The Payvider Movement
Part 3 of 3: How to make your payvider solution a reality
In Parts 1 and 2 of The Payvider Movement series, we laid out the challenges health system leaders are facing in today’s healthcare climate, primarily feeling pressure to achieve greater financial and strategic impact in their organizations in an environment that is making that more difficult than ever. Many have looked at the payvider (payor and provider) model as a potential solution to satisfy their growth goals, since becoming a payvider has potential to drive new revenue, create valuable new relationships with large employers, and help health systems secure greater control of care delivery—all while empowering them to actively contribute to healthcare reform. Today, as market factors and technology are favoring the payvider model, the time to act appears to be prime. But how does a health system—perhaps your own—pursue the payvider path for its organization?
Moving from concept to a concrete offering
If you are a health system leader, you may be convinced that the payvider model is a good idea whose time has come for your system. But now what? You want it to work, but how can you get it started, and what all is it going to take to make it a reality, especially on top of your day job? In this final installment of our payvider series, we will look at the practical aspects of establishing a payvider solution, including how to leverage assets that may already be in place, determining what additional components will need to be created, and tapping into the expertise of resources that can be invaluable in helping to get the job done and done right.
The good news? You’ve already got a lot going for you.
The place to start when launching a new health plan offering is to leverage current strengths to the health system’s advantage and to ensure that the right expertise and partners are engaged to help avoid common pitfalls. Fortunately, most health systems already have a substantial number of elements already working for them. Virtually all health systems have existing strengths that make them well positioned to give employers and their health plan members the “Triple Aim” of cost, quality, and experience. In thinking about their own organization, they should consider the value of the trust and goodwill that have been established by the health system over the course of years within their local community. Chances are they have earned strong market recognition and brand loyalty that can be leveraged in a payvider solution. Additionally, every health system has clinical areas where it excels and where it can truly be said to offer the highest-quality care in the region. Whether it’s a robust and successful primary care model, cutting-edge clinical trials, or world-renowned surgeons, knowing your strengths is a key component to success. Leaders are encouraged to take a fresh look at their organizations and consider the value that they may currently take for granted.
In addition to your traditional care delivery, what additional programs and services does your system offer that can help set you apart? Does your health system have proven care coordination and navigation capabilities? Sophisticated care management programs? Is your system an established accountable care organization (ACO)? Perhaps your organization has a team-based, longitudinal care approach, or provides integrated care navigation and case and/or disease management through a patient-centered medical home (PCMH) model. Population health or bundled payment programs, such as surgery or chronic care, can give a health system a good head start on the payvider solution. Is there clinical data interoperability with the integrated delivery system? The first step in the payvider process is to assess every aspect of the care, approaches, models, and systems that are already in place within the health system and to recognize their value, along with the immeasurable power of the organization’s reputation, in setting the stage for a successful payvider solution. Building upon the existing and proven strengths of the health system, leaders must then develop several distinct components to support the new payvider model.
The “Functional Five”
In order for a health system to create the essential high-functioning integrated delivery and finance systems it will need as a successful payvider, the following five functional actions are essential:
1. Optimize care delivery systems
2. Get comfortable with data
3. Become as good at care payment as you are at care delivery
4. Establish valuable network operations
5. Become proficient in business development and working with employers
For the sake of clarity, let’s examine each in more detail.
Optimize care delivery systems
Health systems embarking on the payvider journey will find it beneficial to go all in on “systemness”—in other words, committing to integration. An example of systemness is the sharing of data and patient information; shared best practices and clinical pathways; team-based care, including both primary care physicians and supporting providers such as nurse practitioners; integration of behavioral health and medical care; and better assimilation of primary care and specialty care.
“Foundational to payvider success is creating a clear, tangible differentiator and delivering on that value through an integrated ecosystem.”
—Marisa Boevers, Vice President of Product Development and Management, Contigo Health
As Robert Pearl wrote in reference to the recent Kaiser acquisition of Geisinger and the formation of Risant Health, Geisinger will need to incorporate the fee-for-service community providers that it relies upon today more formally into the delivery system if it is to be successful.1 In his words, “To meet the healthcare needs of most its patients, Geisinger relies on community doctors who are paid on a fee-for-service basis. Generally, the fee-for-service model is predicated on the assumption that higher quality and greater convenience require higher prices and increased costs. With Geisinger’s distributed model, it’ll be very difficult to deliver consistent, value-based care.”
