solutions that include ways to draw in patients through expanded primary care offerings, including telehealth and virtual care programs, in order to drive decreases in hospital readmissions. In addition, AMCs should also seek to contain costs by adding programs that reduce clinical variation, standardize care protocols and decrease care needs.

Managing Quality and Cost Performance
In addition to having a higher cost base, a recent study found that AMCs have lower quality scores than community hospitals. Though many large AMCs have value-based employee health plans, the number of lives covered may be insufficient to justify the investment in programs that transform care delivery models, institute care management programs, build data collection and analysis capabilities, and hone risk management techniques – all of which are essential for effective population health management.

To justify investments that improve quality and control costs, one option for AMCs to consider is launching a Medicare Advantage plan, which provides the structure to reward value-based outcomes. Payments are adjusted based on enrollees’ health risk, giving AMCs a better opportunity to manage medical costs, as compared to fee-for-service models. In addition, Medicare’s Star Rating program rewards plans for high quality service. Furthermore, Medicare Advantage plans are increasingly popular among the growing ranks of Medicare beneficiaries.

Choosing an Operating Partner to Accelerate Time to Value
The transformation to value can be an overwhelming endeavor for any health system, let alone an AMC. The learning curve is steep and many organizations often get bogged down by missteps along the way.

Rather than forging ahead alone, ACMs can align with an operating partner that offers a proven model that addresses all points of the value chain. This allows AMCs to speed the transformation the value and avoid making disruptive mistakes. An experienced operating partner offers expertise that AMCs typically lack, such as building physician networks, negotiating contracts with incentives to improve quality and the patient experience and constrain costs, creating physician alignment and developing and deploying the advanced analytic capabilities needed to drive improvement and track performance.

The transition to value requires change management and the ability to develop a culture in which stakeholders embrace the principle that healthcare is a team sport with shared risk and reward. While a daunting task, market forces are forcing this change and AMCs can’t remain idle – which is why it’s time for AMCs to turn their enormous capacity for innovation inward and become leaders in value-based care.

By Michael A. Hill, Senior Vice President, Advisory Solutions at Lumeris

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