Unlocking the value of clinically integrated networks

There are a number of strategic reasons for establishing a clinically integrated network (CIN), but there is only one that offers a path to sustainability.

That reason is to provide a competitive vehicle for contracts with payers and employers that would otherwise be unavailable because of legal constraints. Indeed, CINs that have no contracts and covered lives can’t generate a return with which to invest and incentivize continued participation and are ultimately doomed to failure. Some health systems start with their own employee health benefit plan as the initial focus, and that’s fine as a beginning. But CINs that go no further will have difficulty sustaining clinician interest. So, it’s crucial that health systems recognize that if they don’t set their sights on creating a commercially viable entity, they shouldn’t take the CIN trip.

As for the approximately 500 CINs already in existence across the country, their health system sponsors need a clear-eyed assessment of their potential for truly delivering better care at lower cost. And based on that assessment, they need to be prepared to take action to close the gaps they find.

Hospitals and systems have typically been the driving force and largest investor in creating the governance structures, performance improvement processes, and information systems required to qualify an organization as a CIN.

But it’s one thing to meet the standards required of a CIN, and another to ensure they are improving health outcomes and lowering costs for target populations. Despite major investments in time, energy, political capital, and money spent on information technology and analytic platforms, many CINs are falling short - on lowering the cost of care and improving quality metrics, on delivering the benefits promised to participating physicians, and on enabling systems take on risk and compete for contracts with payers and employers. At the same time, competitive and margin pressures are forcing systems to scrutinize returns on all major investments, including those that they’ve made in standing up and operating their clinically integrated networks.

Contributors to sub-optimal CIN performance

Too often, CINs are viewed as “just another delivery vehicle” as opposed to a strategic asset that, effectively managed and positioned, can be a powerful differentiator with payers and employers. Despite the investment in EHRs, evidence-based care protocols, and performance improvement processes and resources, there is still excessive variation in access, utilization and clinical practice that negatively impacts outcomes and increases costs. Many CINs also struggle to establish the risk stratification and predictive analytics capabilities required to cost-effectively manage the health of their patient populations.

Administrative and physician leaders are often reluctant to hold outlier performers accountable for their actions, rendering even the most sophisticated EHRs and data reporting tools ineffective. Many systems, even those with high performing CINs, lack the ability to translate the performance of their CINs into value claims that competitively position them with payers and employers.

Realizing your CIN’s full potential

Healthcare systems can take steps to unlock the value of their CIN by focusing on six key dimensions of CIN performance. And since policy, reimbursement, and the competitive environment is dynamically changing, it’s important that even systems with high performing CINs periodically revisit these focus areas to ensure investments are achieving the desired returns.

1. Strategic alignment: Ensure CIN performance goals and growth strategies are tightly aligned with system-level strategic goals and objectives, particularly as they relate to value-based care and contracting strategies
2. Provider mix: Ensure the mix of specialists and primary care physicians meets the needs of your target market, taking into account employed and independent physicians
3. Value case: Establish a compelling value case for how the CIN benefits aligned physicians and their patient panels, with a goal of migrating a higher percentage of their patients to your CIN
4. Infrastructure: Ensure CIN participation agreements, governance, and performance management processes meaningfully align physician behavior with your CIN goals and objectives
5. Performance management: Develop performance management capabilities and processes required to manage variation in cost and quality and enhance care coordination in specific therapeutic areas in order to achieve meaningful results that are repeatable and scalable
6. Commercialization: Fully leverage strong cost and quality performance in payer negotiations and integrated DTE offerings.

Moving forward

The CIN structure provides a unique opportunity; it enables its members – which can include acute care organizations, employed and independent physicians - to bargain collectively with payers or employers to cover their defined populations. This capability is likely to grow more important with time.

All indications are that payers will continue to move toward value-based contracts, although the pace may vary from market to market. That means a growing apetite for alternative delivery structures with superior cost and outcome profiles. In a healthcare landscape that grows more constrained each day, provider organizations can’t afford to ignore this strategic opportunity. A CIN that can actually deliver better care at lower cost can open the door to new revenues at a critical time – but it’s only an option if your CIN can do the job. Building that infrastructure must be your starting point.

Health systems without an effective CIN will be squeezed out of the game. If you’ve built a CIN, it’s important to maximize its potential. Are you on the right course?

Michael Abrams, MA is Managing Partner and Gordon Phillips, MPS is a Consultant at Numerof & Associates, Inc. (Numerof). Numerof is a strategic management consulting firm focused on organizations in dynamic, rapidly changing industries. We bring a unique cross-disciplinary approach to a broad range of engagements designed to sharpen strategic focus, increase revenues, reduce costs, and enhance customer value. For more information, visit our website at www.nai-consulting.com.

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