To understand it all, let’s refer to how the economics of healthcare have changed and continue to change.
Population Health Management Today
Cut to 21stcentury healthcare, where physicians are no longer compensated as much (adjusting for inflation) for each patient that they see. But, in addition to per patient fees, they are also paid for meeting a number of targets. Like much of the rest of the professional working world, they have been moved to a compensation structure consisting roughly of base pay (regular fees) and incentive compensation for meeting pre-defined targets. Here, the insurance companies and the government are now defining these targets and motivating physicians to adopt their practices to meet or exceed those targets. Those who do well at that also do well financially.
This is the Population Health Management model. To implement it properly, payers including insurers and the government must have masses of data and be able to analyze that data. But, these are often large organizations that have or can build those capabilities. On the other side, there are the providers – mainly physicians, physicians practice groups, and hospitals. Between them, few would have data management as a core competency. And even fewer considered it to be of value.
Which brings us to the new world of healthcare delivery where a major component of physician income is now incentive compensation. And it can be a big one! To get their incentive payouts, physicians must meet targets. There are two ways of going about it. First, they can just see patients and provide the best care that they know how to and hope that the numbers work out. Second, they can use data analytics to understand the incentives and align their practices to the goals that they now must meet.
That looks good in theory, but it’s historically a rare provider or provider organization with analytics capabilities. In fact, before this decade, few physicians had ever heard of data analytics. And among those that have, most are simply not prepared to use them to augment their Population Health Management.
For these providers to move into full-fledged, analytics-powered, optimized Population Care mode, a little prep and introspection is in order:
- What needs to be done (functional capabilities)?
- What organizational adjustments need to be made (infrastructure changes)?
Functional Capabilities for Optimized Population Health Management
- Segment the patient population. Provider organizations will need to break their total patient populations down into well-chosen subpopulations. Dividing the population into groups or suites based on chronic conditions will allow providers to target care opportunities.
- Risk assessment. Sophisticated models are being built that use a combination of health care claims costs for a patient, diagnostic codes (ICD-9, ICD-10), and national drug codes (NDC) to predict clinical risk. Physicians are trained to diagnose a medical problem and to treat it (and hopefully cure it). Understanding which existing factors produce the highest levels of risk will allow them to do that better.
- Support the clinical decisions. In a perfect world, physicians would know every detail about every patient and know exactly why and when each patient needs a care intervention. Historically, that information needed to be stored in the collective brains of the health practice. That’s just not possible. Data analytics will allow for performance management and systems of automated alerts.
- Track results. As the equation of balance shifts from volume to value, provider organizations will need to track that value as value will be represented by performance. Performance will be judged by comparing provider results to those of risk-adjusted national and regional benchmarks. Provider organizations will need to understand their strengths and areas for improvement and develop plans to improve patient value.
- Integrate data. No single physician can know every detail about each patient’s medical history. For his own record of care, he can look to see that piece of a patient’s history, but that may not be sufficient. The ability to share data with all relevant stakeholders and to coordinate care will improve the value proposition for the providers and the patients alike.
- Engage with patients. The historical method of treating patients has been to tell them what to do. It’s been an entirely one-way street. By sharing the decision-making process with patients, physicians will bring their patients into the solution. This engagement will indeed raise health awareness and consciousness among the patient populations.
Infrastructure Changes for Optimized Population Health Management
- Leadership buy-in. Leaders must be at the head of transformation not lagging it. They must set goals, communicate them regularly, and communicate progress toward those goals just as regularly. Leaders must move from being physician administrators to business leaders whose business happens to be healthcare delivery and management.
- Common goals. Some would call this a shared vision. Whatever we call it, health care business leaders and providers need to be united in it. They must see a common definition of patient value and together transform the delivery model to achieve that necessary value.
- Structure to support those goals. In the business world, it’s referred to as good governance. Once agreeing on those common goals and to guarantee acceptance of accountability, provider organizations must ensure that a structure exists that supports success rather than setting up for failure. Such a governance structure will need to include, at the very least, coordination of service, data analytics, and analytics reporting and understanding to support it.
- Live the value model. When an organization changes its business model, to succeed, it must live that new model. For most, this is a big change. Managing this change will require a culture that supports it. Strong leadership, good governance, and state-of-the-art health care information technology combined with an effective change management strategy will build the trust necessary to move to the new value-based model.