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Place your bets: How the DSRIP gamble can pay off for health care

It’s safe to say that state health planners and the high rollers of Las Vegas aren’t often mentioned in the same breath. But states are starting to place big, aggressive bets on the future of health care – in this case through Delivery System Reform Incentive Payment programs, or DSRIP.

Even in a health reform environment that favors disruptive strategies to cut costs and positively affect outcomes, DSRIP stands out. These programs support a broad network of Performing Provider Systems (PPS), a cross more or less between ACOs and integrated systems, to execute a comprehensive overhaul driven by tens of billions in federal and state funding.

DSRIP depends heavily on the cooperation of facilities and integration of systems that may previously have been competitors. Trust, transparency, and interdependence are critical to its success.

The challenges are considerable. States need to get a handle on their Medicaid costs and delivery strategies. Medicaid spending grew at an annual rate of 6.1 percent in 2013, to $449.4 billion — 15 percent of the total national health expenditure that year, according to the Centers for Medicare and Medicaid Services.

New York, with its nearly six million Medicaid recipients, is the seventh state to date to take the DSRIP plunge. Its program is ambitious. Out of 50 initial PPS, 25 are still standing across the state, comprising private and public hospitals, health care departments, even housing authorities and public transportation agencies.

The objective: reduce avoidable hospital admissions and trips to the emergency department. The goal is a 25-percent reduction in expenditures over five years, with $7.2 billion in incentive funding available to drive that level of change. It’s the kind of sprawling strategic effort that requires keen oversight and an ability to facilitate collaboration among multiple agencies to achieve desired outcomes.

Think of it as change management. Winning the market shift, for our clients in particular, and the industry more generally, means pulling different strategies, tactics, workforce training and re-deployment, and operating systems into a cohesive whole.

Steps participants can take to elevate the chances that DSRIP can deliver a winning formula are:

  • Get organized. The participants have to design governance models, assess opportunities across the provider network, and determine the impact on patients. The first two years will likely focus on developing the strategy and framework rather than quantifying savings and operational results.
  • Establish an effective project delivery and management system. Baselines and reporting methodologies will need to be set, as will timelines on deliverables. By the third year, the bill begins to come due. Did you ease ED volume and reduce costs by the proscribed amount? Did you shift resources to in-patient budgets? Did you hire those 10 case managers you said were required to raise productivity?
  • Align the new economic model. Accountability is a big part of the equation. It can impact how PPS are compensated, and whether the pay-off makes the risk worthwhile.
  • Leverage actionable data powered by HIT/HIE. The value of the evolving health care ecosystem can be measured by how well participants take advantage of growing amounts of key data. That’s especially important in this kind of collaborative network, where so many parts need to be seamlessly integrated.
  • Execute care delivery transformation. Assess current abilities and project scope, then design, build, and launch focused DSRIP programs capable of transforming the care of vulnerable populations.
  • Plan for changing workforce needs as the focus moves to prevention and outreach. This is as much a matter of shared vision and mutual benefit as it is a long-term planning goal. In New York, DSRIP could be a disruptive force among unionized workers at public hospitals, in particular. Local 1199 of the Service Employees International Union, which represents thousands of New York State hospital workers, is working with officials and public hospital executives to enact solutions that offset potential employee losses with training and related opportunities.

DSRIP ideally will be an exercise not just in operational change, but in genuine systemic accountability. If PPS aren’t hitting their marks on cost-saving and improving outcomes in ways that are quantifiable, they could risk billions in funding.

Is DSRIP a gamble? You bet it is. A certain amount of risk is inevitable in any undertaking of this size. But I’d wager the odds of achieving these aggressive objectives are much better than winning at blackjack in Vegas.

For more on delivery system reform, visit: Delivery system reform: Working together to improve health care.


Author bio

Scott joined Deloitte in 2010 and has over twenty five years of experience delivering results in the health care industry. He has served numerous health care clients as a consultant and has also served in executive/management roles in hospitals, a multi-specialty physician group, and a physician management services organization. He has specific expertise partnering with hospitals, health care systems, and physician practices on transformation and performance improvement work.