STAYING THE COURSE ON VALUE

Transcription

1 32 % of respondents say the fee-for-service payment model is least effective in quality and cost improvements INTELLIGENCE REPORT MAY/JUNE 2018 STAYING THE COURSE ON VALUE ANALYSIS... 2 SURVEY RESULTS... 6 METHODOLOGY...18 RESPONDENT PROFILE...19 An Independent HealthLeaders Media Report Powered by: SPONSORED BY: Global Healthcare Alliance HEALTHLEADERSMEDIA.COM/INTELLIGENCE

2 HEALTHCARE S GRADUAL EVOLUTION TO VALUE Value-based payment models continue to be a central focus of healthcare providers, with care delivery, finance, and infrastructure undergoing transformation to support the new paradigm. According to the 2018 HealthLeaders Media Value-Based Readiness Survey, modest progress is being made. For example, 62% of respondents say that their level of strength is very strong (13%) or somewhat strong (49%) for overall preparation for value-based financial changes, and preparation for value-based care delivery changes is also encouraging, with 54% saying that their level of strength is very strong (13%) or somewhat strong (41%). Preparation of a value-based infrastructure is slightly less positive, with 50% reporting that their level of strength is very strong (10%) or somewhat strong (40%). Viewed another way, an equal number of respondents (50%) say it is very weak (12%) or somewhat weak (38%), meaning that there is work to be done in this area. The infrastructure changes to me are the hardest part because you have an asset base that, in many cases, could be a hospital that s been around anywhere from 40 to 80 years, says Karen Hanlon, CPA, executive vice president, chief financial officer and treasurer at Highmark Health, and the lead advisor for this Intelligence Report. Based in Pittsburgh, Highmark Health has a diversified portfolio of businesses, including Highmark Inc., a Blue Cross Blue Shield affiliate, and Allegheny 3 Only % of respondents say that their care processes and systems are fully mature Jonathan Bees HealthLeaders Media Senior Research Analyst ANALYSIS Health Network, a health system that features eight hospitals. You have to figure out, how do you repurpose that asset base to be aligned with what your approach to care is in a value-based model? One where you re trying to keep people out of the hospital, Hanlon says. Care delivery competencies. Respondents indicate that they are especially focused on improving care coordination and patient engagement, recognizing that these areas are critical to transforming care delivery. For example, the top two care delivery areas (Figure 4) in which respondents say their organization has developed competencies to prepare for value-based care are care coordination/guiding patients to appropriate care (70%) and encouraging patients to be engaged in their care (68%). Somewhat surprisingly, longitudinal patient care (29%) falls near the bottom of the list of responses and is the only area below a 30% response. This is perhaps an indication of the early stage at which many respondents currently reside in the transition to value-based care. Going forward, longitudinal patient care is expected to play an important role as providers strive to manage patient care over longer periods of time and across multiple care settings as part of their value-based initiatives. Respondents rate their ability to deliver value-based care within the various areas of care delivery fairly highly, with all but one area receiving a response of 44% or higher for very strong, and the top three responses all HEALTHLEADERSMEDIA.COM/INTELLIGENCE MAY/JUNE

