How has the external roadmap to value changed over the last year for providers?

As the momentum to value-based health care progresses, the focus of physicians and hospitals has shifted.  Last year many providers were waiting to see if the Supreme Court would uphold the Patient Protection Affordable Care Act (PPACA), what the outcomes of the elections would hold and whether cadence of value-based public and commercial programs would continue.   We all know the result – PPACA was upheld, President Obama was elected for a second term and there was almost a 200% increase in accountable care organizations (ACO) over the last year. 

In 2012 providers were taking a micro view of value-based care, focusing on developing relationships with commercial payers and targeting alignment with local physicians.  This was not a surprise as commercial payment is more lucrative than that from government-sponsored programs.  Providers focused on shared savings models that supported narrow network strategies and consolidation goals to ensure market share and protection of profitable revenue. Cynthia Kilroy

In the last year, however, most providers have shifted focus to government-sponsored programs. Of the current 428 ACOs, 60% are Medicare based, many states are moving to a managed Medicaid model and one million Dual Eligibles will be part of the Centers for Medicare & Medicaid Services (CMS) demonstrations project.  And it’s no wonder public programs are leading the way for many provider organizations – it represents over 50% of their market.    

Today, providers are thinking on a macro level about how they commercialize the investments they are making in value-based capabilities.  Providers are evaluating the impact of all populations (Medicare, Medicaid, Commercial, Exchanges, Duals) on their short- and long-term strategies and capabilities. 

  • How will the flow of funds change?
  • How will the market change with the reform?
  • When should the organization invest in capabilities?
  • What are the investments the organization needs to make?
  • When should the organization implement new care models and capabilities? 
  • What market segments should they target and when?

In addition to developing a global strategy across markets, providers’ external view has moved not just to consolidation – buying providers – but to regional collaborations with hospitals and physicians groups.  The goal of the regional collaboration is to create scale, including aggregating membership across markets and aggregating investments in the capabilities required to manage care under value-based agreements. 

Both of these external facing strategies will offer providers a better chance of success in changing the delivery system.


Cynthia Kilroy, Sr. Vice President, Provider Strategic Initiatives, Optum

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