On April 10, 2018, Numerof & Associates released its third annual national study of population health adoption. The report provides a national in-depth look at the pace of transition from fee-for-service models to models that are based on fixed payments linked to outcomes. According to the report, a growing number of healthcare delivery organizations are failing to keep pace with their population health objectives and are actually continuing to fall further behind the industry leaders.
The report surveys and summarizes responses from over 400 executives and decision makers in the healthcare industry.
Unfortunately, progress has failed to keep up with prior expectations. In each prior survey, respondents predicted a dramatic increase in the percentage of annual revenue that would be at risk in the next two years. However, those projections were not realized, as the majority of respondents to this year’s survey (54 percent) still reported less than 10 percent of their revenue comes through risk-based agreements.
The results from the report indicate many organizations have fallen short of their targets. In the 2015 survey, over half of respondents predicted they would be at least “very prepared” to take on risk in 2017. In the current survey, however, only one in five felt they had achieved that mark.
Despite the slow overall adoption, some leading organizations did report a substantial portion of revenue moving to new models, increasing the gap over the lagging providers. And most executives agree that population health is the future, with 95 percent of respondents rating it “moderately,” “very” or “critically” important. Roughly one-quarter of respondents cited the threat of financial losses as a barrier to moving to a risk-based model, with other concerns including uncertainty about timing (12 percent), and issues with systems like IT, tracking, and management (12 percent).
While more than 75 percent of respondents reported involvement in risk-based agreements, their financial exposure has generally been limited.
As in our last survey, over three-quarters of respondents reported some experience with an alternative payment contract – but for most (70%), less than 20% of revenue was involved. Among those who claimed experience with an alternative payment contract, a substantial portion – 38% – didn’t risk actual loss. Their risk was upside only – of not receiving a “bonus” if targets were not achieved.
“Numerof’s third annual survey finds that while nearly all healthcare providers see population health as an important next step, a few leading organizations have separated themselves from the rest of the pack,” said Rita Numerof, PhD, the firm’s president. “The shift in the business model has proven difficult for many to achieve due to institutional hurdles and concerns over financial losses.”
“Hospitals that hedge their bets by experimenting at the margins with at-risk payment models underestimate the importance of moving up the experience curve,” said Michael Abrams, managing partner of Numerof & Associates. “Accountability for cost and quality is inevitable, and the sooner a commitment is made, the sooner the necessary competencies will be developed.”
Numerof conducted the study in collaboration with David B. Nash, MD, MBA, Dean of the Jefferson College of Population Health. “Improving the health of the populations we serve while implementing population health management programs, as a part of risk-bearing arrangements, is an apparent paradox in our country today,” said Dr. Nash. “We want to improve health, but the numbers say that we are far short of previously stated goals. One is therefore forced to ask the question—what is the real mission of our industry at this key juncture?”