Healthcare Issues & Trends

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How to Manage the Risk of Population Health Management

Posted on March 3, 2015 by Gallagher Integrated

Are you ready for the new frontier of Population Health Management (PHM)? If not, it’s okay; many organizations are still waiting to see the results from those organizations who have already embarked on the PHM journey. And while it may seem untested to some, there is no question that PHM is an issue permeating all the healthcare headlines at the moment. Success will come soonest to those organizations who begin to embrace PHM soonest. In other words, organizations who choose not to embrace PHM risk being left behind in the dust by their more adaptable competitors.

Risk is, of course, one of the biggest concerns for the majority of the organizations who choose to wait. Adding to the concern is that Medicare ACOs are described as particularly risky—arguably too risky—and therefore, many organizations become concerned that their practice could be hurt financially by participating in a Medicare Shared Risk ACO.

This leaves them with two routes: limiting the size of their ACO Medicare Shared Risk business or focus on achieving the quality goals needed to be eligible for shared risk payments. As it turns out, limiting the size of the ACO Medicare Shared Risk business may be, in the long run, a bad idea. Small populations of patients may not be actuarially stable, which can result in greater risk to the organization, not less.

Without a doubt, the operation of ACO will result in lower professional fee cash flow because of a reduced fee structure, with a shift of that cash flow (assuming a payout) to a shared risk pool for managing medical costs. Further, it is entirely plausible—particularly with Medicare ACOs—that an organization might not achieve the requisite quality measures proscribed by CMS, which would result in no participation in shared risk savings whatsoever. So, sufficient funds set aside to weather a financial hit is prudent, particularly if the organization is at risk to pay physician compensation despite the ACO results.

For more insights like these, take our PHM quiz and download your free whitepaper: “Population Health Management: The New Frontier.” 

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