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Provider-Sponsored Plans Seen as Key to Health Care Reform

Integrated health systems have best shot at managing care, expert says

As health care reform continues to evolve, provider-sponsored health plans have emerged as an effective way to manage care and control costs, according to Paul Keckley, PhD, managing director for the Navigant Center for Healthcare Research and Policy Analysis.

In a recent blog post, Keckley explains that health reform will be all about cost containment––and perhaps the best way to achieve that goal, he says, is to marry health care financing and delivery.

Keckley identifies three “stark realities” for those who deliver health services to patients, (e.g., hospitals, physicians, post-acute providers, laboratories, diagnostic clinics, and allied health professionals):

  • The burden to reduce costs will ultimately fall on providers.

Keckley attributes the snowballing cost spiral to the compounded effect of medical inflation, wage increases among the health care workforce, increased utilization, overtreatment, unhealthy lifestyles, and a system of care in the U.S. “where each sector blames the other for inefficiency and suboptimal results.” While the cost problem in health care is not entirely the fault of providers, it is largely their problem to solve, Keckley says. Changing how providers do their work is the key to cost containment.

  • The major purchasers of health care services—Medicare, Medicaid, large employers, and private insurers—are shifting the financial (insurance) risk to providers.

Purchasers want providers to bear the risk for outcomes, safety and the total costs of care, Keckley observes. Thus, providers recognize that their clinical skills are not enough: they must be as proficient at diagnosis, treatment, and care coordination as they are at enrollment and eligibility, benefit and network design, premium pricing, claims adjudication, medical management, and member services.

  • Relationships with insurers are changing. 

The traditional model––in which providers contract with multiple insurers on an annual basis—is problematic and costly, in Keckley’s opinion. In the old model, outside plans determined which providers treated their members, and how––but that has changed, he says. Many health systems now think sponsorship of their own health plan is essential.

Thus, the current challenge for most providers is transitioning from a delivery system focused on care for patients to an integrated system of health focused on the entire population.

“In these systems of health, sponsorship of a health plan plays a vital role,” Keckley says. “It provides the financial structure through which care can be coordinated and providers in the system held accountable for managing costs. It provides the vehicle through which capital commitments and operational focus can be directed to community health and stronger primary care. It affords physicians and care givers access to data about costs, quality, and care coordination necessary to measure and improve their own performance. It forces hospital, outpatient, and ancillary costs to be low so as to allow the plan’s premiums to be competitive. And it adds the functions, capabilities, and infrastructure necessary for providers to assume financial risk for the work they do, recognizing that the transition from volume to value is well underway.”

It’s not a new concept, Keckley concedes. For years, major organizations, such as Kaiser and Geisinger, have successfully operated in the dual roles of delivery and financing.

Sources: Navigant Healthcare; December 14, 2015; and FierceHealthcare; December 15, 2015.

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