Rob Allen, president and CEO of Intermountain Health in Salt Lake City, is spending a lot of time thinking about changing payment mechanisms and the flow of care for the value-based environment. The health system has been in value-based arrangements since 2011 and Mr. Allen is now challenging his team to think further upstream to manage populations.
Most value-based care conversations focus on facilitating the payment mechanism, which is important, but Mr. Allen wants to talk more about alignment. When anyone asks him about value-based care, he responds: "What value for whom? What value are we creating and for whom are we creating it?"
"As we answer those questions, I think we truly can create a value model that serves our communities, and serves them well," he said during a fireside chat at the Becker's 14th Annual Meeting on April 11 in Chicago.
He is also focused on creating simplicity within the healthcare system for patients, communities and caregivers as well as health plan members. When confronted with a new problem and solution, Mr. Allen looks for ease of use and whether it will bring joy to clinical work.
"Those are really important front items that drive us when we think about the payment mechanisms; we can't get paid now from insurances," said Mr. Allen. He referenced an American Medical Association study showing health insurance takeback schemes are costing hospitals and physicians $1.6 billion costs per month. The study also noted increased denials from 8% to 11% in 2022. Intermountain's solution? Going upstream to collect payment before services are rendered.
"If you get paid on the front end, you actually don't have to appeal and go through the denial process," Mr. Allen said.
Intermountain has been seeking opportunities for pre-payment over the last few years and seen positive results. But it isn't possible with all arrangements, especially in contracts with commercial payers. The healthcare inflation soared higher than the inflation rate for the general public, and healthcare payments didn't increase at the same rate.
"We're in this time of compression. The government isn't going to pay us a lot more. They can't afford it," said Mr. Allen. "We're 28% of the budget in healthcare. We're [17%] of the gross domestic product. We are one-fifth of the economy in the United States. How much more can we squeeze from other parts of the economy? We just have to face the reality we're not going to get a bunch of influx of money in healthcare."
The executive team at Intermountain is looking upstream to take costs out of the healthcare system. About 27% of the $4.4 trillion spent on healthcare last year was for preventable issues that health systems could help people avoid in the future.
"If we truly are upstream in value creation to keep people healthy, we can start to tap into that 27% of $4.4 trillion, which is $1.2 trillion that we can look at how we can redirect and enhance services in some cases," he said, citing a study from the National Institutes of Health. "Can we even give it back to the community? At the very least, we can slow the healthcare inflation factor and hopefully find different value chains for people that we serve."
Another 25% of the healthcare spend is projected out as waste, according to a JAMA study. Combined the spend on preventable issues and waste is around 52% of the total healthcare spend in the country. Mr. Allen posited that simplifying the work can help cut waste and rebuild jobs so nurses and physicians can focus more on patient care.
Intermountain's Utah-based facilities operate with 50% of the revenue stream is focused on value; across the entire enterprise, 37% of the revenue is focused on value. There are places within the system's Colorado and Montana markets that don't have a lot of value within the operations, but the system did just begin a partnership with UCHealth in Denver and sold products last year under its SelectHealth health plan, which has gained membership and projected to continue growth.
Mr. Allen said the leaders heading a value-based care transition should be able to manage upside and downside risk.
"We view value very much as the ability to do the right thing. In a fee-for-service world, you have to do something to somebody to get paid. As much as we want to go upstream, there's limited resources to do that, and what types of things can you do upstream to actually impact people and really help them in their journey along the way?" said Mr. Allen.
Intermountain has several great examples of going upstream, including a partnership to invest $12 million into a project over three years that would support agencies solving community-based needs for underserved populations. But things didn't go as planned at first.
"We learned a lot about those agencies serving those community based needs; [they were] scared that a health system was coming to take over their turf," said Mr. Allen. "That was a surprise to us. It was never our intention, but it was a surprise that people were threatened by us being there because they had their purpose and they wanted to do their good. We learned better how to approach that on the front end as that went along."
One of the major issues was housing instability, so Intermountain moved into impact investing: taking part of the balance sheet set aside for investments, and investing back in the community. This investment is separate from charity care or a gift.
"We actually take a portion of our investment reserves and we take a lower return on that investment," Mr. Allen said. "So our gift is the lower return, and we moved into housing and said, how do we get low income housing going? We have now contributed through this work with others who build the houses. We go out and help invest in the projects, and we've now saved over 2,560 housing units either saved that were coming off or built new."
Intermountain is now expanding the strategy to other states and looking for more ways to go upstream.
"If you own the dollar on the front end, how can you impact people's health? You have to think differently than we did in hospitals, but then still be there for the hospital sites when you need care," Mr. Allen said. "We want to give you the best care possible and we want our teams ready, and they are ready to take care of you. But we want to help you stay healthy as well."
Click here to hear Mr. Allen discuss Intermountain's approach to hospital operations during the Transform Hospital Operations Summit at Becker's Hospital Review 14th Annual Meeting.