Get comfortable with data
As noted in Parts 1 and 2 of The Payvider Movement series, data and analytics, along with market dynamics, have evolved in the favor of health systems waiting to launch their payvider strategy. Economics and healthcare market forces established the need for innovations such as the payvider solution, and now, advanced data and analytics have made the payvider model viable. But that also means health systems must both embrace data and become proficient at using it to its fullest potential. It is vital to recognize data’s central role in order to knowledgeably and successfully optimize and scale the health plan.
The 2021 HFMA Health Risk-Based Healthcare Market Trend report identified “data integrity, reporting, and the cost of technology” as the leading internal challenges for health systems pursuing increased levels of risk.2 In fact, data was named more often than collaboration, scale, and difficulty achieving quality/cost outcomes. That HFMA survey also highlights several specific mission-critical roles data plays for the health system as payvider. For instance, bringing together clinical and claims data sources effectively delivers the highest value for both sides of cost and care. That stated, it also requires significant investment in both sophisticated technology and expertise. From the perspectives of clinical care, cost efficiency, and consumer experience, establishing the appropriate types and combination of benchmarking, analytics, reporting, and clinical technologies is vital to making smart, collaborative payor-provider decisions. Additionally, having quantifiable intelligence that reaches beyond your health system and health plan members provides rigor when establishing strategies that bridge cost, quality, and operational areas of the provider-sponsored health plan. Only at this level of data analysis are leaders able to align provider incentives that facilitate further investment in preventive care and quality management. Securing actionable intelligence that can improve outcomes, support enhanced financial performance, and enable success in new, alternative payment models is what will make managing an integrated risk-based approach possible.
Become as good at care payment as you are at care delivery
Getting the care delivery and data side right is certainly fundamental to the success of any payvider model. Establishing efficient health plan operations is critical as well.
• Eligibility and enrollment operations
• Claims adjudication and appeals
• Auditing and compliance processes and reporting
The payvider will also need to decide if they want to recreate some of the traditional care management functions common to payors, such as case management, disease management, and utilization management. Depending on the plan design, payment method, and “systemness,” health systems functioning as payviders may be able to eliminate most or all these oversight functions by incorporating tools such as clinical decision support, clinical pathways, and risk transfer to ensure the care being delivered meets the goal of the Triple Aim (cost, quality, and experience). Health systems would also be well served to take a good, hard look at their cost structures and determine what shifts may be necessary. For instance, health system payviders may want to offer a combination of fee-for-service and value-based care, especially in early years. The health system as payvider can be the powerful and much-needed catalyst for payment reform. Capitation is an excellent way for health system payviders to capture the value they create in “value-based care.” Capitation allows health systems to evolve their facilities and staffing models beyond a focus on the services delivering the highest reimbursement and on to those services that best meet the needs of their community.
Regardless of the preferred payment methodology, to be a successful payvider, health systems must be able to manage the cost trend. Effective ways to accomplish this include eliminating low-quality and inappropriate care, using digital enablement and team-based approaches to make care delivery more efficient, promoting early intervention with health plan members to improve outcomes, and establishing a true cost-based accounting system to understand more accurately what the “cost of goods sold” is and, from there, know how to set fair and transparent prices for each. Even with the aid of these tools, payviders will still need to have effective ways to communicate and connect with members. Such communication can be enabled by digital support systems that are designed to help providers give health plan members the little nudges they need to adopt healthy behavior—whether that be medication compliance, lifestyle choices, or helping them determine whether to pursue conservative treatment versus surgery.
Establish valuable network operations
One of the cornerstone elements of success as a payvider is the forming of or joining in a narrow network. The narrow network is advantageous in that it can drive appropriate volume in the early years for the payvider while the health system is primarily employing fee-for-service arrangements. The narrow network also enables the health system to filter out any high-cost, low-quality providers from the mix. This becomes particularly important as the payvider introduces attractive capitated or value-based care arrangements. Beyond the network, the health system must establish transparency and execute suitable contracts with its own employed physicians. It can also be tremendously valuable to have a relationship with a network resource such as Contigo Health, LLC that understands health system payviders intimately and has the expertise and reach to help introduce additional regional and national providers to the health system that meet established value standards.
