3 challenges for meaningful delivery reform

The alignment of new payment models with existing provider compensation formulas is just one of several challenges that healthcare leaders must address to achieve meaningful payment and healthcare delivery reform, according to a new report from the Robert Wood Johnson Foundation (RWJF).

The RWJF assembled grantees and healthcare experts last year to discuss payment reform best practices and development. The meeting identified three major challenges to care delivery reform:

Alignment of alternative payments and provider compensation: As the nature of the payer-provider financial relationship changes based on new payment models, providers must decide how to translate those incentives to clinician and non-clinician employees, the report states. The report uses the example of a provider in a shared-risk arrangement with a payer plan that rewards it for care management and quality outcomes, but compensates providers based on billing volume. The problem, the report said, is that it rewards "behaviors that diminish its ability to succeed relative to its shared-risk arrangement." The report also cites the example of the Wisconsin-based ThedaCare health system, which provides incentives that emphasize profitability and productivity, as well as quality to a lesser extent. The system's model has evolved over the years and currently strives for a balance between the incentives of production-based payments and total cost of care-based payment.

The need to repurpose healthcare providers' resources: As healthcare increasingly shifts to community- and home-based settings, providers who enter risk-based contracts must repurpose facilities, according to the report. Healthcare reform makes it harder to ignore that healthcare services are often out-of-step with community need, the report said. Phoenix's Mercy Gilbert Medical Center, for example, shuttered its pediatric unit as part of its parent company's pediatric services consolidation and plans to repurpose the space as a short-term unit for adults and adolescents, according to the report.

Socioeconomic conditions: Socioeconomic factors are a major driver of population health and several speakers at the meeting addressed the social determinants of healthcare and outcomes disparities, with a 2014 study finding unemployment was the top driver of preventable readmissions. Indeed, a combination of lifestyle and environment account for 70 percent of determinants of health, according to the RWJF report. One of the participants in the meeting, Benefits Data Trust, collaborates with five states to identify patients who may qualify for public benefits and help them sign up. A 2013 study found such interventions could lower readmissions by up to 50 percent.

To learn more:
- read the report (.pdf)