Population Health Management is a Verb: Part III

PHM

By Joel French, CEO, SCI Solutions

Entire industries and market sectors have been either vanquished or transformed by technology and business model shifts. One only needs to think of Kodak, which dominated consumer photography for more than a century, only to see its business erode with the introduction of digital cameras. What should leaders do when they know years in advance that the entire way their organizations have operated to earn revenue for decades will be turned upside down? They have to question doing business as usual and consider if their resources are focused around the best priorities. 2016 will be a pivotal year for health systems as the pace of consolidation continues and reimbursement shifts from fee-for-service to value-based care requires a fundamental reordering of priorities.

Consumers with high-deductible health plans and narrowing insurance networks will fund a larger proportion of their care and will demand more convenience, choice and information from providers. They will begin to look like traditional retail shoppers. Multi-hospital health systems must benefit from their larger scale by centralizing functions like patient scheduling and revenue cycle management, while becoming easier to access by consumers and referring providers. Providers must wean spending on internally-focused electronic health records and pivot to more modern technologies that can help direct and manage clinically-appropriate and low cost utilization across populations, care episodes and sites of service.

Industry pundits, vendors and academics have turned their focus away from electronic health records (EHRs) to population health management (PHM) as the next frontier of growth and investment. Certain vendors seeking their next category of revenue growth have realized the Meaningful Use era that fueled product sales for years is now all but dead, leaving behind a blistering financial hangover for providers. Providers that purchased these EHRs have new software, but it is accompanied by software maintenance costs, substantially higher payroll for information technology employees, ongoing consulting fees to optimize their implementations, depreciation, opportunity costs and management distraction. When asked about usability, physician satisfaction or evidence of risk-adjusted returns on that spend, the answers are almost universally damning.

The very same vendors and consultants that benefited from the “Meaningless Abuse” transfer of resources from taxpayers and provider balance sheets to vendor shareowners have suddenly become PHM experts and are heralding their company visions to become the PHM leaders of tomorrow.

Let’s consider this.

EHRs were designed (and now used) to digitize health-related communications and transactions within the four walls of a clinical setting. When provider organizations increasingly absorb financial risk for the health status of patient populations or for entire care episodes, the most significant exposure points and opportunities for them lie in intelligently guiding patient care transitions between and among providers that are part of a network. Vertically integrated networks of today will give way to virtually integrated networks of tomorrow. Yes, consolidation and physician employment will continue, but the implied costs faced by systems trying to own its means of delivery will overwhelm any scale economies exacted as a result of the largesse.

Today’s PHM firms have focused on one or two components of what is believed to be needed for end-to-end PHM. Several high-quality software companies have tools for risk-stratifying patient populations. This is important because chronic disease and co-morbid conditions represent more than 80 percent of health care costs. Some of these same firms have care management capabilities to organize patient subsets into cohorts and then apply evidence-based protocols to define the clinically appropriate treatment pathways. Other firms have staked out “big data” market positions to do both retrospective and prospective analytics. These are all important capabilities, but they miss the most essential element. All of these capabilities are static. Risk stratification and evidence-based content applied to chronic disease are also relatively static efforts. The degree of change in chronic conditions among a defined patient population quarter-to-quarter is relatively modest.

The largest opportunity for reducing costs lies in improving provider utilization and adjusting consumer behavior. To improve the health of populations, those populations must be “managed.” Management, the verb, needs the emphasis. The management component of PHM depends upon coordinating care for these populations. Tools must be applied to direct clinically appropriate utilization to low-cost, high-quality providers within a network, and to avoid unnecessary utilization. This depends upon appropriate referral management and patient scheduling across the entire network, not just within a clinic, a hospital or a post-acute provider. For example, populations of diabetics require foot exams, eye exams, an HgA1C and a visit to an endocrinologist. Knowing what needs to be done is necessary – but not sufficient. We need to do the work with each patient efficiently. Closing these gaps in care proactively will substantially lower unit costs and contribute to the overall health of both populations and the organizations providing care.

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