In an effort to broaden availability of healthcare insurance coverage and to control spiraling premiums and underlying costs, Congress passed the Patient Protection and Affordable Care Act in 2010. While the law's ability to address these issues has been called into question, the legislation was ultimately an indicator of broad dissatisfaction with an expensive and inefficient healthcare system. The reality is that healthcare costs have continued to outpace other sectors of the economy, and as the government’s share of this cost burden increases, how we pay for and deliver healthcare in this country will have to change to move toward better health outcomes at lower cost.
One approach to doing this that has garnered increasing interest is population health management. As the industry struggles with how to reduce costs without negatively impacting healthcare quality, focus in this area will only grow. Despite the buzz, however, the concept of "population health management" means different things to different people, and there is little consensus on how to solve the problem of managing the health of a given population. Managing a population's health requires systematic and transparent delivery of services to improve the health status of a given set of people, ultimately delivering better outcomes at lower cost for that population. This really is a paradigm shift, requiring a new approach to quality improvement and how it's measured, greater focus on the continuum of care and a payment system that is aligned with these goals.
1. Define target population. Before providers can do anything else, they must define the population they are managing, and over what time period. Are the patients captive or not? Is the responsibility short-, intermediate- or long-term? What other variables will be critical? What are the characteristics of the population? Part of this process includes clearly defining what services your organization is responsible for — for example, will you cover all services, or will there be carve-outs for specific areas like oncology or obstetrics?
2. Define benchmark spend and quality metrics. Next, healthcare leaders will have to understand what it currently costs to treat this population, how health status and outcomes can be characterized by appropriate quality metrics and how both costs and outcomes compare to appropriate external references. Further analysis will be required to identify those segments of the population that drive the greatest variances in cost and quality relative to benchmarks.
3. Identify priority population segments. Then, identify which population segments to target, based on specific health characteristics. Decisions about which population segments to allocate interventional resources to are complex and will require both careful analytics and appropriate input. The challenge is to have the greatest impact on overall cost and quality within the context of political, social and demographic constraints.
4. Analyze variation. Within selected population segments, apply appropriate financial analytics and clinical input to identify underlying factors that explain cost and quality outliers.
5. Define interventions and goals. Based on analysis of outliers in selected segments, develop appropriate interventions to address the underlying contributors to high cost and suboptimal quality, along with implementation plans and targets for improvement.
6. Implement interventions. Next, healthcare leaders will have to implement key steps toward meeting these goals. While this step may seem simpler than no. 5, this is typically a major challenge — restructuring processes, roles, responsibilities and ensuring accountability to deliver on the interventions. An essential component of these interventions and goals will be incentives for providers and consumers that are tied to health outcomes.
7. Monitor results and refine. Finally, providers will have to continuously monitor results. This includes both internal monitoring for compliance and external review, to ensure that their organizations stay current with ongoing research. This will help guarantee that they continue to deliver better care at lower cost.
Rita E. Numerof, PhD, is president and Michael N. Abrams, MA, is managing partner at Numerof & Associates, Inc. NAI is a strategy consulting firm that develops customized, market-based solutions for strategic and operational challenges of organizations in industries undergoing significant transition.
One approach to doing this that has garnered increasing interest is population health management. As the industry struggles with how to reduce costs without negatively impacting healthcare quality, focus in this area will only grow. Despite the buzz, however, the concept of "population health management" means different things to different people, and there is little consensus on how to solve the problem of managing the health of a given population. Managing a population's health requires systematic and transparent delivery of services to improve the health status of a given set of people, ultimately delivering better outcomes at lower cost for that population. This really is a paradigm shift, requiring a new approach to quality improvement and how it's measured, greater focus on the continuum of care and a payment system that is aligned with these goals.
7 key steps
So what does a structured approach to population health look like? There are seven key steps.1. Define target population. Before providers can do anything else, they must define the population they are managing, and over what time period. Are the patients captive or not? Is the responsibility short-, intermediate- or long-term? What other variables will be critical? What are the characteristics of the population? Part of this process includes clearly defining what services your organization is responsible for — for example, will you cover all services, or will there be carve-outs for specific areas like oncology or obstetrics?
2. Define benchmark spend and quality metrics. Next, healthcare leaders will have to understand what it currently costs to treat this population, how health status and outcomes can be characterized by appropriate quality metrics and how both costs and outcomes compare to appropriate external references. Further analysis will be required to identify those segments of the population that drive the greatest variances in cost and quality relative to benchmarks.
3. Identify priority population segments. Then, identify which population segments to target, based on specific health characteristics. Decisions about which population segments to allocate interventional resources to are complex and will require both careful analytics and appropriate input. The challenge is to have the greatest impact on overall cost and quality within the context of political, social and demographic constraints.
4. Analyze variation. Within selected population segments, apply appropriate financial analytics and clinical input to identify underlying factors that explain cost and quality outliers.
5. Define interventions and goals. Based on analysis of outliers in selected segments, develop appropriate interventions to address the underlying contributors to high cost and suboptimal quality, along with implementation plans and targets for improvement.
6. Implement interventions. Next, healthcare leaders will have to implement key steps toward meeting these goals. While this step may seem simpler than no. 5, this is typically a major challenge — restructuring processes, roles, responsibilities and ensuring accountability to deliver on the interventions. An essential component of these interventions and goals will be incentives for providers and consumers that are tied to health outcomes.
7. Monitor results and refine. Finally, providers will have to continuously monitor results. This includes both internal monitoring for compliance and external review, to ensure that their organizations stay current with ongoing research. This will help guarantee that they continue to deliver better care at lower cost.
Leading the charge to population health
The landscape for healthcare is changing rapidly. Demands for better outcomes and lower costs have continued, and the differences between health and healthcare have taken center stage. As provider organizations begin to tackle the challenge of managing population health, they'll need to develop a systematic approach to quality improvement and how it's measured across the continuum of care. The practical demands of managing population health are huge and require underlying cultural and operational shifts. The sooner healthcare leaders get started, the more likely they will be to have a successful "takeoff."Rita E. Numerof, PhD, is president and Michael N. Abrams, MA, is managing partner at Numerof & Associates, Inc. NAI is a strategy consulting firm that develops customized, market-based solutions for strategic and operational challenges of organizations in industries undergoing significant transition.
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