Creating Sustainable Business Models for Innovative Care Delivery

Innovative care delivery programs intended to improve quality and reduce costs need sustainable business models in order to last beyond the end of grants or other methods of time-limited funding. RAND researchers take a look at methods Massachusetts health plans and accountable care organizations are using.

Payers and providers using new payment methods to align financial incentives with quality improvement and cost reduction goals may be relying on grants or related funding methods to test pilots; however, these only provide time-limited support. These programs must have a sustainable business model if they are to last beyond the end of grant funding, according to a study from RAND Corporation.

The researchers used a sample of 7 health plans and 5 accountable care organizations (ACOs) in Massachusetts to identify paths to sustainability for innovate care delivery programs.

“Dynamics in the current environment suggest that innovation will likely be concentrated in health care delivery systems that are able to manage financial risk and that have experience and capacity in delivery innovation,” the authors wrote. “For providers seeking to innovate, the central challenge will be building the capacity to manage financial risk in global payment arrangements and to support improvements in care.”

Among the health plans and ACOs studied, the most common short-term objective of innovative care delivery programs intended to improve quality and reduce costs was to improve the coordination of care for the highest-risk patients.

The 2 criteria most often used by study participants to assess innovative care delivery programs are scale and impact, which depend on the number of relevant and affected patients as well as the potential for improvement in quality and reductions in healthcare costs for the population.

In addition, the researchers found that while savings can be a potentially important factor when determining which care delivery program to invest in, the program does not have to demonstrate cost savings in a pilot prior to investment.

Study participants indicated that the healthcare payment environment still needs to shift farther from fee-for-service in order to meaningfully support care delivery innovation. Respondents also highlighted a lack of alignment across payers and care delivery programs. Lastly, they suggested a better understanding of the costs and effects of care delivery transformation is still needed.

“We found widespread interest and activity in testing new care delivery models to improve health care quality and reduce costs in Massachusetts,” the authors concluded. “However, the environment presents great uncertainty for the sustainability of these programs.”