3 ANALYSIS exceeding 50% (Figure 5). The top three areas for very strong are broader access to care (55%), clinical integration (51%), and care coordination/ guiding patients to appropriate care (50%). Consistent with the results in Figure 4, longitudinal patient care (44%) also receives a lower assessment for I think that if you re a system that s in a value-based model and you re working with independents that are not in the same model, it s hard to get alignment of financial interests. Karen Hanlon, CPA, executive vice president, chief financial officer, and treasurer, Highmark Health respondent organizations ability to deliver value-based care. It is tied with encouraging patients to be engaged in their care (44%) as the second-lowest response for very strong, and it receives the second-highest response for very weak (13%). These responses are a sign that longitudinal patient care remains a work in progress for most providers. Although care coordination and patient engagement place high on the list of care delivery competencies, respondents indicate that existing processes and systems that support care teams and practices in coordination, communication, and patient outreach efforts require more work (Figure 6). For example, 50% of respondents say that their care processes and systems are fully mature (3%) or that their care processes and systems are evolving to a mature state (47%). On the other hand, an equal number (50%) say that they are still evaluating required changes (6%) or that they are in the beginning stages of evolving their processes and systems (44%). And while it is not unexpected that few respondents say that their care processes and systems are fully mature, it is nonetheless surprising that in our survey data no respondent from either a health system or hospital says that they have achieved this stage of development. Conventional wisdom is that health systems in particular are further along in the transition to value-based care, but this response highlights the challenge of achieving full maturity. Finance competencies. Responses for healthcare finance competencies are comparable to the results for care delivery, with respondents indicating a relatively high degree of competency across the various areas (Figure 2). For example, the top two healthcare finance areas in which respondents say their organization has developed competencies to prepare for value-based care are value-based performance metrics (63%) and aligning employed physicians/ providers (63%). At the other end of the spectrum, responses show that developing a provider-sponsored health plan (24%) can be challenging for providers. This is because the skill sets and staff necessary to be successful in this area are typically outside of the provider domain. Also difficult for providers is aligning independent physicians/ providers (28%), as it can be problematic for providers to develop risk-based relationships with physicians outside of their organizations. (This issue is discussed more below.) When rating their organizations ability to deliver value-based care within various areas of healthcare finance (Figure 3), respondents generally indicate a strong ability. For example, 79% say that their level of ability is very strong (25%) or somewhat strong (54%) for developing value-based performance metrics, and 73% say that their level of ability is very strong (25%) or somewhat strong (48%) for aligning employed physicians/providers. Note that the healthcare finance areas that receive the weakest ratings for ability to deliver value-based care are the same areas found at the bottom of the response list for healthcare finance competencies in Figure 2. For example, 63% of respondents indicate that their provider-sponsored health plan is very weak (33%) or somewhat weak (30%), HEALTHLEADERSMEDIA.COM/INTELLIGENCE MAY/JUNE

4 ANALYSIS and 58% say that aligning independent physicians/providers is very weak (18%) or somewhat weak (40%). While aligning independent physicians/providers for value-based care is one of the more difficult areas of healthcare finance, it is also one of the more critical. It is one thing for a provider to be able to deliver value-based care throughout its network, and quite another to provide it across the full continuum of care that includes outside organizations. Hanlon says that the problem is not necessarily caused by a lack of management control over independent physicians/providers, but conflicting financial models. I think that if you re a system that s in a value-based model and you re working with independents that are not in the same model, it s hard to get alignment of financial interests, she says. One of the things that we re doing at Highmark Health that is having success is establishing clinically-integrated networks. These are comprised of our Allegheny Health Network employed physicians as well as independent physicians that join the reimbursement program between our insurance company and the clinically-integrated network, which is a value-based contract. Those independent physicians have signed on to live in that world and are very aligned to a value-based model. But I think absent the aligned economic interests between you as a health system and the independent physicians, it s going to be hard to operate, Hanlon says. IT competencies. Survey results reveal that providers are especially focused on EHR capabilities as they work to improve their IT competencies in preparation for value-based care (Figure 7). In fact, the top three IT items are all EHR related: enhancing provider efficiency through EHR usability (57%), EHR standardization among care partners (49%), and EHR interoperability (46%). Having a seamlessly integrated EHR environment is one of the keys to successfully implementing value-based care, and it is no surprise that providers are concentrating on this area. Interestingly, one area that receives a low response from respondents is prescriptive analytics (predictive analytics plus suggested solutions) (19%). This year s response is 14 percentage points lower than in last year s survey, a somewhat unexpected result given the industry s typically strong interest in analytics. Providers are expected to increase their focus on developing skills and investing in advanced forms of analytics as they make a greater commitment to value-based care. Survey results also indicate that the respondent commitment to developing EHR competencies to prepare for value-based care is starting to produce results (Figure 8). For example, 64% of respondents say that EHR standardization among care partners is very strong (22%) or somewhat strong (42%), and 62% say that enhancing provider efficiency through EHR usability is very strong (11%) or somewhat strong (51%). Completing the list of top three areas, 59% of respondents say that their EHR interoperability is very strong (19%) or somewhat strong (40%). However, areas such as staff actuarial skills for financial risk assessment and prescriptive analytics (predictive plus suggested solutions) are assessed by respondents as the weakest areas of IT. For example, 70% of respondents say that staff actuarial skills for financial risk assessment is very weak (28%) or somewhat weak (42%), and 66% say that prescriptive analytics is very weak (20%) or somewhat weak (46%). I think the first thing that providers are doing are the things that are the most obvious, such as care coordination, care teams, standardization of clinical practice, things that for a clinician are normal practice, says Hanlon. When you get to analytics, I think that you need a team that has a very different skill set, and you have to be willing to invest in it. And you probably also have to have some alignment with a payer so that you re able to leverage their data and any insights that come from the connection of payer and provider data. Payment models. Respondents report a wide range of experiences with the various payment models they use, both fee-for-service and value-based (Figure 13). Not surprisingly, they say that the fee-for-service with no value-based component payment model HEALTHLEADERSMEDIA.COM/INTELLIGENCE MAY/JUNE

