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Provider Strategies for Transition to Value-Based care

September 16, 2015

Value_driven_HealthcareIn years past, the healthcare industry focused on payment from patient volume; however, recent modifications (with ACA) have changed that focus to payment from value-based care. For this reason, hospitals need to engage physicians in cost containment measures. To balance service line operations and move toward greater profitability, physician engagement is essential. Once accomplished, improvement in overall operating margins will follow.

The world of the Accountable Care Organization (ACO) continues to expand

From the end of 2013 to the end of 2014, the number of public and private sector ACOs increased by 203%. During that same period, ACO covered lives increased from 13.6 million to 18.2 million, a jump of 34 percent. A report from the research marketing firm Parks Associates states that by 2017 more than 130 million lives will be covered by an ACO. In addition, at the most recent Accountable Care Organization Summit participants were informed that major insurers expect that within three to five years, most of their provider payments will be made via some kind of value-based contract.

With the rapid growth of value-based care, hospitals need to find ways to encourage physicians to embrace the ACO concept.

Financial incentives are only one of the facets driving physician behavior

According McKinsey & Company “Engaging Physicians to Transform Operational and Clinical Performance” study, there are four reasons that engaging physicians in performance transformation is challenging:

  1. The importance that hospitals and payers place on the utilization of physicians as the principal means of securing engagement totally disregards effective holistic approaches that incorporate multiple alignment strategies.
  2. The majority of physician employers are too dependent on using compensation as the mechanism to influence physicians’ behaviors.
  3. The limited understanding physicians have of the risk-based payment models, in conjunction with their inherent risk aversion, make accepting these approaches difficult; thus, hindering the possibility for an increase in higher-value care.
  4. Physicians become overwhelmed or feel as if they are not prepared to implement or accommodate changes. Additionally, they have a limited understanding of the ways their behavior influences inefficiency and waste.

The McKinsey & Company study states that, “health systems and health plans should develop a true capacity in physician engagement, which is much broader than, and does not necessarily include employment. Employing physicians is very costly, often fails to deliver the intended value and is not crucial to achieving physician engagement.” The report suggests the way in which physicians are engaged is a crucial aspect of driving change; more so than any contractual mechanism.”

Strategies to incite provider engagement

Because each association is different, a one-size-fits-all approach is not feasible. However, there is a variety of strategies an organization can embody to incite physician engagement.

Communication is key in developing a plan for reducing costs while improving quality

The hospital and physicians must work together to create a feasible plan to accomplish their goals. Give physicians the opportunity to express their concerns; develop a strong relationship with your physicians by addressing these concerns. Once your physicians trust you, they will be more enthusiastic about moving forward with quality improvement and cost reduction strategies.

Should there be issues involving strained relationships, schedule private meetings with these physicians to discuss the issues presenting challenges, barriers that need to be overcome and possible solutions.

Administrative assistance to achieve a successful transition

Implementation should include providing administrative support, quality training programs to ensure meaningful improvement, as well as data analytics and reporting.

Physicians need to assist with controlling costs

Technological advancements combined with physician engagement strategies gives providers the ability to gain the upper hand in cost management. Many providers find that when they include physicians in the monitoring of costs related to the devices and supplies they use, unexpected savings result.

Offer physicians data supporting behavior changes

When the time comes for physicians to make tough decisions, data are a significant component in helping them decide what action offers the most benefit to the hospital and their particular department. As the specifics of healthcare reform continue to become evident, each organization’s supply chain management team will be key in driving finance and offering substantial data to suggest various ways the organization can save money with the use of a variety of products.

Success in the implementation of value-based purchasing is reliant upon each physician’s commitment to the transformation. Physicians are the hands-on providers and as such need to become pro-active in eliminating unneeded care and improving the coordination of care.


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