Hospitals can build all the infrastructure they want to try to deliver health care in a value-based fashion, but none of it really matters without strong leadership and governance to shepherd organizations through this time of change.

That's one of the main messages from a recently released report by consulting firm Kaufman Hall and the Health Research & Educational Trust. Titled "Value-Based Contracting," the piece provides a primer to hospitals and health systems looking to get serious about moving away from just tallying each sick visit, and toward actively managing the health of their entire patient population.

Doing so, of course, isn't going to be easy (the authors predict that it could take as many as 10 years to move to this new model). But leadership can go a long way toward making the transition successful, Andrew Cohen, vice president of Kaufman Hall, told me by phone last week.

"Just because you build it doesn't mean they will come, and just because you build it doesn't mean you'll be successful in running it. This is pretty complex stuff that requires a tremendous amount of effort and change, and we can't underscore enough the importance of what those investments are going to be, and the governance required to truly change behavior," Cohen says.

Along with solid leadership and governance, the foundational requirements for moving to a value-based approach also include shared goals and incentives, along with a value-focused mindset throughout the entire organization, according to the report. A good place to start is by figuring out your hospital's service area and its needs, deciding what piece of the delivery puzzle you want to be, and determining the feasibility of your desired state.

Questions to mull over include: In what types of arrangements can we or should we participate? How much and what types of risk can we take on? How quickly should we move toward value-based contracting, and how can we "mind the gap" during the transition? Taking measured steps can help increase success, but don't wait too long to take on risk, or your market may leave you behind. Hospitals shouldn't be afraid to approach insurers about signing value-based contracts, Cohen says.

"You don't have to wait necessarily for the payers to come to you," he says. "There are opportunities now for providers, hospitals and health systems to formulate a more proactive strategy and go to the market and say, ‘These are the skills and capabilities that we're building, and we want to work with you collaboratively to develop reimbursement methodologies that line up with this new way of delivering care.' "

Key factors of success that any hospital or health system "must have," according to the report, include physician engagement, transparency and accountability, and performance measurement and improvement. Some, such as Kaiser Permanente out in California, have been succeeding at this for years, but Cohen believes the rest of the industry can eventually get there within the next decade.

"We don't think the 10-year window is an unrealistic one at all," he says. "Some markets are going to move quicker than others where we have that greater stakeholder alignment, where we have greater skills and capabilities that have been developed, or greater experience. But certainly when we talk about the market generally and we look at the majority moving in this direction, we think that may even be a conservative estimate."

We've written and recorded a ton on this subject if you're looking for further information. Matthew Weinstock spoke with David Swieskowski, M.D., senior VP at Mercy Health in Iowa, about how his organization is openly courting insurers to become partners in risk-based contracting. And I chatted with health care governance expert James Orlikoff a couple of months ago about the new challenges that will emerge as hospitals move to the second curve.

What about you? Where is your hospital at with taking on value-based contracts? Does 10 years seem like a realistic timeframe for the entire industry? Share your experiences in the comment section below.