5 ANALYSIS is the least effective in terms of quality and cost improvements, with approximately one-third (32%) saying that it offers neither improved outcomes nor reduced costs. This result is higher than any other payment model, and it has the highest participation rate by respondents only 3% say they have no involvement with this program. On the other hand, partial capitation (12%) and full capitation (10%) receive the lowest response for yielding neither improved outcomes nor reduced costs. However, they also have the lowest participation rate by respondents 49% and 54%, respectively, report they have no involvement with this program. And only 4% and 3%, respectively, report improved outcomes and lower costs, suggesting that this payment model has yet to yield much value. According to respondents, fee-for-service with upside rewards, such as performance awards (28%), is currently the top model for improved outcomes and lower costs, coming in nine percentage points higher than bundled payment programs (19%). Notably, the three highest responses for improved outcomes, no cost reduction are all fee-for-service based: fee-for-service with no value-based component (34%), fee-for-service with upside rewards, such as performance awards (24%), and fee-for-service with downside risk, such as reimbursement penalties (21%). with independent physicians/providers. A more fundamental hurdle facing providers is reconciling the existence of two distinct payment models: fee-for-service and value-based care. I think to fully immerse yourself in a value-based world, you have to have a heavy weighting of your payer mix aligned with that model, says Hanlon. It s too hard to live in two different worlds. If you have a commercial payer that represents 10% or 15% of your book, and that s the only payer that s really moving down a value-based path, as a provider I don t know how you d do that. Jonathan Bees is senior research analyst for HealthLeaders Media. He may be contacted at jbees@healthleadersmedia.com. Going forward, respondents say that fee-for-service with upside rewards, such as performance awards (63%) is the top payment model they expect will evolve into one of their organization s principal payment models for value-based care (Figure 14), followed by bundled payment programs (50%), and shared risk, such as ACO (49%). Value-based growth. Responses suggest that momentum is building for value-based care, and respondents expect strong growth in the share of patients in value-based programs over the next three years. For example, they report that 23% of patients are currently in value-based programs, and in three years time they expect this to double to 46% (Figures 9 and 10). Likewise, they indicate that 21% of current net patient revenue comes from value-based programs, and that this will more than double to 44% in three years (Figures 11 and 12). While expectations for value-based growth are robust, there are many challenges ahead, such as developing competencies that address longitudinal patient care and achieving alignment HEALTHLEADERSMEDIA.COM/INTELLIGENCE MAY/JUNE

6 VALUE-BASED CARE LEVEL OF STRENGTH Percent of respondents who say that their organization s level of strength is very strong or somewhat strong for value-based financial changes. Figure 1 Considering the industry s direction toward value-based care, what is your organization s level of strength in each of the following? > Financial changes. Respondents generally have a positive appraisal when evaluating their organizations level of strength in preparing for value-based financial changes. For example, 62% say that their level of strength is very strong (13%) or somewhat strong (49%), and only 38% say it is very weak (9%) or somewhat weak (29%). > Care delivery changes. The response for overall preparation for value-based care delivery changes is somewhat less positive, with 54% saying that their level of strength is very strong (13%) or somewhat strong (41%). Forty-six percent say it is very weak (10%) or somewhat weak (36%). > Infrastructure changes. The response for overall preparation of a value-based infrastructure indicates that more work is required, with 50% reporting that their level of strength is very strong (10%) or somewhat strong (40%). At 50%, an equal number say it is very weak (12%) or somewhat weak (38%). Very strong Somewhat strong Somewhat weak Very weak Overall preparation for value-based financial changes 13% 49% 29% 9% Overall preparation for value-based care delivery changes 13% 41% 36% 10% Overall preparation of a value-based infrastructure 10% 40% 38% 12% Ranked by responses for very strong Base = 90 HEALTHLEADERSMEDIA.COM/INTELLIGENCE MAY/JUNE

