Guest Commentary: Changes in healthcare delivery driving payers and providers closer together

Guest post by Patrick Pilch

The healthcare industry has seen tremendous changes over the course of a lifetime, and recent years are no exception.

From the introduction of group health insurance as an employee benefit in the late 1930s, through the commencement of Medicare and Medicaid in the 1960s, to the enactment of the HMO Act of 1974--recent times are beginning to show that historically antagonistic relationships between payers and hospital providers are now changing.

Once on opposite sides, today's payers and providers are finding themselves leveraging their respective strengths to meet common healthcare goals--and hopefully a positive outcome for all.

Payers and providers are part of a larger healthcare system; however, their goals and missions have been at odds. Providers focused on delivering quality care to patients, while payers focused on supplying access to healthcare provider networks for its members. Payers have more complete claims data and are often in a better position to appreciate the impact of rate changes on the value proposition of their provider network.

Needless to say, the conflicting missions between payers and providers have resulted in a negotiation process that has taxed both organizations, negatively impacting the greater goals of our healthcare system.   

Amidst institutional and market noise around new paradigms for collaboration and the slow transition to emerging revenue models from traditional fee-for-service, payers and providers are beginning to deploy best practices from other industries, realigning their approach to meet the needs of their shared stakeholders--members and patients.

The drivers for the realignment include healthcare policy changes, advancements in information technology (IT), movement to connect reimbursement with improving the quality of patient care and outcomes, and reducing the total cost of care--the Triple Aim.

Payers are realizing the power of big data and are assisting in the development of population health models to drive and achieve the Triple Aim goals. Likewise, shrinking reimbursement is helping payers and providers realize they need each other. Providers are interested in tapping into large data to transform the delivery of care for patients' needs in their primary and secondary service areas. Payers have the claims data on their members and providers have the clinical data on their patients.

Forward-thinking payer and provider organizations, anticipating healthcare reform, recognized years ago that sharing their constituency of members and patients would be beneficial to both organizations and began a process for shifting from negotiating rates to collaborating around quality outcomes and value. Collaboration has led to consolidation within payer and provider sectors, a trend which is expected to accelerate.

In certain markets, payers also are acquiring clinical providers--both hospitals and physician groups--while in other markets, large providers are developing their own payer models, taking on and managing risk through sophisticated and coordinated care management models.

Collaborating on common goals for a shared constituency, payers and providers can deliver on their respective strengths. Payers can leverage their massive claims data history, understanding of risk and strong IT infrastructure, while providers bring their strengths in patient care, understanding of quality protocols and clinical perspective.

Connecting these new relationships and networks will take investment.  Investment can take the form of capital and resources, but first requires commitment and openness on the part of each organization. 

Clearly, present times reinforce the notion that healthcare models are changing once again. A rapidly aging population with life expectancies at the highest level in our country's history, coupled with significant federal and state budgetary issues, and the implementation of the Patient Protection and Affordable Care Act means new healthcare relationships should and must emerge.

Payers and providers are finding themselves unlikely collaborators, given their history, and are working together to leverage their respective strengths to reach their goals. Ideally, the outcome will benefit all constituencies--and the healthcare system overall.  

Patrick Pilch recently joined BDO Consulting as a managing director. He previously served as the vice president of managed care and new business development at North Shore-LIJ Health System in New York.

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