Become proficient in business development and working with employers
Understanding how employer health plans work and what employers want most is the leaping-off point. To meaningfully approach and engage prospective employers, one must know what pains they are experiencing and what is needed most from their health plan for both members and their business. Such understanding can begin with introspection into your own health system’s experience as a sizable employer in the community that operates its own self-funded health plan for employees. Beyond tapping into that firsthand knowledge, below are a few other things to consider.
Employers want care to be affordable.
Above all, employers are seeking affordability. After all, self-insured employers own the risk of their employees’ healthcare utilization. As such, they feel the direct impact of each swing and shift. These employers are acutely aware of how much care their employees receive and how much that care costs. That becomes particularly poignant considering that median costs per person increased to more than $6,000 in 2021, according to new analysis from the Health Care Cost Institute (HCCI).3 The study also indicates that median per-person healthcare spending increased by 24 percent from 2017 through 2021.4 Employers genuinely want value-based care to work. They want care that is affordable, high quality, and convenient (the Triple Aim).5
They know their employees aren’t as healthy as they should be.
Along with their concerns about rising costs of care, employers are also highly aware—and reasonably anxious—that their employees do not enjoy optimal health. Factors such as medical history, environmental factors, social determinants, lifestyle, and more are at play and are largely out of the employer’s control.
Unfortunately, the programs and benefits that employers invest in and put in place to mitigate these factors are commonly underutilized.6 With less-than-optimal employee health compounded by high costs of care, it is no wonder employers are placing stronger focus on employee well-being and benefits engagement. A 2023 Forrester Consulting study indicates that 80 percent of HR and EX professionals surveyed place increased emphasis on improving health benefits offerings, growing awareness of benefits, and making access easier.7 Even so, utilization remains low.8
They—and their employees—want convenience.
Employers and their health plan members want genuine convenience. They expect providers to have availability and to offer both in-person and virtual care options that make it easier for the member to access care.9 They also want access to the digital tools that make care management simpler, no matter where they are.10 While there may be structural challenges related to data and introducing new ways to make access to care more convenient, payviders may actually be in the ideal position to help remove much of the current confusion and inconvenience contributing to plan members feeling trapped between their care provider and their insurance carrier.
Beyond the employers themselves, it is essential to understand the brokers and consultants who work closely with employers as trusted advisors. It will be critical to know how to win their respect and trust so they won’t become a barrier between the health system and targeted local employers (and they can be a barrier if they are not engaged in the process early on). Instead of viewing the broker as an obstacle, health system leaders should consider the value brokers can bring as a source of precious insight into the targeted employer. If trust is established between the health system and broker—and the broker can see the value in what is being offered to their employer client—they can be an ally to the payvider. In fact, when approached properly, brokers and consultants can become the health system’s gateway to the employer and may even serve as an advocate and/or point person.
Once employer relationships are secured, it will be tremendously valuable to provide meaningful, timely reporting to all employer groups. One of the best ways to differentiate the health system payvider from traditional payors is to consistently and proactively deliver extensive, transparent reporting as well as access to data for those employers who prefer to do their own analytics. Remember that employer sales cycles are annual, but employers often begin their search for the next health plan carrier a full 18 to 24 months in advance of that plan going live. To put that in perspective for the health system just embarking on its payvider solution, it can take several years to form a health plan, have a pilot client (such as the health system’s own employee health plan), show the results, and develop a pipeline of prospects. Having a defined and disciplined approach to payvider development is crucial since slow decision-making, missed deadlines, or unclear objectives can result in lengthy delays and, most important, missing these long-term sales cycles and the opportunities they represent.
Going all in
Deciding to become a payvider is not a light decision. After all, it is a foundational change to a health system’s business that will impact everything it does. But it’s all for the better. Health-system-led payviders are positioned to drive true care transformation and improve the health and well-being of millions of Americans, drive toward a better healthcare ecosystem, and create much-needed financial stability and growth opportunities for themselves. But to get there, the health system must formally and firmly commit. Here are some of the ways to make that commitment pay off.
Hire a team.
