The healthcare industry transition to value based care & reimbursement (VBC/R) is disrupting traditional business and care models. Both payers and providers are challenged to re-imagine and re-engineer their business and revenue models, organizational structures, clinical and administrative operations, and supporting clinical and information technology infrastructures.

The critical starting point for most VBC/R transition planning is – wait for it – money. Both payers and providers must design and execute for a self-sustaining financial model, or everything else is irrelevant. The simple fact is that if providers achieve value based care objectives for healthcare quality and patient satisfaction, they’ll see less utilization for a given population of potential patients. And lower utilization means less revenue.

The basics are clear: Providers must increase unit price, volume or both in order to maintain revenue and profit margins. Here are 8 best-practice strategies that will help providers achieve financial sustainability while transitioning to VBC/R. (Next week we’ll follow up with VBC/R transition strategies for payers.)

1. Enhanced Marketing

The most successful providers increase patient flow through marketing that is multi-modal, traditional and digital, and multi-stakeholder, including employers, payers, TPA’s, consumers, local governments and advocacy groups. Branding, competitive positioning, and supporting messaging must be re-imagined and redesigned for a value based consumer-driven environment.

2. Get and Stay In Network

Payers are aggressively moving to narrow networks in every market to optimize patient flow to providers offering the highest value. And unlike in the past, consumers are more accepting of some restricted access in return for lower cost. As always, value is in the eye of the payer. But it typically includes a balance between quality, accessibility, and price. Providers must put themselves in the best position possible in order to convince payers and network managers that keeping them in network is essential to optimize their plan & network design.

3. Direct to Employer Contracting

Innovative providers look to establish direct relationships with local and remote employers for all services or those that can be strongly differentiated. These arrangements typically bypass intermediary payers and, if properly structured, can capture patient volume for the provider while reducing the employers’ costs.

4. Medical Travel

Related to medical tourism, medical travel programs focus on attracting and servicing out-of-area patients. Providers that offer a differentiated service marketed as a Center of Excellence have a distinct advantage. The key is to offer specialized services at a price that includes the cost of travel and is competitive with providers who are more local to the consumers.

5. Re-engineer Operations for Cost Effectiveness

Re-engineering both clinical and administrative processes to squeeze out inefficiencies and waste from unnecessary and duplicative processes and sub-optimal resource utilization is another critical strategy for providers. Increasing volume does a provider no good if they lose money on every unit of service.

6. Vertical Integration

Providers should strive to own more of the healthcare continuum revenue stream. Industry transition to VBC/R does NOT mean less healthcare revenue opportunity overall. It simply moves spending away from more expensive acute services and into prevention and maintenance services in an effort to improve outcomes and lower cost trend increases. Vertical integration that combines population health, primary and acute care, and recovery and long-term care under one organization gives providers more control over the revenue stream as well as opportunities for operational scale and enhanced care coordination.

7. Horizontal Integration

Mergers and acquisitions with comparable healthcare providers can help achieve market and/or operational scale. Combining forces with the right partner increases access to more potential patients, creates more opportunities for cost management, and improves access to talented resources.

8. Integrate with a Health Plan

Whether in the form of a Provider Sponsored Health Plan or a Health Plan Sponsored Delivery System, these combinations offer the potential for stronger alignment and coordinated execution of operating objectives and strategies between providers and at least one health plan. This can result in more cost effective care for patients across the health care continuum, more predictability and confidence for providers and plan members, and greater value for the ultimate payers – insurers, employers, taxpayers, or individuals.

These strategies all require an initial investment of time, money, executive leadership attention, and management talent and capacity. Financing the transition to VBC/R is a topic for another day. But if properly designed and executed, these strategies will position providers to survive – and even thrive – in the evolving value based healthcare ecosystem.

To learn more about how Arlington Healthcare Group can help you define and execute your organization’s strategic plan for transition to Value Based Care & Reimbursement, contact us today.

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