Originally published in Healthcare Michigan, Volume 40, No. 10
In an age of highly polarized opinions, there is a common consensus to address the rapidly rising health care costs in the United States. Research shows that the US average gross national product for health care costs is 17.1% while the rest of the world average is about 10.6%; the US missing that mark costs $1.7 trillion per year. There are numerous opinions and beliefs on how to achieve significant savings in health care without sacrificing quality of care.
Many believe that the current “fee-for-service” model simply incentivizes the health care system to treat “sick” patient symptoms rather than to practice preventative care. Attempts to control costs by reducing individual fee-for-service rates have not been successful. Over the past ten years, new concepts like ACOs, CINs and other similar operational vehicles initiated the shift from fee-for-service financing. The ultimate goal has been to move toward a true risk-and-reward model that incentivizes health care practitioners to delay or reduce unfavorable medical outcomes as long as possible.
Value-based care is a health care delivery model that aims to proactively adjust the quality and timing of patient care thus reducing overall costs. The model rewards providers based on influencing positive patient outcomes as a measure of the quality of care provided. At the forefront of this model are the primary care providers (“PCPs”). It is well-established that PCPs are the first and most frequent interaction between patients and physicians during the critical period leading up to the highest medical cost years. The initial opportunities to create and accomplish changes in health behaviors and implement early-stage preventive measures begin with PCPs.
In this compensation model, significant shared savings incentives are aligned to reward the PCPs’ positive patient outcomes rather than the quantity or volume of services provided. This model builds on the premise of early intervention to proactively treat patients, and in turn, get paid for meeting or exceeding quality of care metrics and cost-efficiency targets. These metrics include measures of health improvement, patient satisfaction, and adherence to evidence-based guidelines and ultimately lower costs.
Unfortunately, to the small independent primary care practice, upfront implementation costs and assumption of risk curtail the widespread adoption of the value-based model. It is easier and less risky to work another day treating patients than to lay out the resources necessary to implement a more aggressive patient management process. In Michigan, two organizations, United Physicians, Inc. with Agilon Health, Inc., have joined forces to assist providers in this transformation by offering support, resources, and technology.
United Physicians, a member organization representing nearly 1,700 physicians throughout Michigan, works on improving health care through a coordinated, efficient, and integrated network of physicians. The organization achieves this by integrating electronic health records and implementing effective care coordination practices. Their organization encourages PCPs to establish long-term, trusting, and proactive relationships with patients.
Agilon also supplies resources in the primary care sphere. The organization partners with independent physicians to create a network that focuses on health care for seniors. It is different from the more familiar private equity model in that Agilon does not acquire physician practices. Through a population health approach, Agilon emphasizes preventative care and the management of chronic conditions. PCPs can receive various tools and incentives to expend all of the focus on high-value medical care. Agilon provides the capital, data, payor relationships, executive experience, and contract support, while also fostering the independence of PCPs.
Physician members of United Physicians, Agilon, and similar networks receive many benefits from value-based partnership arrangements, including better outcomes via data-driven decision-making. Members gain access to a wealth of patient data, enabling them to make more informed and evidence-based decisions and empowering them to adapt their strategies to individual patient needs. Additionally, these partnerships reduce the administrative burden, such as billing and credentialing, allowing physicians to fully devote their time and expertise to serving their patients.
These resources allow PCPs to actually implement a system based on the value of care, and not the volume of fees. It provides a platform for physician groups to systematically and realistically take on the risk of total care for their most vulnerable patients. This transformative approach not only improves the quality of care, but also lays the foundation for a more sustainable future for health care.
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About the Authors
Mark Wilson is a Member in Dickinson Wright’s Troy office. He can be reached at 248-433-7581 or mwilson@dickinsonwright.com. His biography can be accessed here.
An attorney in the firm’s Troy office, Allison Tuohy practices in all areas of healthcare law, with a particular interest in mergers and acquisitions, and represents a variety of healthcare professionals and organizations. She can be reached at 248-433-7505 or atuohy@dickinsonwright.com. Her biography can be accessed here.