Nearly 60% of health systems plan to advance into risk-based Medicare Advantage models in 2022, according to a Guidehouse Center for Health Insights analysis of an executive survey conducted by the Healthcare Financial Management Association (HFMA). This equates to a 14% increase when compared to a June 2019 analysis.
The 2021 Risk-Based Healthcare Market Trends survey of more than 100 provider chief financial officers and finance and managed care executives also found that health systems have diversified their risk-based payment strategy with a broader array of business lines, including commercial employer-based risk contracts (52%), Medicare alternative payment models (49%), managed Medicaid (36%), and direct-to-employer partnerships (33%), in addition to Medicare Advantage.
"We're seeing increased interest from providers to own the premium dollar through risk-based arrangements," said Richard Bajner, partner at Guidehouse. "On the other hand, large payers have been more aggressive in building and even investing directly in primary care assets to gain control over the flow of care and better manage services delivered to members, compounding the need for payers and providers to align closely on market strategies. These moves have led health systems to gravitate toward programs more favorable for risk-based collaborations—or payvider models — such as Medicare Advantage, managed Medicaid, and self-insured models."
In fact, the survey found that strategic partnerships with payers is the No. 1 external challenge (50%) for providers. Additionally, survey respondents cited vertically integrated health plans (52%) as the top market disruptor creating the greatest barriers to success. Coming in second were consumer-facing organizations, such as CVS and Amazon (17%).
"While traditional payer and provider relationships have taken a hit in this evolving market, the ones that we see working are payvider models that create value for both entities," said Travis Sherman, director at Guidehouse. "The one-size-fits-all, 'I-win-you-lose' approach is no longer a good business model. Industry disruption has created new opportunities for health systems to rethink the structure of their payer and provider partnerships, reassess their markets for new entrants with a willingness to innovate together, and readjust their network strategy to align with where their market is going."
Key to knowing which organizations to partner with and achieving meaningful results is using data to both understand local markets and better manage care. However, provider respondents to the survey cited data integrity, reporting, and the cost of technology (36%) as the No. 1 internal challenge in pursuing increased levels of risk. While half of respondents are building these capabilities in-house, 30% are partnering with payers to support risk-based capabilities and 21% are outsourcing services to a third-party organization.
Survey findings were first revealed during Guidehouse's Fall 2021 Clinical Integration Summit, where industry leaders shared insights on the state of disruption in healthcare, how the disrupted can become disruptors, and ways to build momentum for innovation. During the Summit, half of hospital participants said their biggest opportunity was to improve infrastructure to drive performance.
"I attribute our success to using leadership influence to support deployment and having a robust analytics capability that helps us deeply understand the problems we are trying to solve," said Bruce Muma, MD, CEO of Henry Ford Physician Network during the Summit. Henry Ford achieved nearly $4 million in shared savings in its first year as a Next Generation ACO, and more than $20 million in savings through 2019.
With survey results suggesting that 43% of health system leaders are unsure they will meet budget in 2021, reassessing investments, partnerships, and business models for 2022 has become more important than ever.
"Unfortunately, many well-intentioned payer and provider partnerships never come to fruition due to challenges with operationalizing and implementing risk-based models," said Nicole Fetter, MD, director at Guidehouse. "Organizational commitment, a cohesive governance structure, and adequate investment in a strong data-driven infrastructure is required to overcome these obstacles and achieve success."
The survey analysis was conducted July-August 2021 and produced by the Guidehouse Center for Health Insights, which provides a complete view of healthcare payment, operational, and consumer disruption insights and solutions.
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