When Florida Medical Clinic (FMC) began the transition to value-based care in 1993, the physician organization had two doctors operating under a Medicare Advantage contract. By the early 2000s, FMC started converting more Medicare lives to capitation.
“Then in 2008 we reached another fork in the road and really started taking the total cost of care even more seriously in our contractual relationships. We’ve been on this journey and started our MSSP ACO contract in 2012,” said CEO Joe Delatorre during the recent Health Evolution virtual Executive Briefing Accelerating the transition to value-based care (watch the on-demand recording). The conversation also features Miles Snowden, MD, MPH, Chief Growth Officer and Executive Vice President of Physician Strategy, Navvis.
FMC now has approximately 400 providers; about 60 percent of their physicians are specialists and 40 percent of their physicians are primary care providers. They have 1.8 million patient encounters every year and serve 100,000 lives in the Tampa metro area. Nearly 70 percent of the revenue they generate is touched in some capacity by risk-based programs, whether that is a pay-for-performance agreement, some modified risk, partial risk, or a full risk arrangement.
“The intent to move toward risk environments from CMS has remained strong and influential in the marketplace. I think everyone feels a sense of urgency about moving forward in that regard,” Snowden said. “The other component driving interest is under-performance. Executives are seeing others experience success operating under value-based contracts, recognizing their own under-performance, and that’s creating a lot of interest in value-based contracts.”
To inform other health care CEOs embarking on the transition to value-based care, Delatorre and Snowden addressed the following topics:
- Understanding where to invest initially
- Supporting physicians and their care teams
- Addressing common barriers
Understanding where to invest initially
In response to the escalating cost of care and quality improvement initiatives, providers are increasingly transitioning to value-based models.
Value-based programs require a baseline investment in technology, people, new processes, and training. Making that investment has become a reality of today’s economic situation, Delatorre said. “This will continue to accelerate, continue to change, and the payment model today isn’t going to be the payment model of tomorrow,” Delatorre added. “I can assure you it will all move in the direction where there is more accountability.”
CEOs and other C-suite executives who are considering making those investments should understand that the baseline investment is no different for a small increment of risk than it is for a larger increment of risk, according to Snowden. “It doesn’t matter how much or how little risk, or how many or how few patients under those risk-based contracts you have,” Snowden added. “It’s that same foundational expense.
“The critical elements that are necessary to succeed in these risk-based contracts are unique. You need clinical analytics, you need data, you need information, you need to have reliable data that can be shared with providers,” Delatorre said. “You have to have a different set of people with a lot of talent really focused on redesigning and redeploying how people function in teams and how they should be organized.”
Supporting physicians and their care teams
As with many enterprise-wide initiatives, the transition to value-based care requires change management and that means supporting physicians and their care teams. Physician leaders need to be integral in the establishment of any new workflows and processes.
Foundational work includes new incentive structures, new resources to help serve their entire patient panel, and relevant data at the point of care.
“That’s the magic,” Snowden said. “In my mind, there is no substitute for that.”
Creating the right culture is also a critical part of the journey to value-based care. Delatorre said that FMC’s journey is constantly evolving as leadership changes within the organization, and as the workforce needs to be educated or re-trained.
To steer its clinicians on the appropriate path, FMC created a medical executive committee in 2014 that was tasked with developing the plan to move a portion of compensation to value-based initiatives and then create momentum to enable the transition.
“You have to get leadership in your organization to understand why it’s necessary to make the transition and then commit to engaging with their peers. If an administrator is the only one saying, ‘We have to move over here,’ it doesn’t work well. This happens all the time and it has to be a team effort,” Delatorre said. “You have to keep doing it. You have to keep building.”
Developing mutually beneficial partnerships with smaller or independent group practices is critical. At the health system level, Snowden said organizations that are building clinically integrated networks will have the ability to measure the quality of physicians and groups to bring them into the sphere of risk-based contracts.
“When a health system creates a value-based contract, it can support physicians by providing the technology, the processes, and solutions to smaller entities and allow them to use those services to be successful,” Snowden said. “Adding those to the armamentarium addresses a lot of pressing issues.”
Addressing common barriers
Beyond the baseline investment and adding resources to support physicians, CEOs should anticipate some challenges to optimizing performance in value-based programs. Those include associated costs, physician buy-in, primary care and specialty alignment, and risk mitigation.
“The barriers almost always come down to two things: scale and capital,” Snowden said. “Being able to scale sufficiently is a significant barrier for many physician groups.”
For physician organizations predominantly operating in fee-for-service models, the decision to set aside a significant amount of cash flow, interrupt processes and workflow, deploy new technologies, and potentially reduce the number of patient encounters all to move toward an outcome that may or may not be realized in the short term can be daunting. Succeeding requires migrating enough patients quickly into a value-based arrangement to make that baseline investment yield a return.
“That’s a real challenge and it can be frightening for physician groups to make that pivot because they don’t have the same capital allocation as larger health systems or groups affiliated with a larger system,” Snowden said.
For larger health systems, particularly those that comprise multiple acquired entities that may or may not have been adequately assimilated into the larger organization, another challenge could be aligning all the affiliated physicians.
“Physician alignment requires a mission shift – to find a way to establish a true commitment to your population and understand that future revenue streams will be different,” Delatorre added. “Those who have accepted that are making progress. The ones just paying it lip service are falling behind.”
Risk mitigation is yet another challenge because when everything is working well under value-based models and downside exposure is limited, that’s one scenario. But when risk-based arrangements are not working as well, economic conditions can be difficult for practices to overcome.
“We have to figure out how to better mitigate risk. We also need to figure out how to think about downstream risk,” Delatorre explained.
Delatorre also pointed to aligning primary care doctors and specialists in these initiatives as another obstacle. “Trying to find a way to engage the specialist when the payment mechanism right now isn’t correct for them remains difficult,” Delatorre said.
Value-based care represents a significant transition ahead for virtually all health care organizations.
The journey to value-based care typically presents challenges that impact almost everyone on the care team as well as leadership. Building the infrastructure, adapting the culture, creating the right teams, implementing new processes and workflows, supporting physicians, creating the right incentives, and addressing obstacles for risk-based contracts take time, capital, and workforce resources. Successful implementations yield high performance and high-quality outcomes and enable providers to better serve the populations they care for.