7 DEVELOPING FINANCIAL COMPETENCIES The top two healthcare finance areas that respondents say their organization has developed competencies to prepare for value-based care are value-based performance metrics and aligning employed physicians/providers in a tie. Figure 2 In which of the following areas of healthcare finance has your organization developed competencies to prepare for value-based care? > Leading finance areas. The top two healthcare finance areas in which respondents say their organization has developed competencies to prepare for value-based care are value-based performance metrics (63%) and aligning employed physicians/ providers (63%). Developing value-based performance metrics Aligning employed physicians/providers Ability to model payer contracts Collaborative relationships with payers Financial risk assessment capabilities Linking provider compensation to value-based metrics 63% 63% 49% 44% 41% 41% > Competency challenges. Responses indicate that developing a provider-sponsored health plan (24%) can be challenging for providers. The skill sets and staff necessary to be successful in this area are typically outside the mainstream of the provider domain. Further, the response for aligning independent physicians/ providers (28%) also places low on the list, as it can be difficult for providers to develop riskbased relationships with physicians outside of their organizations. Aligning independent physicians/providers Provider-sponsored health plan 28% 24% Other area(s) of finance None 3% 7% Don t know 1% Base = 90 HEALTHLEADERSMEDIA.COM/INTELLIGENCE MAY/JUNE

8 ASSESSING FINANCIAL STRENGTHS Percent of respondents who rate their organization s level of ability as very strong or somewhat strong for developing value-based performance metrics. Figure 3 Please rate the following areas of healthcare finance according to your organization s ability to deliver value-based care. > Top finance areas. According to respondents, the top two healthcare finance areas with the strongest ratings are the same ones identified in Figure 2 for areas of healthcare finance competencies developed to prepare for value-based care. For example, 79% say that their level of ability is very strong (25%) or somewhat strong (54%) for developing value-based performance metrics, and 73% say that their level of ability is very strong (25%) or somewhat strong (48%) for aligning employed physicians/providers. > Value-based challenges. Not surprisingly, the areas of healthcare finance receiving the weakest ratings according to respondent organizations ability to deliver value-based care are the same areas found lower on the response list for commitment to developing healthcare finance competencies to prepare for value-based care in Figure 2. For example, 63% of respondents indicate that their provider-sponsored health plan is very weak (33%) or somewhat weak (30%), and 58% say that aligning independent physicians/providers is very weak (18%) or somewhat weak (40%). Very strong Somewhat strong Somewhat weak Very weak Developing value-based performance metrics 25% 54% 18% 2% Aligning employed physicians/providers 25% 48% 20% 6% Collaborative relationships with payers 20% 43% 29% 7% Financial risk assessment capabilities 18% 45% 33% 5% Linking provider compensation to value-based metrics 16% 39% 35% 11% Ability to model payer contracts 14% 49% 27% 10% Provider-sponsored health plan 12% 25% 30% 33% Aligning independent physicians/providers 6% 36% 40% 18% Other area(s) of finance 8% 41% 33% 18% Ranked by responses for very strong Base = 83 HEALTHLEADERSMEDIA.COM/INTELLIGENCE MAY/JUNE

9 DEVELOPING CARE DELIVERY COMPETENCIES Percent of respondents who say that their top area of care delivery competency for value-based care is care coordination/ guiding patients to appropriate care. Figure 4 In which of the following areas of care delivery has your organization developed competencies to prepare for value-based care? > Leading care delivery competencies. Responses indicate that the top two areas of care delivery competencies respondent organizations have developed to prepare for value-based care are care coordination/guiding patients to appropriate care (70%) and encouraging patients to be engaged in their care (68%). Care coordination/guiding patients to appropriate care Encouraging patients to be engaged in their care Clinical integration Care team coordination/primary care as care team leader Care standardization Broader access to care 70% 68% 63% 51% 46% 42% > Longitudinal patient care. The area receiving the lowest response from respondents for developing care delivery competencies is longitudinal patient care (29%). The low response is an indication of the early stage at which many respondents currently reside in the transition to value-based care. However, longitudinal patient care is expected to play an increasingly important role as providers focus on managing patient care over longer periods of time and across multiple care settings as part of their value-based initiatives. Longitudinal patient care 29% Other area(s) of care delivery None 7% 3% Don t know 1% Base = 90 HEALTHLEADERSMEDIA.COM/INTELLIGENCE MAY/JUNE

