As reimbursement moves toward a pay-for-performance system, providers will increasingly be faced with payment reform design and implementation challenges.
In a Robert Wood Johnson Foundation conference held in October 2014, RWJF grantees and a diverse group of provider faculty convened to explore emerging challenges that will need to be addressed to assure the long-term success of payment and delivery reform.
Participants at the conference identified three primary challenges hospitals and physician practices will increasingly face, and strategies to mitigate them. A full report on the conference can be seen here.
1. Aligning alternative payment with clinician compensation. As providers and payers establish financial relationships that create new incentives for quality and efficiency, provider organizations must devise ways to effectively translate these incentives to their employees — both clinicians and non-clinicians. Failure to do so could lead to misaligning incentives and jeopardizing performance under alternative payment models, according to the report.
2. Considering social determinants of health in payment reform models. The impact of social determinants on health is not a recent realization. However, providers and payers have recently been paying more attention to the connection between contributors of poor health — such as socioeconomic disparities, current social needs and healthcare — and health outcomes.
According to the report, the relative impact of medical care is rather small. Lifestyle and behavior had the largest — 50 percent — impact determining health status, followed by environmental (20 percent), human biology (20 percent) and medical care (10 percent). These findings underscore the necessity among payers and providers to consider the impact these social determinants have on health status as they implement payment reform aimed at improving health outcomes and reducing costs. These findings also raise questions about whether and how measurement strategies should be risk-adjusted for the impact of socioeconomic variables on the patient, as some patients will require more services than others to attain an improved health status.
3. Repurposing hospital resources. As a result of reformed payment models, which motivate providers to reduce avoidable inpatient hospital and emergency department utilization, healthcare services are increasingly being provided in the outpatient, home and other community-based settings.
According to the report, more hospitals and health systems are reacting to this trend by transforming their facilities to better address the needs of the communities they serve. For example, reduced inpatient volume has led some smaller community and rural hospitals to convert to urgent care centers, office space or facilities for outpatient care. In some instances, real estate developers renovate under-utilized space and use it for outpatient medical services, including doctor's offices, dialysis centers and urgent care centers, as well as for non-medical services.