Cost Containment: A New Win-Win Opportunity in Provider-Payer Convergence?

By August 2, 2017Value Based Care

In the debate and conversation about healthcare costs control, we don’t hear much about controlling technology costs, nor how controlling technology costs may have positive ripple effects. What we do hear is that for providers and payers, technology costs continue to increase dramatically, as demonstrated again in a report from the Medical Group Management Association’s 2017 MGMA DataDive Cost and Revenue Survey.

Physician-owned healthcare practices report spending $2,000 to $4,000 per physician FTE more on IT operating expenses than they reported the previous year. This follows whopping increases in IT operating expenses of up to 70% since 2007, yet increases in technology investments and costs show no signs of abating. Value-based care, accountable care, and population health management (PHM) trends continue to introduce new technology requirements across the healthcare ecosystem.

This is a tough scenario against the backdrop of international reports that the U.S. once again spends more than twice as much on healthcare as other industrialized countries, yet continually ranks at the bottom with respect to quality and outcomes. Not to mention all eyes are on Washington as the Accountable Care Act replace/repeal debate continues with no signs of progress yet. No matter the outcome at the political level, the market is going to be pushed to do more with less – starting from a lagging position.

There may be some hope in the form of provider-payer convergence models driven by value-based health market incentives. Provider-payer convergence in the realm of PHM is a notable opportunity. Success requires collaboration among payers and providers across contracting, risk management, population and care management, direct services, and consumer engagement.

However, disparate technology systems present considerable collaboration challenges.  Providers and payers, ostensibly working toward common goals, are using very different data, metrics, financial, and clinical information. Not only is duplicative technology investment hugely and unnecessarily expensive – it causes expensive downstream population health and care management disconnects that also thwart quality and outcome objectives.

Why do both payers and providers spend money and resources toward the same end, particularly in a collaborative model?  The answer: They don’t have to and they shouldn’t.

Early in 2017, Chilmark Research introduced the notion of a shared platform environment for PHM as a rising solution to both healthcare technology and PHM quality and outcomes challenges. Early in the research cycle, there were very few market examples. However, current PHM research at mid-year 2017 suggests that the collaborative platform model may have found its early adopters. At least 50% of the top PHM vendors with comprehensive solutions report existing and emerging examples of providers and payers using their solutions as collaborative platforms.

Of course, these initiatives are in early stages; most are executed for a limited use case, a specific population, or a “test” scenario. But all conversations show real promise of the shared platform environment to begin to tackle the cost and quality issues of disconnected and redundant platforms across provider and payer population health strategies.

Sure, challenges and hurdles exist. A shared platform between a provider organization and one payer does not solve the problem of the multiple platforms that would be needed for multiple payer relationships. And integration with health information exchange (HIE) and electronic medical record (EMR) initiatives is under assessment.

As national debates, new initiatives, and new regulations crash in waves across the U.S. healthcare industry, the collaborative platform model emerging from provider-payer convergence may provide unique and, as yet, unheralded improvements in industry technology acquisition and population management models.

Watch this space as Chilmark follows this trend in upcoming PHM, care management and reimbursement research. We hope you’ll share your stories and join the conversation at Chilmark’s Convergence conference this fall. 

Janice Young

Author Janice Young

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