There’s no question value-based care is changing the health care industry landscape. But how prepared are health plan executives for the transformation already under way?
Put another way: what’s the smart bet for health plans in order to remain competitive, or even ahead of the curve, in an unpredictable health care environment?
To better understand current industry thinking, Deloitte conducted a new study of health plan leaders and how they are being impacted by value-based pressures and methodologies. The findings in our report, “Journey to value-based care: Insights and implications from Deloitte’s 2015 health plans executive interviews,” open a window into where health plans stand on their journey to value-base care.
I had anticipated something along the lines of a 50/50 split among respondents on whether they had hit their inflection point on VBC, in terms of having this as part of their strategy fundamentals. But nearly all respondents said they had reached that milepost, and were planning to make it a core piece of their future business models and market strategies. Health plans that we talked to said that value-based strategies were fundamental to everything they were planning for the future — products, services, contracts, network design, and marketing. They stressed that this is a ‘new way of life’ and it’s not a question of if, but of when and how.
To drive closer collaboration with providers and enable value based care, health plans need to develop meaningful, practicable solutions and resources with hospital and physician networks, to meet cost, data and service challenges. Historically, that relationship has been mostly transactional but many health plan leaders want collaboration platforms built on trust and common goals, and that promote more efficient business models.
But hurdles remain. Providers have been slow to adopt “true risk” value based care models, and for legitimate reasons. Many of them don’t yet have the capital capacity or operational capabilities to manage the “stick” – the potential downside risk. They may be willing to use the “carrot” (upside risk) as an on-ramp to design true risk (both downside or upside) capabilities. But concern over heavy financial burdens including investments tend to obscure their view.
One clear view that came out as part of these conversations is that the journey is essential, and should not be made alone. The path forward is likely to be best served by strong health plan / provider partnerships, as an important way to demonstrate long-term value. Collaboration in designing and implementing new care models can reduce costs and make often complex operational interactions more efficient.
Not all providers are strong candidates for such partnerships. The market is overcrowded and fragmented, with more than 5,500 hospitals and thousands of physician groups currently in operation across the United States. Many of them may not survive the next three years, let alone the next 10. Some will be incapable, financially or operationally, of pursuing a value based care course. Still others are likely to be absorbed by stronger local, regional or national networks. So health plan executives seeking to develop lasting and mutually beneficial provider partnerships need to do the strongest possible due diligence in selecting partners.
Transformation through data is another important milepost. The transition to value needs to involve broad standardization of clinical and claims data to support actionable insights. Plans and providers should work together to improve data collection and exchange. If they don’t, new and disruptive entrants may bite into their market share.
Over the next decade, the smart money is on health plans willing to make the right bet. Selecting insightful, high performing partners to drive market change, and who can help demonstrate value and facilitate market improvement over time, is likely to be a winning combination.