As the number of high-deductible and high-premium plans has increased and access to affordable health care has decreased, health care consumers are finding themselves in a difficult position.
Consumers — particularly those who care as much, if not more, about cost and choice as they do about their well-being (we’ll call them “new consumers”) — may be avoiding traditional providers that bill insurance. Rather, they may seek alternative and integrative care, concierge medicine, and homeopathic and prevention services. Or they may simply avoid seeking treatment or postpone treatment to keep expenses down.
These trends, coupled with the stalled migration from inpatient to outpatient settings and declines in utilization, are putting hospitals in a difficult position. Health care organizations can no longer rely on case volume and savings achieved by moving care to more efficient outpatient settings.
Fortunately for hospitals, there is a way to address the unmet needs of the new consumers and, in the process, prepare for changes to the health care system and reimbursement models. It can be accomplished through affiliations: partnerships, either formal or informal, between organizations from within or outside the health care system.
Through affiliations, hospitals can move toward a population health model while expanding their scope of influence throughout the communities they serve. They can enter into affiliations that expand their access points while taking advantage of current payment structures. This can be accomplished without taking on the expense of providing care for which they will not yet receive reimbursement.
Risk of inaction
Hospitals often are not economically incentivized to pursue population health strategies. The movement toward value-based payment is advancing, but slowly, with most revenue still tied to fee-for-service payment. There can be little or no reimbursement (at this time) for hospitals providing population management services. As such, developing programs to cater to the needs of these new consumers is an expense hospitals may believe they want to avoid. While that may seem to be a viable strategy, there is a significant risk in taking this approach.
If hospitals fail to develop population health programs or put a halt to those programs already in place or in the planning stages, this may initially reduce some costs. However, it will hinder hospitals’ ability to effectively meet the needs — pertaining to both cost and care — of new consumers. That will not only be the case now but also in the likely not-so-distant future when reimbursement shifts from fee-for-service to value-based payment.
When the shift occurs, hospitals that chose to play the waiting game will have to build population health programs from scratch for patients who were not previously a priority. But meeting the needs of these consumers requires gaining an understanding of the different populations that are not having their needs met by the traditional health care system. That includes learning the diverse characteristics of these populations, including their environment, behavior and genes, that influence health care needs, desires and demands.
Assessment of health needs is not a simple process. Treating it as such in an attempt to rush population health program development would be not only an expensive proposition but one likely to result in programs rife with shortcomings, inefficiencies and waste.
There are many different affiliations hospitals can consider pursuing. In addition to more traditional ones — with physician groups and ambulatory surgery centers —hospitals should research the viability of less traditional affiliations for population health improvement efforts, including ones with community health centers, school districts, local public health departments, chambers of commerce and faith organizations.
For example, a hospital may pursue an affiliation with a community health provider such as a federally qualified health center. One reason for such an affiliation would be to expand the hospital’s ability to provide care for primary care patients in an environment where it is better reimbursed than if those patients were seen in hospital clinics.
As another example, a hospital may pursue an affiliation with a school district as a means to support efforts to offer and expand physical exams, screenings, and diagnosis and treatment of simple illnesses and minor injuries to pediatric patients. This would help reduce the unnecessary use of more expensive health care portals outside the school setting.
In the past, hospitals may have been driven to pursue affiliations as a means to increase patient volume. While that may still be a benefit of affiliating with outside organizations today, that should be not the primary motivating factor. In today’s health care environment, affiliations are most likely to help direct patients to the best sites for care and reimbursement, allowing hospitals to meet the needs of the new consumers through less costly approaches than current structures often provide.
This is a short-term move that is critical to a longer-term strategy for sustainability and success. When the time arrives for value-based care to become the dominant method of reimbursement, hospitals will be firmly positioned to make the transition and take advantage of the new payment structure.
Andrew Lasser, Dr.P.H., F.A.C.H.E., is the executive vice president of Avanza Healthcare Strategies in Austin, Texas.