10 ASSESSING CARE DELIVERY STRENGTHS Percent of respondents who assess their organization s ability to deliver valuebased care within care delivery as very strong for broader access to care. Figure 5 Please rate the following areas of care delivery according to your organization s ability to deliver value-based care. > Strong ratings. Respondents generally assess their organizations ability to deliver value-based care within care delivery as strong, with all but one response receiving a rating of 44% or higher for very strong, and the top three responses all exceeding 50%. The three leading areas for very strong are broader access to care (55%), clinical integration (51%), and care coordination/ guiding patients to appropriate care (50%). > Work in progress. As with Figure 4, longitudinal patient care (44%) receives a lower rating for respondent organizations ability to deliver value-based care in this area. For example, it is tied with encouraging patients to be engaged in their care (44%) as the second-lowest response for very strong, and it receives the second-highest response for very weak (13%). These responses indicate that longitudinal patient care remains a work in progress for most providers. Very strong Somewhat strong Somewhat weak Very weak Broader access to care 55% 17% 23% 5% Clinical integration 51% 15% 26% 8% Care coordination/guiding patients to appropriate care 50% 21% 26% 3% Care standardization 49% 27% 17% 7% Other area(s) of care delivery 47% 31% 7% 15% Longitudinal patient care 44% 33% 10% 13% Encouraging patients to be engaged in their care 44% 22% 28% 6% Care team coordination/primary care as care team leader 37% 27% 28% 8% Ranked by responses for very strong Base = 86 HEALTHLEADERSMEDIA.COM/INTELLIGENCE MAY/JUNE

11 EXISTING PROCESSES AND SYSTEMS Percent of respondents who say that their care processes and systems are fully mature or that their care processes and systems are evolving to a mature state. Figure 6 How well do your existing processes and systems support your care teams and practices in their coordination, communication, and patient outreach efforts? > Modest progress. Responses suggest that modest progress has been made in supporting care teams and practices in their coordination, communication, and patient outreach efforts. Fifty percent of respondents say that their care processes and systems are fully mature (3%) or that their care processes and systems are evolving to a mature state (47%). However, an equal number are not as far along, with 50% saying that they are still evaluating required changes (6%) or that they are in the beginning stages of evolving their processes and systems (44%). Our care processes and systems are fully mature Our care processes and systems are evolving to a mature state 3% 47% > No health systems or hospitals. While it is not unexpected that few respondents say that their care processes and systems are fully mature, it is nonetheless surprising that in our survey data we found that no respondent from either a health system or hospital indicates that they have reached this stage of development. The general expectation is that health systems in particular are further along in the value-based evolutionary process, but this result perhaps highlights the difficulty in achieving full maturity. We are in the beginning stages of evolving our processes and systems 44% We are still evaluating required changes 6% Base = 90 HEALTHLEADERSMEDIA.COM/INTELLIGENCE MAY/JUNE

12 DEVELOPING IT COMPETENCIES Figure 7 For which of the following IT items has your organization developed competencies to prepare for value-based care? Percent of respondents who indicate that enhancing provider efficiency through EHR usability is the top IT item that their organization has developed competencies to prepare for value-based care. 57 % > EHR ecosystem. Respondents indicate that EHR capabilities top the list of IT items in which their organization has developed competencies to prepare for value-based care, led by enhancing provider efficiency through EHR usability (57%), EHR standardization among care partners (49%), and EHR interoperability (46%). Having Enhancing provider efficiency through EHR usability EHR standardization among care partners 49% 57% a fully functional EHR ecosystem is critical to successfully implementing value-based care, so it is no surprise that providers are focusing on this area. EHR interoperability IT-based clinical decision support Staff analytics skills to identify patient cohorts Integrating data sets from various sources, including payers More rigorous data accuracy standards than required by fee-for-service Prescriptive analytics (predictive analytics plus suggested solutions) 19% 40% 37% 36% 30% 46% > Prescriptive analytics. One item that is interesting for its location toward the bottom of the list is prescriptive analytics (predictive analytics plus suggested solutions) (19%). This year s response is 14 percentage points lower than in last year s survey, and clearly headed in the wrong direction. However, the prevailing view is that providers will place a greater emphasis on developing skills and investing in advanced forms of analytics as they move more deeply into value-based care. Staff actuarial skills for financial risk assessment 14% None 7% Don t know 1% Base = 90 HEALTHLEADERSMEDIA.COM/INTELLIGENCE MAY/JUNE

