The risks and rewards of value-based contracting

In the new Optum white paper, “The speed of transformation: Preparing for the payment models of tomorrow,” we discuss the drivers that are pushing the move to value-based reimbursement. One area that will see some of the greatest — and fastest — changes is contracting with payers.

Moving to fee-for-value creates significant financial risk for organizations if they are not prepared to systematically change the way they do business. Value-based care catalyzes fundamental change in provider organizations’ operating economics, affecting revenue sources, profit drivers and profit centers. Financial success in value-based care can only be achieved if organizations shift from managing operating costs to reducing the total cost of delivery for the patient.

But how do value-based organizations achieve enough savings to cover costs, finance transformation and reward providers? You’ll need a carefully plotted roadmap to stay in the black. Transitioning from volume-to-value can’t be done with the flip of a switch. Activities must be carefully sequenced so that patient volumes and care management efforts match current payer mix and provider strategy. In other words, maximize your fee-for-service contracts while bringing fee-for-value capabilities online.

Investments need to be made in optimizing care protocols, optimizing relationships with partners and optimizing information technology.

  • Optimize care protocols — Care protocols need to be transformed from generally reactive to generally proactive.
  • Optimize partner relationships — Physician incentives need to be structured to engage, drive and reward behavior that optimizes population health performance.
  • Optimize information technology — Clinical and financial transformation processes must be aligned to create and capture the value of the investments.

Making the right changes in value-based contracting requires the right combination of people, processes and technology. That means providing the right resources in the right setting for each patient. Though the greatest contractual returns come via physicians, organizations can see revenue gains from lower-level contributors such as nurse practitioners, social workers and health coaches.

And, like many solutions, it can come down to data and analytics to tell you what it all means. Knowledge can turn risk into financial opportunity. But the opposite is also true; if you’re acting on bad information, incomplete information or no information, then the organizations with the knowledge have the upper hand.

In our next post, we’ll discuss how to manage change in business operations and culture — in provider relations and in patient engagement.Game_changer1

You can download the full white paper, “The speed of transformation: Preparing for the payment models of tomorrow, for more information.

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