Population health adoption is proceeding steadily, with providers exploring risk-based models and receiving increasing risk-based net patient revenue.
Healthcare providers are continuing a slow-but-steady embrace of population health management, with the majority of providers either involved in formal programs or pilots.
For example, a combined 75% of respondents in our 2017 HealthLeaders Media Population Health Survey say that they are either fully committed and underway or have an experimental or pilot program underway for managing the overall health of a defined population, nearly the same response as in last year's survey (76%).
And while the percentage of respondents saying that they are fully committed and underway (53%) is up six percentage points and participation in experimental or pilot programs (22%) is down seven points, these modest changes in response are within the survey's margin of error.
But, as we delve further into the population health management story, survey results show increasing momentum in risk-based population health revenue.
For example, 40% of respondents say that 25% or more of their organization's net patient revenue is attributed to risk-based population health management activities, up 18 percentage points from last year's survey.
Also encouraging is that fewer respondents say that this activity represents less than 10% of net patient revenue (34%), with results down 14 percentage points from 48%.
These results suggest that a greater share of respondents is taking on risk-based population health activities and making a deeper commitment.
Note that the use of risk-based financial models is a key indicator that population health management is occurring at an organization as providers face real consequences if they misjudge their capabilities or lack insight into the quality of their risk pool.
Up until now, providers have generally taken a cautious approach, but momentum appears to be building toward assuming greater risk.
Importance of financial resources
As with many aspects of healthcare, scale is critical to success. Provider organizations need sufficient financial resources to support innovation and investment in population health programs and infrastructure along multiple axes and over a long duration of time.
Further, population health programs also need a sufficient number of covered lives to help offset costs.
This necessity for scale is partly behind the correlation between organizational size and the level of commitment to population health management programs in our survey.
For example, a greater share of health systems (65%) than hospitals (45%) and physician organizations (34%) is fully committed and has programs underway, and based on net patient revenue, a greater share of large organizations (74%) than medium (50%) and small organizations (44%) is fully committed and underway. It takes both infrastructure and resources to make population health work.
Helen Macfie, PharmD, FABC, the lead advisor for this Intelligence Report, is chief transformation officer at MemorialCare Health System, a nonprofit integrated healthcare network with over 11,000 employees and 200 locations, including five hospitals, a medical group and an independent physician association, a health plan, and numerous outpatient health centers, imaging centers, and surgery centers throughout Orange and Los Angeles Counties.
She says that financial resources and subscriber scale are critical challenges for providers.
"To engage in managing the health of a population, you just have to accept that the financial and resource investment is for the long haul, and that the return—if there is one—generally won't be made in the same year. Also, while testing and innovating, try and do that as fast as you can, so that you don't have a decrement on your operations," says Macfie. "Much of this is being paid for out of our hospital operations and our ambulatory growth as we evolve to scale.
"At MemorialCare, we're up to about 259,000 covered lives, with some experts saying 200,000 is a tipping point. We had to put the infrastructure in place and then started to leverage that infrastructure more effectively. The more scale we gain in terms of the number of at-risk lives we're managing, the better we are able to perform. Taking on increased responsibility really forces you to look at the systems, processes, and infrastructure that you need to do this well."
Financial risk structures
Survey results for financial risk structures that organizations currently use in caring for an identified population indicate a continued preference for structures with shared risk, and a gradual trend toward assuming greater downside risk.
For example, shared savings programs with payers (48%) and bundled payments (47%) are the top two financial risk structures by a large margin, with direct contracting with employers (28%) rounding out the top three.
Note that the response for shared savings programs with payers is up five percentage points, bundled payments increased four percentage points, and direct contracting with employers is up six points over last year's survey.
More importantly, the response for shared profit and loss arrangements with payers (23%) is also up five percentage points from last year's survey (18%), an indication that respondents are gradually adopting risk-sharing financial models with downside risk.
However, respondents indicate that this trend is expected to accelerate over the coming years.
For example, while respondents cite that shared savings programs with payers (62%, up 14 percentage points), bundled payments (61%, also up 14 percentage points), and direct contracting with employers (46%, up 18 percentage points) will remain the top three financial risk structures their organizations use in caring for an identified population in three years, the biggest gain in response in three years is for shared profit and loss arrangements with payers (43%, up 20 percentage points).
This risk structure moves to fourth position on the list of responses, up from sixth currently.
The survey results are a clear indication that respondents expect to take on more financial risk in the next three years.
Note that the increase in response for joint venture with a health insurance company (33%, up 20 percentage points) is tied with shared profit and loss arrangements with payers for the biggest gain.
Macfie points out the importance of spreading the risks associated with population health program experimentation over multiple initiatives.
"One of the things that we've talked about is that, if we diversify our innovative ACO and bundled payment portfolio, it balances out over time. We might be taking a little bit of a hit on this one, and we have upside on that one. Meanwhile, we're investing in all this learning and infrastructure for the future to be more ready for what may come. So strategically it makes sense, but we are taking risk and more than we probably would normally; however, we believe it's a great strategy for the long haul."
Balanced approach
Survey responses indicate that respondent organizations are allocating resources and developing population health capabilities in a balanced manner across care delivery, infrastructure, and financial capabilities. This balanced approach has enabled a moderate amount of progress, but with no one capability standing out.
