Since its inception in 2012, Westwood, Mass.-based Beth Israel Deaconess Care Organization — a value-based physician and hospital network and ACO — has been fighting to push the healthcare industry toward population health and value-based incentives. The organization has been working for nearly five years to equip hospitals and physician groups with a set of centralized services to aid the transition to risk-based contracting.
As President and CEO of BIDCO, Jeffrey Hulburt oversees all aspects of the organization's mission. He works with various physician groups and hospitals to advance the adoption of value-based payment models and to create a high-value, lower cost network in the Massachusetts market.
Here, Mr. Hulburt explains how to thrive in a risk-based environment, shares the biggest risk-based contract challenge, discusses the most common mistakes while negotiating contracts and offers his advice for administrators seeking to enter risk-based contracts.
Editor's note: This interview has been edited for length and style.
Question: How were you able to thrive with risk-based reimbursement models?
Jeffrey Hulburt: The way we've been successful is having and spreading the philosophy that physicians and hospitals need to work together in this new value-based environment. Both parties bring to the table a set of services, which become more essential to success as we transition away from fee-for-service — where both parties could traditionally function independently and get paid — to this new risk-based environment. The new risk-based environment requires the parties to coordinate care to be effective and efficient together as an entity. Our real accomplishment has been from the recognition of the value that comes from physicians and hospitals working together. BIDCO itself delivers a set of services to these physicians and hospitals to help them implement the changes necessary… to navigate this new environment and help them be successful.
Q: What are some of the biggest challenges you've faced getting physicians engaged with ACOs?
JH: One of the biggest challenges we've had, which still exists today, is the movement out of the fee-for-service environment to a population health, value-based one. Since the transition doesn't happen over night, many of our practices still have a number of contracts or a number of patients, which they get paid via the fee-for-service model. Then you have another part of the population that has moved into this risk-based contract. So right now, we are struggling with competing incentives. In one situation providers recognize that they can be rewarded by volume, but in another situation they are rewarded for better quality care and the outcome of the patient.
Currently, about half of the patients seen by our physician groups and hospitals are involved in risk-based contracts. But honestly, I've been telling people we need to be approaching 75 percent to 80 percent of patients seen by our providers entering into value-based contracts before you can let go of the incentives that drive the fee-for-service market. I like to call the 75 percent to 80 percent the tipping point — the transition won't happen overnight, but we have made significant movement.
Q: How have you been able to overcome these challenges?
JH: One factor was a huge push from the state of Massachusetts. Legislation was passed to push providers into more value-based contracts over time in the state.
Another factor that encouraged physicians to enter into ACOs, which was in part the founding philosophy of BIDCO… was making sure physicians knew the burden of this new, transforming environment was not solely falling on their shoulders or their office practice. We wanted to create a centralized set of resources to take the burden of various complexities off of physicians. BIDCO was formed in fall 2012 with recognition that it needed to provide support to providers and that providers would not necessarily make the move if they didn't feel like they had some level of ability to be successful in this new environment.
However, we haven't overcome all the challenges, it's an evolution as we continue to transform the industry or the industry continues to transform us. But thus far we've done pretty well getting over this initial hump.
Q: What are some of the common mistakes in risk-based contracting?
JH: Contract negotiations used to center around the rate component. Now, if you say 'I'm worried about my rate and what I am going to get paid for each service' you miss the bigger picture. You need to take a step back. Rates are definitely a component; however, you need to understand from the population health management perspective, what the utilization is and what quality opportunities exist. You need to make sure the contract isn't solely focused on the rate itself, but also ways to incentivize the network to achieve these outcome measurements both in utilization and quality.
The other big mistake is accurately depicting the illness burden of your population ... to adequately risk-adjust your population. These metrics are not often considered in a fee-for-service [contract] but they become critical in risk-based contracting.
Q: What is your best advice for hospital executives entering into these contracts?
JH: Hospital executives moving into risk-based agreements have to recognize that the way you've always done business isn't necessarily going to lead to success in these new contracts. A lot of people think risk-based contracting means focusing solely on decreases in utilization, which is somewhat troubling for hospital executives. My advice is to take a broader look at the idea of total population health management. If population health management efforts improve patient satisfaction and drive positive patient outcomes, health plans will begin to reward value-based care appropriately in ways that compensate providers for potential reductions in utilization… it really involves a shift in traditional mindsets.