13 ASSESSING IT STRENGTHS Percent of respondents who assess their organization s level of strength for EHR standardization among care partners as very strong or somewhat strong. Figure 8 What is your organization s level of strength in each of the following areas of IT, specifically in relation to the change from fee-for-service to value-based care? > EHR strength. In Figure 7, respondents indicate that they are particularly focused on developing EHR competencies to prepare for value-based care, and responses in Figure 8 reveal that these efforts are yielding results. For example, 64% of respondents say that EHR standardization among care partners is very strong (22%) or somewhat strong (42%), and 62% say that enhancing provider efficiency through EHR usability is very strong (11%) or somewhat strong (51%). Rounding out the list, 59% of respondents say that their EHR interoperability is very strong (19%) or somewhat strong (40%). > Areas of weakness. Consistent with the results in Figure 7, staff actuarial skills for financial risk assessment and prescriptive analytics (predictive plus suggested solutions) are the weakest areas of IT. For example, 70% of respondents say that staff actuarial skills for financial risk assessment is very weak (28%) or somewhat weak (42%), and 66% say that prescriptive analytics is very weak (20%) or somewhat weak (46%). Very strong Somewhat strong Somewhat weak Very weak EHR standardization among care partners 22% 42% 30% 6% EHR interoperability 19% 40% 34% 7% Staff analytics skills to identify patient cohorts 13% 33% 35% 19% Enhancing provider efficiency through EHR usability 11% 51% 28% 11% IT-based clinical decision support 8% 42% 35% 14% Integrating data sets from various sources, including payers 8% 39% 35% 18% More rigorous data accuracy standards than required by fee-for-service 7% 40% 43% 10% Staff actuarial skills for financial risk assessment 7% 23% 42% 28% Prescriptive analytics (predictive analytics plus suggested solutions) 5% 29% 46% 20% Other infrastructure element(s) 1% 39% 36% 24% Ranked by responses for very strong Base = 83 HEALTHLEADERSMEDIA.COM/INTELLIGENCE MAY/JUNE

14 PATIENTS IN VALUE-BASED AND FEE-FOR-SERVICE PROGRAMS The percent of patients currently in value-based programs is expected to double in three years time Figure 9 Most Recent Figures 9 and 10 What share of your organization s patients are/will be in one or more of your value-based and fee-for-service programs, currently and in three years? > Patients in value-based programs. Responses indicate that respondents expect strong growth in the share of patients in value-based programs. For example, they report that 23% of their patients are currently in value-based programs, but in three years time, that number will double to 46%. Figure 10 Three Years > Patients in fee-for-service programs. Participation in fee-for-service programs is expected to decline, with respondents saying that 71% of their patients are currently in fee-for-service programs, and that in three years time this will decline to 49%. Base = 90 HEALTHLEADERSMEDIA.COM/INTELLIGENCE MAY/JUNE

15 NET PATIENT REVENUE FROM VALUE-BASED AND FEE-FOR-SERVICE PROGRAMS The percent of net patient revenue from value-based payment models is expected to more than double in three years time. Figure 11 Most Recent Figures 11 and 12 What share of net patient revenue does/will value-based and fee-for-service payment models represent in your organization s most recent reconciled fiscal year and in three years? > Revenue from value-based programs. Respondent expectations for net patient revenue growth from value-based payment models mirrors those found in Figures 9 and 10 for growth in the share of patients in value-based programs. For example, respondents indicate that their current net patient revenue percentage is 21% value-based, and they expect this will more than double to 44% in three years. Figure 12 Three Years > Revenue from fee-for-service programs. Net patient revenue from fee-for-service programs is expected to decline, with respondents saying that 74% of their current net patient revenue is feefor-service, and that in three years time this will decline to 49%. Base = 90 HEALTHLEADERSMEDIA.COM/INTELLIGENCE MAY/JUNE

