Fee-for-Service Model to a Sustainable Population Health Model

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According to Numerof and Schlosser (2022), healthcare executives must grasp that achieving proper population health requires a transformative shift from the outdated fee-for-service (FFS) model to an entirely new patient-centered, value-based care model. The unsustainability of FFS has been laid bare by staggering financial losses at major health systems, rural hospital closures, and overall economic distress exacerbated by the COVID-19 pandemic. At its core, FFS is provider-centric, with little accountability for outcomes across the complete care continuum. As highlighted in the Numerof & Associates 2022 State of Population Health Survey Report, COVID exposed FFS’ profound failure to address social determinants of health, leaving millions vulnerable. The pandemic also revealed FFS’ precariousness when procedure cancellations cut off revenue. Executives must accept that FFS’ days are numbered amid trends like growing government payer mix with lower reimbursements, private payer pushback on costs, and consumer cost-sharing through high-deductible plans (Numerof & Schlosser, 2022). A strategic pivot is critical.

The new value proposition must redefine healthcare as a market-driven service accountable for clinical and economic value across the care journey (Sharan et al., 2021). Organizations must proactively make the value case by transparently demonstrating quality outcomes and prudent costs. Simply operating without this consumer-focused, outcomes-driven mindset cedes ground to disruptive industry entrants. Achieving this transformation requires surmounting persistent barriers. Data deficits prevent quantifying outcomes for routine procedures. Clinical practice remains marred by unwarranted variation, with one study suggesting that one-third of medicine lacks evidence (Siwek, 2022). Physician engagement lags, with most organizations rating poorly on managing cost variation at the physician level.

Leading health systems recognize that developing care pathways, formally identifying cost/quality variance, incentivizing physicians on outcomes, and fostering accountability for value are essential (Agarwal et al., 2021). However, adoption remains suboptimal due to inertia and misaligned incentives entrenched in FFS. To truly advance population health - optimizing care while lowering overall costs - executives must courageously restructure operations and compensation around value-based, patient-centered principles (Chee et al., 2021). Investing in data capabilities to quantify outcomes, hardwiring evidence-based practices, empowering physicians as Cost/quality stewards, and aligning stakeholders around shared accountability is crucial (Fraze et al., 2022). Old habits die hard, yet persisting with FFS ensures healthcare’s “critical condition” worsens amid chronic disease burdens, physician burnout, and eroding public trust. Transitioning to an innovative population health model is vital for financial viability and restoring healthcare’s promise of maximizing health for communities.

Practical Strategies to Lessen the Burden

1.      Develop comprehensive data and analytics capabilities: Robust data infrastructure and analytics are crucial for population health management. Organizations must invest in data warehouses, interoperable electronic health records, and advanced analytics tools to stratify patient populations, identify care gaps, and measure outcomes (Gotz et al., 2022).

2.      Redesign care delivery around value-based care models: Moving away from volume-based payment requires redesigning care pathways, expanding care teams, leveraging telehealth/remote monitoring, and emphasizing preventive care and care coordination across the continuum (McWilliams et al., 2022).

3.      Align physician compensation and incentives: Transition physician compensation from productivity-based models to value-based arrangements that incentivize high-quality, cost-effective care. This could include shared savings, bundled payments, or population-based payments (Peiris et al., 2021).

4.      Foster clinical integration and care standardization: Develop evidence-based clinical pathways protocols and leverage clinical decision support systems to reduce unwarranted care variation. Promote interprofessional collaboration across acute and ambulatory settings (D’Aunno et al., 2022).

5.      Enhance patient engagement and self-management support: Provide patient portals, mobile apps, and remote monitoring tools. Offer health coaching, education, and social support to empower patients in self-care (Hong et al., 2022).

6.      Address social determinants of health: Screen for social needs and integrate social care into care delivery through partnerships with community-based organizations (Fraze et al., 2021).

7.      Pursue value-based payment models: Transition from fee-for-service to alternative payment models like bundled payments, shared savings, and capitation that align incentives for population health (Lewis et al., 2022).

8.      Foster a culture of value and continuous improvement: Visible leadership drives culture change, multidisciplinary teams focus on process improvement, and leveraging data/feedback loops is critical (Agarwal et al., 2021).

9.      Adapting to sustainable population health requires a multi-pronged approach, restructuring care delivery, financial incentives, technological capabilities, and institutional culture around value-based, patient-centric principles.

 

References:

Agarwal, R., Gupta, A., & Fifer, S. (2021). Reengineering clinical operations at the physician level. New England Journal of Medicine Catalyst. https://catalyst.nejm.org/doi/full/10.1056/CAT.21.0176

Chee, T. T., Ryan, A. M., Wasfy, J. H., & Borden, W. B. (2021). Current state of value-based care among physician practices. New England Journal of Medicine, 384(7), 633-643.

D’Aunno, T., Broffman, L., Spector, W., & Kumar, S. R. (2022). Integration of healthcare services across acute and ambulatory settings: An implementation science perspective. Healthcare, 10(3), 585.

Fraze, T. K., Jiang, H. J., & Burgess, J. F. (2021). Hospitals addressing population health: environmental characteristics, capability, and motivation. Population Health Management, 24(1), 103-110.

Fraze, T. K., Meyer, A. K., & Laugesen, M. J. (2022). Building foundations for population health management. Population Health Management. https://doi.org/10.1089/pop.2021.0284

Gotz, D., Rick, J., Mongan, J., Sair, A., & Marcus, S. C. (2022). Building the Bridge to Better Population Health. NAM Perspectives.

Hong, Y. R., Huo, J., & Antoun, J. (2022). Remote patient monitoring for better population health. Frontiers in Digital Health, 4.

Lewis, V. A., Fraze, T., Gold, M., & Bynum, J. P. W. (2022). Moving Actual Medicare Payment Policy Toward Rewarding Better Population-Based Health. JAMA Health Forum, 3(2), e215717.

McWilliams, J. M., Barnett, M. L., Muhlestein, D., & Roberts, E. T. (2022). Investing in comprehensive care models to achieve better population health. NEJM Catalyst.

Numerof, R., & Schlosser, J. (2022). Bringing Value to Healthcare: Practical Steps for Putting Value Over Volume. Taylor & Francis.

Peiris, D., Peng, Y., Lassere, M., Certified, N. P., & Usherwood, T. (2021). Systematic review of value-based payment models’ impact on population health outcomes. BMJ Open, 11(6), e044840.

Sharan, A. D., Schroeder, A., Isbell, B., Arnold, J., Falernino, T., Berkelhammer, C., ... & Press, V. G. (2021). Shifting to value-based care models through health system integration. Advances in Therapy, 38(4), 1513-1525.

Siwek, J. (2022). One-third of medicine is unsupported by evidence. American Academy of Family Physicians. https://www.aafp.org/news/blogs/freshperspectives/entry/20220126fp-evidence.html

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