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Numerof Report: Population Health Is Inevitable, but Initiatives Have Stalled

Wallace Stephens
The fourth annual Numerof Survey Report outlined the evolution of population health management in the United States. The report found that while the population health management has been gaining momentum, initiatives toward adopting risk-based models have stalled. 
While population health management continues to gain momentum as a model for cutting healthcare costs and delivering better care, progress towards adoption of risk-based financial models has stalled, according to the fourth annual Numerof Survey Report.

“Whether it’s a change in regulation, customer base, competitive picture, or technology, all of those kinds of factors can require a change in a business model, and, if you look at healthcare, they are experiencing all of these changes at the same time. Any one of those would have been sufficient to require a business model change. All of them together are unprecedented,” said Michael Abrams, MA, co-founder and managing partner of Numerof & Associates, in an interview with The American Journal of Managed Care®.

Numerof & Associates partnered with David Nash, MD, dean of the Jefferson College of Population Health, to conduct the company’s fourth annual Numerof Survey Report to track the evolution of population health management in the United States. The online survey was designed to assess progress, challenges, and success factors in healthcare delivery organizations’ transition to population health management. The target audience were physician group executives or vice presidents and individuals working in US provider organizations including healthcare systems, hospitals, and academic medical centers.

Population health is centered around managing the health of a population by providing the most significant intervention for individual at the most cost-effective point along the continuum of care. The goals of the model include improving care coordination, enhancing health and wellness, eliminating disparities, and increasing transparency and accountability. An ideal population health model would reduce acute care utilization, lower total healthcare costs, and change the perception that healthcare is only for managing sickness but can instead help individuals live healthier lives.

Expressing the need for a shift in accountability, Abrams said, “I think that payers need to push providers to take more accountability for the outcomes. Providers are the ones in every other aspect of commerce. Providers of the service are generally accountable for the satisfaction of the recipient of the product or the service that sold. That’s what drives improvement in cost and quality. I think what payers can do is to push for contracts that make providers more accountable.”

The lack of significant progress made by healthcare systems toward accepting a population health model can be attributed to multiple factors. Hospital administrators have paused efforts until the government decides what course of action it will take. Executives that engaged in pilot programs with positive results experienced problems scaling their initiatives. Providers continue to struggle to manage variation in cost and quality at the individual physician level. Other obstacles include developing the right systems, platforms, and benchmarks to facilitate the shift to this new model, determining the timing of the transition, and creating a culture that embraces real change.

“Right now, what we have are a number of interesting and effective innovations, but it’s still the exception, not the rule," Abrams explained. "Population health management tends to be pilot programs that are topics for showcasing rather than routine parts of the operation in every healthcare delivery organization. That’s where we need to get to.”

The Numerof Report was derived from an online survey of C-suite healthcare executives and included responses from open-ended interviews. A total of 528 surveys were submitted from stand-alone facilities, small systems, both for-profit and not-for-profit integrated delivery networks, academic and community facilities, and government institutions.

While there are many definitions of population health, all are related to the goal of improving health outcomes and lowering costs. Population health has been considered a potential solution to address the issues encompassing the current healthcare system., Abrams defined population health management as, “ a plan of action that’s focused on a specific segment of patients with the goal of improving their health and lowering the cost of care. You can define that segment of patients in pretty much any way you want but you do have to have a segment of people in mind that have something in common.”

The majority of executives, 99% in total, agreed that population health is the future. A combined 94% of respondents rated it between somewhat and extremely important.
  • 12% rated it moderately important
  • 42% rated it very important
  • 40% rated it critically important
Nearly all respondents, 99%, said the reason they were considering a population health model was to better control clinical costs, quality, and outcomes, 96% were considering it to capture performance-based financial incentives, and 94% said a change is necessary as fee-for-service won’t last forever.

“Thirty years of fee-for-service payments that have not been connected to outcomes has created a structure in which the incentives are not aligned with efficient use of people and material resources to maximize outcomes for a patient. What really needs to happen is to realign those incentives and to restructure supporting processes in order to lower the cost of doing business and create better results,” Abrams stated.

Almost 25% of respondents said the most significant barrier to the implementation of population health is the threat of financial loss. Other concerns that were raised included difficulty in changing organizational culture, issues with information technology, tracking, management, and uncertainty about when to make a change from the current model to a risk-based model.

Respondents were concerned about their organization’s ability to manage cost and quality of care as only 60% reported they were at least moderately prepared to face the challenge. Less than 50% of respondents said their organizations had a process to identify outliers in cost and quality at the physician level, and less than 40% said compensation was linked to cost and quality-performance for some clinicians.

The threat of financial loss will remain a barrier until organizations build experience implementing value-based contracts where they see both returns on investments and improved patient outcomes. While population management has generated significant attention, little effort has been made to track progress made toward value-based models of care.

“Value-based care is typically intended to mean the linkage of outcomes with payment. It means that the payment to whomever bears some relationship to the outcomes. These 2 concepts, these 2 ways of doing business, they’re both focused on the same goal but they have different means. They’re both focused on improving the quality of care and lowering the cost,” Abrams remarked.

The majority of respondents said that only 10% or less of their revenue came from risk-based contracts. They also reported that estimates of future revenue at-risk were lower than projected, suggesting that the healthcare industry predicts slower adoption of population health models. Almost all respondents said they anticipate their organization will have revenue in models with upside gain or downside risk within 2 years. Of those who said they had experience with alternative payment contracts, 31% didn’t risk actual loss. They received a bonus if targets were achieved but didn’t suffer any financial drawbacks.

“Most healthcare institutions do not want to take on risk. Historically they haven’t been in the risk business, they’ve been in the service-providing business. They do more, they make more. When you add risk based contracting to the picture, then they’re not accountable for the outcomes. It’s understandable since they’re never done this before, that it’s not something that most of them are anxious to do, and as long as they have the option of operating in a model they’ve always used, when they provide more services they make more money, it’s understandable that they would rather continue in the model that they already know,” Abrams explained.

Larger hospitals or health systems were found to take on risk-based contracts at higher rates than those which were smaller.
  • 90% of large hospitals or health systems said they had at least 1 at-risk contract
  • 76% of mid-sized hospitals or health systems said they had at least 1 at-risk contract
  • 71% of small hospitals or health systems said they had at least 1 at-risk contract
Abrams stated, “Smaller hospitals are more reluctant to enter into risk-based contracts because the potential for financial loss, which is the number 1 concern of every healthcare organization, looms larger for a smaller institution.”

“I think that we’re moving in the right direction. There are more examples of population health management innovation than there were 5 years ago," he said, but "payers and providers have been very slow to collaborate on programs to share in savings from population health management efforts. Population health management represents a different business model, a different way of looking at the mandates of healthcare delivery. Most organizations are not yet prepared to embrace it, despite the fact that as you saw in the survey, most of the executives across the industry accept the fact that it’s inevitable."

Reference

The State of Population Health: Fourth Annual Numerof Survey Report. 2019. http://nai-consulting.com/numerof-state-of-population-health-survey/. Accessed March 29, 2019

 
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