16 EXPERIENCE WITH PAYMENT MODELS Percent of respondents who report that the fee-for-service with no value-based component payment model offers neither improved outcomes nor reduced costs. Figure 13 Overall, what has your organization s experience been with the following payment models? > Least effective payment model. Survey responses indicate that the fee-for-service with no value-based component payment model is the least effective in terms of quality and cost improvements, with approximately one-third (32%) of respondents saying that it offers neither improved outcomes nor reduced costs. This result is higher than any other payment model, and has the highest participation rate by respondents only 3% say they have no involvement with this program. > Most effective model? At the other end of the range, partial capitation (12%) and full capitation (10%) receive the lowest response for yielding neither improved outcomes nor reduced costs. However, they also have the lowest participation rate by respondents 49% and 54%, respectively, report they have no involvement with this program. Further, only 4% and 3%, respectively, report improved outcomes and lower costs, suggesting that this type of model has yet to yield much value. > The most effective model. Fee-for-service with upside rewards, such as performance awards (28%) has the highest response for improved outcomes and lower costs, coming in nine percentage points higher than bundled payment programs (19%). Interestingly, the three highest responses for improved outcomes, no cost reduction are all fee-for-service based: fee-for-service with no value-based component (34%), fee-for-service with upside rewards, such as performance awards (24%), and fee-for-service with downside risk, such as reimbursement penalties (21%). Improved Improved Neither Don t know No Don t know if we outcomes outcomes, improved results of involvement have experience and reduced no cost outcomes nor our with with this costs reduction reduced costs experience this program program Fee-for-service with upside rewards, such as performance awards 28% 24% 14% 13% 17% 3% Bundled payment program(s) 19% 13% 19% 16% 32% 1% Fee-for-service with no value-based component 18% 34% 32% 11% 3% 1% Medicare Shared Savings Program with upside rewards only 18% 16% 21% 12% 31% 2% Shared risk, such as ACO 18% 14% 14% 13% 38% 2% Fee-for-service with downside risk, such as reimbursement penalties 12% 21% 17% 14% 30% 6% Medicare Shared Savings Program with upside and downside 10% 13% 16% 10% 47% 4% Partial capitation 4% 11% 12% 18% 49% 6% Full capitation 3% 12% 10% 17% 54% 3% Ranked by responses for improved outcomes and reduced costs Base = 90 HEALTHLEADERSMEDIA.COM/INTELLIGENCE MAY/JUNE

17 PRINCIPAL PAYMENT MODELS Percent of respondents who indicate that fee-for-service with upside rewards, such as performance awards is the top payment model they expect will evolve into one of their organization s principal payment models for value-based care. Figure 14 Please select the top three payment models that are most likely to evolve into one of your organization s principal payment models for value-based care. > Top payment models. Respondents indicate that fee-for-service with upside rewards, such as performance awards (63%) is the top payment model they expect will evolve into one of their organization s principal payment models for value-based care, followed by bundled payment programs (50%), and shared risk, such as ACO (49%). Fee-for-service with upside rewards, such as performance awards Bundled payment program(s) Shared risk, such as ACO Medicare Shared Savings Program with upside and downside 63% 50% 49% 46% > Capitation. Consistent with the results in Figure 13, the payment models receiving the lowest responses are partial capitation (11%) and full capitation (7%), an indication of respondents low expectations that these value-based models will become their principal payment model. Medicare Shared Savings Program with upside rewards only Fee-for-service with downside risk, such as reimbursement penalties 32% 31% Partial capitation 11% Full capitation 7% Other 1% Base = 90 HEALTHLEADERSMEDIA.COM/INTELLIGENCE MAY/JUNE

18 METHODOLOGY The 2018 Value-Based Readiness Survey was conducted by the HealthLeaders Media Intelligence Unit, powered by the HealthLeaders Media Council. It is part of a series of thought leadership studies. In March 2018, an online survey was sent to the HealthLeaders Media Council and select members of the HealthLeaders Media audience at healthcare provider organizations. A total of 90 completed surveys are included in the analysis. Base size varies between 80 and 90 according to the respondents knowledge of the question. The margin of error for a base of 90 is +/- 10.3% at the 95% confidence interval. Survey results do not always add to 100% due to rounding. What Healthcare Leaders Are Saying Here are selected comments from leaders regarding the new value-based initiatives they are planning to implement at their organizations within the next year, and what specific goal(s) they are intended to achieve. Align with Medicaid Managed Care Organizations to allow reimbursement for DSRIP programs with shared goals. Chief financial officer at a small hospital Bundled payment modeling related to joints and hips as well as cardiac care. Hoping to achieve tighter care coordination across spectrum, especially postacute care. Chief medical information officer at a large health system Expanded chronic care management with care coordinators. Being able to expand services and better manage a large elderly and chronic needs community. CEO, president/board member at a small hospital Getting the entire system on one EHR. Improved patient medical record, reduced gaps in care, and eliminated wasteful duplication. Chief financial officer at a medium hospital Launching home chronic-care visits using paramedics to reduce hospitalizations and hospital readmissions under value-based care. Executive director, managing director, partner at a large physician organization CLICK HERE TO JOIN THE COUNCIL TODAY! About the HealthLeaders Media Intelligence Unit The HealthLeaders Media Intelligence Unit, a division of HealthLeaders Media, is the premier source for executive healthcare business research. It provides analysis and forecasts through digital platforms, print publications, custom reports, white papers, conferences, roundtables, peer networking opportunities, and presentations for senior management. Senior Research Analyst, Intelligence Unit JONATHAN BEES jbees@healthleadersmedia.com Vice President, Product Development & Content Strategy ERIN E. CALLAHAN ecallahan@h3.group Editor in Chief and Leadership Programs Director JIM MOLPUS jmolpus@healthleadersmedia.com Senior Managing Editor ERIKA RANDALL erandall@healthleadersmedia.com Senior Client Services Manager CATHLEEN LAVELLE clavelle@healthleadersmedia.com Intelligence Report Contributing Editor PHILIP BETBEZE pbetbeze@healthleadersmedia.com Intelligence Report, Art Director DOUG PONTE dponte@healthleadersmedia.com Opinions expressed are not necessarily those of HealthLeaders Media. Mention of products and services does not constitute endorsement. Advice given is general, and readers should consult professional counsel for specific legal, ethical, or clinical questions. Copyright 2018 HealthLeaders Media, an H3.Group Brand 100 Winners Circle, Suite 300, Brentwood, TN HEALTHLEADERSMEDIA.COM/INTELLIGENCE MAY/JUNE

