The devil's in the details. That's the case for healthcare as it makes the move from volume- to value-based care delivery.
The transition has advanced from a conceptual state to an operational one in the past couple of years, but hospital and health system executives are still tasked with big challenges in how to best orchestrate the move for their organizations.
Curt Whelan, managing director at Huron Healthcare in Dallas, identified five issues that are most top-of-mind for executives as they make the transition from volume to value.
1. Cultivating new competencies. Value-based care delivery involves different sensibilities than the traditional fee-for-service model, and Mr. Whelan said hospital CEOs across the country are focused on "three levels of competency they need to develop: provider competency, payer competency and physician competency."
Hospital CEOs are no longer tasked with only leading their acute-care facilities, but also developing relationships with providers throughout the spectrum of care, including long-term care and skilled nursing facilities. As hospitals take on more risk, their leaders must also become more payer-savvy and lead their organizations in a way that will be attractive to health insurers developing narrow networks.
Finally, executives must have competency in physician relationships to integrate new practices into their system successfully, drive evidence-based medicine and ensure care coordination is optimal, among many other initiatives.
2. Adopting a transformation mindset. One of the numerous hurdles facing hospital executives is the jump from conceptualizing and strategizing to actually implementing new payment and care delivery models. Whether a bundled payment program, accountable care organization or value-based contract with a commercial payer, leaders are increasingly executing big initiatives and making investments that will help transform their hospitals or health systems.
3. Building operational excellence as a foundation. Executives face plenty of external and internal pressures to keep up with their competitors, but they also shouldn't underestimate opportunities that can arise from achieving and maintaining operational excellence.
"A lot of hospitals are moving toward population-based management. However, there are a lot of foundational improvements still available within their current operations," says Mr. Whelan. "We're finding that organizations across the country — sizable organizations anywhere from six to 15 hospitals — have well over $100 million in foundational operational improvement opportunities."
4. Timing the transition to new payment models. Many executives describe their current position between fee-for-service and pay-for-performance as having one foot on the dock, one foot in the canoe. Mr. Whelan said executives continue to face questions about how best to move from FFS to value-based reimbursement.
"The question for many executives is timing. Some of them are progressing quickly toward new models of care. Others are staying conservative," he said. "It's important for executives to understand their markets relative to payer readiness for new models, what their competitors are doing and what their organization's capabilities are as they make decisions about when to move to new models."
5. Evaluating the current revenue base. Related to the above issue, executives are closely scrutinizing where the lion's share of their revenue comes from and how it may be affected under new pay-for-performance models.
"The time for action is now, but providers are still stuck in the gap between payment systems. If they move too quickly, they end up alienating revenue on the fee-for-service side," said Mr. Whelan. "If they don't move quickly enough, they may find themselves carved out of networks due to narrow network deals, etc."
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