Risky business for providers: Planning for financial realities and capacity downturns

Ultimately, the financial side and the clinical side of the ACO equation need to be in balance. Adjusting to the financial realities of value-based contracting is essential. Therefore, our fourth risk-bearing action for provider organizations is financial and capacity planning.

Focus first on the “low-hanging fruit.” We often counsel ACOs and other provider organizations with value-based contracts to focus on the three-to-five percent of the population that drives 60 percent of costs. This group is relatively simple to identify, and care coordination can make a significant difference in the management of their chronic issues. Lowering costs associated with their care by even five percent will save significant dollars.

Over the long-term, organizations can focus on internal aspects of improvement, such as stimulating utilization of generic prescriptions, reducing waste in care, and reducing technology variation, for example. Miles Snowden, MD, MPH, CEBS Chief Medical Officer, OptumHealth

The elephant in the room, especially for facilities, is inpatient utilization. Organizations need to plan for what to do when inpatient volume begins to decrease. Hartford HealthCare is in the early stages of determining what facilities and departments within its system will be most impacted as utilization drops. And it is preparing by getting leaner.

“It is unclear whether all hospitals or only some grow within the system and which ones shrink. Do they all lose volume?” said James Cardon, MD, executive vice president and chief clinical integration officer for Hartford HealthCare. “I think there is no question that there’s a sense that volumes are going to drop. What we need to do is figure out the essential care provided by the hospitals and become more cost-efficient than anybody else.”


“Risky Business” previous posts:


Miles Snowden, MD

One thought on “Risky business for providers: Planning for financial realities and capacity downturns

  1. Great article, and I appreciate your comment about the “low-hanging fruit”. For this group, in particular, the seeming redundancy of services (multiple physicians) and duplication of meds, etc. create any number of ways in which savings can be realized and care, in general, significantly improved. These patients, especially, would greatly benefit from someone over-seeing and coordinating various plans of care, visits, orders and the like. A classic case of, when less is actually more.

Leave a Reply