Why Managing Clinical and Financial Risk Is Primary Care’s Future
By Brian Klepper, PhD
How will primary care practices change as the health benefits market increasingly favors value? Risk bearers (like health plans, health systems, stop loss carriers, and captive insurance arrangements) often rely upon primary care physicians to do the basics: managing common ailments and coordinating care and cost in ways that deliver consistently better health outcomes and/or lower costs. But there also are management approaches available that can drive appropriateness and efficiencies throughout the continuum, facilitating still stronger performance, if primary care will only access them.
Today, primary care is in high flux, but nervous about getting ahead of market trends. Most practices are still dominated by the delivery model that evolved in response to fee-for-service reimbursement, rewarding high volumes of staccato, 10-minute office visits, referring complexity on to specialists, and managing common ailments. But most don’t actively manage the excesses that plague American health care, nor do they see it as part of their role.
Dissatisfaction with the impersonal nature of the fee-for-service model has fostered the growing Direct Primary Care (DPC) sector, which offers concierge-level personalized attention to patients who pay a monthly subscription fee. While this niche holds promise and does appear to have satisfied patients, so far, little evidence has been presented suggesting better clinical or financial results. It also is doubtful that many DPC providers have invested in the infrastructure required to more effectively manage clinical or financial risk.
A large percentage of primary care physicians (PCPs) are now employed by health systems that, in exchange for a healthy paycheck and minimal administrative burden, expect them to refer patients early and often into the system’s lucrative outpatient specialty and inpatient services.
Some primary care practices have become much more focused on optimizing their roles through Medicare Advantage (MA) contracts that offer them full risk arrangements. Organizations like ChenMed in Miami and Iora Health in Boston accept 85% of the premium – the MA plans keep the other 15% – and are accountable for managing everything that’s required within the population, including specialty services, outpatient and inpatient services, imaging, drugs, and so on. These groups have become highly adept at managing this risk and are profitable. It is not much of a stretch to imagine that similar risk arrangements can be struck between primary care organizations and employer or union health plans.
In many cases, physicians’ relationships with health systems have worn thin, and some new groups are eager to pursue risk arrangements. In Charlotte, NC, about 100 physicians at Atrium and about 50 physicians at Novant, the two dominant regional health systems – have recently left to establish new primary care practices. One of the new groups signed a management agreement with Holston Medical Group in Kingsport, TN, which over the past few years has developed advanced risk management arrangements, including an ACO, and the infrastructure required to aggressively manage that risk.
The next step in this evolution is to pair primary care practices that are positioned to take on risk with highly capable risk management “modules.” There are now hundreds of specialized health care management organizations, some of them proven high performers, focused on nearly every conceivable type of high-value clinical and financial risk. Companies are specialized for management of musculoskeletal conditions, cardiometabolic conditions, cancer care, allergies, sleep dysfunction, dialysis, fertility, low-risk maternity, and so on. On the financial risk side, there are companies that specialize in claims review, large claims resolution, imaging cost management, drug spend management, reference-based pricing, bundled pricing, and more. Typically, the companies that have developed these risk management approaches have very high subject matter expertise in their niches, so generalists are not likely to be able to obtain comparable results. It’s probably worth contracting with the folks who have built a demonstrably better mousetrap.
The list detailed above goes far beyond the risk management activities most primary care practices have in their wheelhouse and think of as their responsibility. But they each represent significant areas of cost or health outcomes whose management can be overseen by primary care physicians. The primary care practice of the future will likely develop risk management capabilities in as many identifiable areas as possible, in order to drive maximum benefit, because it will be in its interests to do so.
Almost certainly, a future market will increasingly demand that providers consistently demonstrate better health outcomes and/or lower cost than conventional care. Care and cost management will be mission-critical organizational capabilities. Going at risk by guaranteeing results in some form based on the population-level outcomes and costs that an organization knows it can achieve, should be a priority.
Also, our understanding of the elements that comprise full continuum risk becomes more detailed as our experience deepens, informing the risk management tools we deploy and how we measure impact. Primary care will become more thorough and competent risk managers.
It is important to remember that many purchasers are eager to seek better deals than they’ve had access to from the conventional health plans recently. It shouldn’t be difficult to shine by outperforming our current health care system. In other words, acting from the front end of the health system, primary care physicians can cobble together multi-vectored risk management platforms favoring high-performance providers that are focused on driving optimal care and costs not only within primary care, but downstream, throughout the continuum.
Going at risk for care and cost will encourage primary care physicians to drive patients only to high performing specialty services, and to erode the delivery of inappropriate and unnecessary care. The reduction in overtreatment will create an oversupply in many specialties, re-empowering primary care and could flip the relatively disadvantaged relationship with specialists that has dominated for the past 30 years.
By organizing around highly capable of management of full continuum risk, primary care can become re-empowered, reasserting its role in health care as a manager of complexity, driving out unnecessary care and excessive cost, and bringing health care back to rights.
Brian Klepper is a health care analyst and Executive Vice President of Validation Institute.