The premise of value-based contracting is that by changing incentives, health care organizations will help unhealthy people get healthy and healthy people stay that way. The change most value-based organizations are undertaking that stands to make the most difference in the health of patients is population health management (PHM).
Population health management is a proactive, patient-centric approach to health care that engages patients and physicians in prevention, wellness, care coordination, and care management with the goals of improving outcomes and reducing costs.
Population health management isn’t a buzzword that’s more hype than substance. For years, payers have been investing in targeted PHM programs, with mixed results. Using remote care management teams and claims data that was at least 60 days old, their programs operated from a limited perspective. The programs typically targeted specific conditions using remote outreach models that were not integrated with the physician.
But in value-based models, provider organizations take responsibility for the health and overall costs of a defined population. Physician-led population health management can work better not only because they have face-to-face access to patients, but also because they have access to real-time patient data. These advantages allow organizations to structure care teams led by physicians or care managers that can engage patients quicker and closer to the point of care.
High-risk populations are the most logical starting point for PHM programs. High-risk patients are often found to be the three-to-five percent of your population who drive the majority of your costs. Concentrating on managing the chronic conditions of such patients can yield impressive results.
For example, an Optum client—a hospital system in the southwest United States—engaged our care management services to help the top one-to-two percent of hospital utilizers among its employees and their dependents. One care manager handled a caseload of 75-100 patients per month, regularly meeting patients in their homes, during hospitalizations, and sometimes accompanying them to appointments. The care manager engaged patients’ primary care physician to facilitate care.
Self-reported data indicates that hospital utilization (admissions, re-admissions, and ER visits) among the studied population decreased by approximately 30 percent. Based on an average hospitalization cost of $13,000 in the service area, the hospital system believes the decrease in utilization amounts to a cost savings of about $1.5 million.
Cost containment another premise of value-based contracting. As demonstrated briefly above, PHM programs have the potential to impact both cost and quality for the better.
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