You, the health plan leadership, need an experienced health plan/payvider leader to work with you, along with a dedicated team of specialists that includes:
• Health plan executive (leader)
• Legal, compliance, regulatory, and privacy
• Population health
• Business development
Each of those areas needs to have at least one person on the health plan side dedicated to managing and overseeing vendors. This should not be someone from the health system attempting to do the job in addition to their regular job responsibilities; it is a full-time commitment and must be a dedicated resource without other obligations. While the requirements to establish the payvider model may feel overwhelming and the mountain of details may seem insurmountable, health system leaders need not go it alone. They can find it tremendously valuable to align with a knowledgeable strategic partner who is equally committed to realizing the health system’s payvider vision, to creating a sustainable healthcare ecosystem, and to putting providers back in the driver’s seat of care.
There is an organization dedicated to making it easier for health systems to activate a payvider solution and help connect health systems with employers. Born out of the healthcare industry as a consolidated subsidiary of Premier, Inc., Contigo Health has been down this road before, helping health systems initiate and grow their own payvider offering. Contigo Health is a health benefits platform that leads direct-to-employer and direct-to-provider relationships and is focused on revolutionizing healthcare through appropriate, cost-effective, transparent, and thoughtful benefits design—all in the interest of leading the way to financially sustainable healthcare. The Contigo Health® Payvider Activation product is designed specifically to guide and support health systems every step of the way.
In the end…is it all worth it?
Having a knowledgeable partner and a solution that is designed to provide a comprehensive approach and all the components needed certainly makes establishing a payvider solution more attractive and achievable. And knowing that the healthcare ecosystem status quo will not be a sustainable long-term solution for health systems wanting to be both viable and vibrant in the years to come is the impetus to make the move now while the market is favorable. Becoming a payvider is not a journey to be taken lightly, but it can be a tremendously rewarding one, especially when the effort is supported by knowledgeable payvider specialists who can help ensure everything is done properly.
Now what? Here’s a logical place to start.
To assist you in determining if becoming a payvider is right for your health system, Contigo Health is offering a complimentary payvider readiness assessment.*
The assessment will include:
• “Nine Facets of Payvider Readiness” internal self-assessment
• Market snapshot, including high-level evaluation of your addressable market, competitive landscape, and market dynamics
• Two-hour consultation with our payvider strategy team to review results and conduct a visual planning session
To learn more, please contact Marisa Boevers at email@example.com.
* Additional terms and conditions apply.
1. Forbes. 2023. “Value-Based Healthcare Battle: Kaiser-Geisinger Vs. Amazon, CVS, Walmart.” July 2023. https://www.forbes.com/sites/robertpearl/2023/07/17/value-based-healthcare-battle-kaiser-geisinger-vs-amazon-cvs-walmart/?sh=38cabad16417. Accessed 11/03/2023.
2. Guidehouse. 2021. “2021-22 Risk-Based Healthcare Market Trends.” November 2021. https://guidehouse.com/-/media/www/site/insights/healthcare/2021/gated/2021-risk-based-healthcare-market-trends.ashx. Accessed 11/03/2023.
3. Health Care Cost Institute. 2023. “Healthy Marketplace Index.” June 2023. https://healthcostinstitute.org/hcci-originals/healthy-marketplace-index/hmi. Accessed 11/03/2023.
4. TechTarget/RevCycle Intelligence. 2023. “Median Per-Person Healthcare Spending Exceeds $6K.” July 2023. https://revcycleintelligence.com/news/median-per-person-healthcare-spending-exceeds-6k. Accessed 11/03/2023.
5. Health Affairs. 2008. “The Triple Aim: Care, Health, and Cost.” June 2008. https://www.healthaffairs.org/doi/10.1377/hlthaff.27.3.759
6. HLTH. 2023. “The Business Case for Boosting Benefits Engagement: Improving Employee Wellness, Retention, and the Bottom Line.” June 2023. https://www.hlth.com/digital-content/hlth-matters/blog/the-business-case-for-boosting-benefits-engagement-improving-employee-wellness-retention-and-the-bottom-line. Accessed 11/03/2023.
9. Kyruus Health. 2022. “Becker’s Payer Roundtable Recap: Are Payviders Supervillains or Superheroes?” November 2022. https://kyruushealth.com/beckers-payer-roundtable-recap/. Accessed 11/03/2023.
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