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Why risk matters as healthcare providers transition to pay-for-performance models

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The concept of risk is typically partnered with the idea of reward. If I take a risk, what is my expected reward? It’s a sound way to evaluate whether to move forward with simple decisions like “should I buy these concert tickets?” as well as high-impact choices such as “is this the right time to invest in a better health IT solution?” If the risk is too high, human nature tells us to walk away.

For healthcare providers transitioning to value-based care, embracing risk remains a challenge. In varying degrees, all pay-for-performance contracts – from both the Centers for Medicare & Medicaid (CMS) and private payers – contain elements of risk. The key to getting a reward from the contracts is to figure out how to proactively manage patient care and produce high-quality outcomes.

Many healthcare providers and hospitals have yet to adopt risk models, instead keeping the fee-for-service models with which they have a comfort level. But, with the growth of accountable care organizations, bundled payment models and the continued roll-out of mandatory risk-based programs, now is the time to embrace the complexities of the new payment models.

Barriers to taming risk
Value-based payment models require the ability to make sense of big data to track and report on treatment measures as means of obtaining a full picture of patient outcomes. Uncertainty about how to access disparate patient data and leverage it across the organization remains largely the main barrier standing in the way of managing risk.

Many healthcare organizations are in the early stages of building the IT infrastructure needed to gain this level of insight from their data. Gaps in information can mean the difference between earning rewards or forfeiting payouts.

Finding opportunity in risk
As healthcare organizations take on risk, there is an opportunity to leverage risk for their benefit. It just takes the right tools. Health IT solutions explicitly designed for population management and bundled payments enable organizations to integrate data and measure performance.

Holistic patient data that is available to providers within their workflow can be used at the point of patient care to improve decision making and offer an enhanced view of a patient’s complete health.

Harnessing big data is how healthcare providers can do more than just manage risk. It’s the key to improving patient outcomes across the board and being rewarded for it.

If you’d like to learn more about why risk is important as healthcare providers take on more performance-based contracts, read “Taking financial risk: A primer on IT infrastructure, Part 1: Why this matters”.


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