Preparing for Risk Based Contracts

Preparing for Risk Based Contracts

Preparing for Risk Based Contracts

Preparing for Risk Based Contracts

Preparing for Risk Based Contracts

Every group in the organization will be affected by Value Based Contracting. The Board, Senior Leadership, Payor Relations, Finance, Compliance, and the Providers. According to national surveys, most organizations are not confident about their organizations readiness to enter into risk based contracts. We have all been in a Fee for Service world for such a long time that any other financial relationship seems like a brave new world, because it is. A Clinically Integrated Network whose focus is lives on the hospital systems health plan, allows the system and its providers to “Walk before we Run”.

Not all Risk is the same

In Fee for Service there is still risk, usually around quality metrics. In the new risk based arrangements the risk can be considerable, including a fully capitated risk contracts. If not well managed the downside risk can be catastrophic. Every part of the organization needs to understand the contract specifics and the physicians in particular should be able to give a full accounting of the contracts. Like any athletic team, the players have to understand the play. If they don’t, the team doesn’t execute. A Clinically Integrated Network which manages the employees and their dependents is a much lower risk engagement, with a big upside. The organization, and especially the provider network learns how to succeed in the Value arena. The next step to risk based contracts isn’t such a big step.

How to Prepare for Risk

There is no shortage of advice on how hospital systems prepare for risk. A common theme seems to be three areas of preparation. First, a Strategic Alignment of Stakeholders. Second, some recommend a separate business unit to manage risk based contracts.  Third is Analytics and Care Redesign.

Physicians are not great at “taking orders”. You could make a pretty good argument that they went to Medical School because they don’t like taking orders. If the Medical Leadership makes a good case for why the docs need to aim for these metrics, and change a process or two, as long as it improves the care of the patient, the clinicians will  usually run the play. Most of the time though, most physicians don’t know what the contract calls for, let alone why. Their clinical life is a hurricane of information coming from every direction. It is exceedingly difficult to get and hold their attention for very long. Yet they are the team on the field, more importantly, your team on the field. Aligning them takes a dedicated communication strategy, not FTE’s. Your organization has an exceptionally well trained, humanitarian work force delivering all this compassionate, excellent care. Make the most of them.

This new risk environment will necessitate some changes in the way the business group operates. To establish a separate group initially may not be necessary. A Clinically Integrated Network should provide the accounting and integration with your third party payor(s), and the claims environment. There are a great many vendors selling all manner of analytic capabilities. Most of the functionality your organization already possesses. It’s a question of how does it “connect”. The connections can be data connections, but more importantly are leadership connections-how does your organization learn from the data you are already collecting. You already have the infrastructure in place.

Health Systems are living breathing business units that deliver healthcare, employ exceptionally talented and dedicated people. New business units or adding more employees, especially at the beginning of the journey to value, is probably not necessary. The organizational change will happen as the journey progresses.