How will PCPs adapt to the evolution of value-based payment models?
The transition from fee-based to value-based payment models is becoming a top priority for healthcare executives, fundamentally changing the way the system views and engages primary care physicians (PCPs). However, this can be a complex process that requires changes and modifications for the system and the PCP.
Health System Perspective
Today, health systems are employing increasing numbers of physicians. Historically, there were various reasons for employing PCPs, the major one being to align the care of their patients within the health system. But, many hospital leaders view the hiring of PCPs as a revenue pitfall. In fact, The New England Journal of Medicinereported health systems lose about $200,000 per employed PCP per year in their first three years.1
In the fee-for-service world, a loss in revenue from these newly employed PCPs can be attributed to the fact that they are reimbursed at lower rates than specialist services and have fewer opportunities to generate revenue from technical services such as tests, therapies and labs.
In the context of the transition from volume- to value-based care, health systems have the opportunity to reassess how they evaluate the performance of PCPs. In a value-based care model, the benefit PCPs bring to an organization is less about referrals and more about helping the system build the framework for population health management. Organizations need to have attributed lives to enter into a value-based contract tied to outcomes. PCPs bring-and manage-those attributed lives.
The transformation of healthcare delivery requires executives to rethink their business model and how to align it with effective compensation, evaluation and incentives for the PCPs. Adopting accountable primary care, based on better outcomes and performance, also requires the system to provide the tools and resources to PCPs so they can be successful under this arrangement. Consequently, PCPs can help the system achieve a surplus in value-based care and are compensated for better outcomes at reduced costs.
The transition to value-based care presents a daunting challenge to PCPs. After investing years in an educational marathon that prepared them to become clinicians, new PCPs now have to learn to deliver patient care within a new model that is not taught in medical school. On the other hand, established PCPs with long tenure are now at the mercy of changing healthcare models under which they will soon be required to operate. The fundamental task, then, is helping established and newly trained PCPs practice in this new world; but this is more easily said than done.
Many PCPs are used to operating in a fee-for-service environment, where they get reimbursed for performed services and the risk is borne by the insurance company. When a health system enters into value-based contracts, the PCPs are fundamental to managing the risk. This means that PCPs need a better line of sight into the cost of care, data about the effectiveness of various treatments as well as the patient’s medical history so they can incorporate these factors into the care delivery. PCPs also need to establish new ways to communicate with their patients and help patients with complex medical conditions adhere to their treatment plans. All this requires PCPs to practice differently and the majority don’t yet know how.
The PCPs pain points at this stage are closely linked to changes at an organizational level in the institutions where they practice. As the C-suite grapples with decisions about if, when and how to transition to value-based care in order to stay profitable, PCPs face uncertainty and sometimes conflicting demands. They now have to be proficient in becoming the coordinators of care and managing their teams; developing treatments plans; and understanding measures of population health.
The healthcare systems that have been the most successful in their transition to value-based care did so by ensuring PCPs were actively engaged in the process. Engagement can be defined in several ways. First, PCPs need clinical leadership and inclusion in the governance structure of the organization, so they can have a seat at the table when big decisions impacting the practice of medicine are made. Second, health systems have to provide PCPs with the tools they need to do their job well in a value-based arrangement, such as new workflows, information on the cost of care, access to data across the care continuum, best practice sharing and training. Third, health systems need to offer incentives to PCPs to change the way they practice, which, at its core, is a change of behavior.
At a broader level, best practice sharing within a hospital system will be of critical importance, as organizations adopt population health management. There is no disputing among PCPs that the escalation of healthcare costs must be curbed and as success stories happen, healthcare organizations and PCPs will be inspired to take the plunge into value-based care. I am optimistic that with time, practicing population health management will be among the key competencies of the next generation of PCPs.
- “Hospitals’ Race to Employ Physicians – The Logic Behind a Money-Losing Proposition.” Robert Kocher, MD, and Nikhil R. Rahni, BS. New England Journal of Medicine, May 2012.