19 RESPONDENT PROFILE TITLE Base = 90 34% 24% 17% 13% 8% 1% 2% TYPE OF ORGANIZATION Base = 90 Hospital 41% Health system (IDN/IDS) 24% Physician organization (MSO/IPA/PHO/clinic) 20% Ancillary services provider (diagnostic/therapeutic/custodial), home health agency 8% Skilled nursing facility/nursing home 6% Urgent care center 1% NUMBER OF PHYSICIANS Base = % CEO, President Clinical leadership Financial leadership Operations leadership IT leadership Marketing leadership Other VP % % CEO, PRESIDENT > CEO, President > Chief Executive Administrator > Chief Administrative Officer > Board Member > Executive Director > Managing Director > Partner OPERATIONS LEADERSHIP > Chief Operations Officer > Chief Strategy Officer > Chief Compliance Officer > Chief Purchasing Officer > VP/Director Operations Administration > VP/Director of Compliance > Chief Human Resources Officer > VP/Director HR/People > VP/Director Supply Chain/Purchasing FINANCIAL LEADERSHIP > Chief Financial Officer > VP/Director Finance > VP/Director Patient Financial Services > VP/Director Revenue Cycle > VP/Director Managed Care > VP/Director Reimbursement > VP/Director HIM CLINICAL LEADERSHIP > Chief Medical Officer > Chief Nursing Officer > Chief of Medical Specialty or Service Line > VP/Director of Medical Specialty or Service Line > VP/Director of Nursing > Chief Population Health Officer > Chief Quality Officer > Medical Director > VP/Director Ambulatory Services > VP/Director Clinical Services > VP/Director Quality > VP/Director Patient Safety > VP/Director Postacute Services > VP/Director Behavioral Services > VP/Director Medical Affairs/ Physician Management > VP/Director Population Health > VP/Director Case Management > VP/Director Patient Engagement, Experience MARKETING LEADERSHIP > Chief Marketing Officer > VP/Director Marketing > VP/Director Business Development/Sales IT LEADERSHIP > Chief Information Technology Officer > Chief Information Officer > Chief Technology Officer > Chief Medical Information Officer > Chief Nursing Information Officer > VP/Director IT/Technology > VP/Director Informatics/Analytics > VP/Director Data Security West RESPONDENT REGIONS 14% Midwest 30% NUMBER OF BEDS Base = % % % Do not have a standard number of beds 27% PROFIT STATUS Base = 90 Nonprofit 72% For-profit 28% NET PATIENT REVENUE Base = 90 $249.9 million or less (small) 60% $250 million $999.9 million (medium) 8% $1 billion or more (large) 24% None of the above 8% RURAL STATUS Base = 90 No 68% Yes 32% 32% 23% South Northeast HEALTHLEADERSMEDIA.COM/INTELLIGENCE MAY/JUNE

20 You could follow someone who s learning the way or you could work with the people who drew the map. Global Healthcare Alliance is an innovator in value-based healthcare programs with more than 1.2 million cases successfully delivered. Using our proven, data-driven approach, we work with clients at all points on the journey, delivering sustainable economics, increased market share, and uncompromised clinical excellence inquire@globalhca.com 2018 Global Healthcare Alliance Holdings, Inc.