For example, 57% say that their level of strength is very strong (15%) or somewhat strong (42%) regarding overall preparation for population healthcare delivery changes; 54% say that their level of strength is very strong (15%) or somewhat strong (39%) for overall preparation of a population health organizational infrastructure; and 54% say that their level of strength is very strong (10%) or somewhat strong (44%) regarding overall preparation for population health financial changes. All three capabilities are at relative parity.
Viewed another way, the results also reveal that the level of weakness across the three aspects of population health development is also relatively equal.
Forty-seven percent say that their level of strength is very weak (10%) or somewhat weak (37%) for overall preparation of a population health organizational infrastructure; 45% say that their level of strength is very weak (11%) or somewhat weak (34%) regarding overall preparation for population health financial changes; and 43% say that their level of strength is very weak (8%) or somewhat weak (35%) regarding overall preparation for population healthcare delivery changes.
It is significant that nearly half of respondents say that their level of strength is very weak or somewhat weak for each of the three aspects of population health development. While progress has been made, there is still ample room for improvement.
Barriers to population health
Respondents say that the three biggest barriers to successfully deploying population health programs are engaging patients in their own care (47%); up-front funding for care management, IT, and infrastructure (44%); and aligning independent physicians/providers (40%).
Note that the response for engaging patients in their own care is up eight percentage points, and up-front funding for care management, IT, and infrastructure and aligning independent physicians/providers are both up two points compared with last year's survey.
The good news is the majority of providers are investing in solutions to remedy these barriers.
For example, respondents say that the top three patient engagement areas in which their organizations are investing in population health management are patient portals (78%), wellness- or condition-related outreach programs (69%), and patient access to medical records (63%).
It is worth noting that the top five responses for this survey question are all greater than 50%, an indication of broad-based investment in patient engagement.
Likewise, respondents indicate that they are making IT infrastructure capability investments that are directed toward population health management, with the top three areas being analytics using payer claims data (61%), and analytics using population data (56%) and data warehouses (56%) in a tie.
The results reveal a high level of respondent interest in applying analytics to population health management.
As mentioned earlier, the need for greater scale and resources when implementing population health programs is a key requirement.
Perhaps because of this need, our survey reveals a correlation between organizational size and investing in IT infrastructure capabilities that are directed toward population health management.
Based on net patient revenue, a greater share of large (76%) and medium organizations (74%) than small organizations (49%) mentions analytics using payer claims data; a greater share of large organizations (68%) than medium (50%) and small organizations (48%) cites analytics using population data; and a greater share of large organizations (82%) than medium (57%) and small organizations (43%) indicates data warehouses.
In fact, the correlation exists for all responses for this question, with the exception of "None" and "Other."
Macfie cautions that technology alone is not the answer, and stresses the importance of patient engagement. "My takeaway on this is, in addition to all this technology, the people part of care navigation is really important. You could have all these tools, but if you don't create the human connection with Mrs. Jones, you may not understand what's really causing her trouble today. These are just technology platforms, and they need to be linked with processes and workflow."
Care redesign
Care redesign is an essential element of population health management success, with the majority of respondents engaged in some form of this activity.
According to the survey, the leading delivery of care areas that have been redesigned with the intent of supporting population health management are care management with risk-based patient panels (58%), clinical programs organized by disease state (51%), and team-based care in patient-centered medical homes (43%).
As with other aspects of population health management, survey responses reveal that the use of technology in redesigned delivery of care is correlated with organizational size.
For example, based on net patient revenue, a greater share of large organizations (58%) than medium (41%) and small organizations (29%) mentions telemedicine, and a greater share of large (29%) and medium organizations (26%) than small organizations (18%) cites remote monitoring.
Note that respondents say that their organizations have achieved a high level of strength in those areas where they have redesigned the delivery of care with the intent of supporting population health management.
Combining responses for very strong and somewhat strong levels produces the following list: team-based care in patient-centered medical homes (82%), clinical programs organized by disease state (73%), care registries organized by disease state (72%), and care goals, incentives aligned across continuum (70%).
All responses but one—remote monitoring (45%)—have a response greater than 50%, indicating the level of progress respondents have made in redesigning care delivery for population health.
On the other hand, remote monitoring (55%) and telemedicine (44%) receive the top results for combined very weak and somewhat weak responses for level of strength, which might be an indication of their evolving role in population health management.
Triple aim goal
The survey provides a snapshot of the current state of population health competency by asking respondents about triple aim goals.
Respondents say that their organizations' level of strength for population health's triple aim goals is stronger for improving patient experience of care (79% very strong or somewhat strong combined, and only 21% very weak or somewhat weak combined) than improving the health of populations (53% very strong or somewhat strong combined, and 48% very weak or somewhat weak combined), and reducing the per capita cost of care (42% very strong or somewhat strong combined, and 58% very weak or somewhat weak combined).
The response for improving the patient experience of care is not surprising given the emphasis that providers and the Centers for Medicare & Medicaid Services are currently giving patient experience.
And the response for improving the health of populations is also encouraging, indicating that population health programs are producing improvements in outcomes.
However, the result for reducing the per capita cost of care indicates that lowering costs remains a challenge for many providers.
Macfie describes industry progress on population health this way: "Part of this is, as we get more informed, we learn that improving the health of populations is a longer-term goal. You don't actually know in year one what you've accomplished. You might know in year three or five if you've actually accomplished the triple aim, because it's a delayed response as far as health outcome statistics."
Jonathan Bees is a research analyst for HealthLeaders.