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Want to Close the Gap to Value? Focus on Culture

Everyone in health care fervently supports the goals of value-based care—better quality and better outcomes at lower costs. But transitioning from the traditional fee-for-service system to population health management and payments based on capitation or global risk with reconciliation raises legitimate concerns and obstacles for physicians, hospitals, health plans and consumers.

True, many payers and providers have moved down the road toward value-based care in recent years through limited shared savings and other alternative payment programs. Yet progress at scale, with measureable movement of the dial on improving care quality, access and equity while reining in costs, demands a larger commitment to system-wide transformation. Securing that commitment and reinventing the U.S. health system to deliver a new level of performance and value depends on overcoming numerous cultural barriers.


Culture trumps everything
Whether you are a health plan or provider leader, you may be tempted to push people and change management down your to-do list after strategy, financial modeling and other priorities for transforming care. There is so much functional work to do to ensure success. That said, skipping over cultural alignment and a true change management process would be a colossal mistake.

People and culture need to be at the center of any strategic change initiative, especially one as sweeping and fundamental as value-based care. No matter how good the strategy, the data and analytics, the processes and the infrastructure investments, you cannot build a sustainable new way of managing health and delivering health care without the necessary buy-in and willingness to change from the people who must work and live within the new paradigm. We’ve all heard the saying, and it’s so true, “culture eats strategy for lunch.”


Taking care of culture
The key, then, is understanding, addressing and changing organizational and cultural norms, traditions and expectations along with ingrained behavior for all stakeholder groups. The obstacles vary by stakeholder group, as do the solutions.


Control: While physicians may support the tenets of population health management to improve overall quality, outcomes and patient satisfaction, they often feel they have little control or responsibility for cost or quality outside of their office. Physicians are often not included in planning efforts, or included briefly and sporadically more as “window dressing” or for the checking of a process box rather than truly engaged and heard in the formation of the plans.

Loyalty: Physicians, without a reasonable financial and operationally aligned framework, often refer patients to other providers based on personal relationships. Physicians also may in some cases be quite loyal to specific hospitals and other providers regardless of the costs, which are often unknown. There is often a belief in the high performance, efficiency and quality of those being referred to when there is an absence of objective data.

Costs: Most physicians are typically unaware of the cost of care, especially for higher-cost services. Doctors are generally used to billing for their services and aren’t overly motivated to change, despite the growing reimbursement squeeze, escalating payment denials and clear advantages of capitated payments during the pandemic. Because they don’t have a firm understanding of capitation or other risk arrangements and what the impact will be to them, they worry that a few high-risk patients could severely reduce their compensation or simply don’t trust that they will receive transparent financial data and their fair share of the results of good performance.


Physician education, especially when part of the curriculum in medical school and residency as well as ongoing education for practicing physicians, coupled with early successes and support from physician champions is critical. Health systems and other risk-bearing organizations (RBOs) need to offer convenient and comprehensive training and information that clearly defines population health management and explains physicians’ roles in a team-based approach and describes the opportunities to physicians and their patients.

Equally important, doctors need to have access to transparent financial reporting, understand new compensation processes, have a clear understanding of how their behavior and decisions can directly impact savings and costs, and be able to clearly connect the dots to what this means to their compensation. Health systems and RBOs need to design per member per month (PMPM) compensation and funds flow from shared savings/risk pools such that doctors either come out ahead or at least don’t lose ground. Moreover, higher-performing doctors need to be able to clearly see how they will earn the risk pool dollars they deserve for higher performance.

Information is power, so it’s critical to analyze and transparently share performance and financial data on all physicians and practices in the organization along with regional and national benchmarks. To be effective, the data needs to be real, easy to understand, and actionable so physicians can make adjustments in a timely manner to impact care or compensation. For example, it’s essential to make sure that patients attributed to primary care physicians (PCPs) have or are being treated by that physician and thus belongs in that PCP’s patient population.

This approach puts physicians in control of their own destiny in value-based relationships.


High costs: Hospitals are expensive to build and maintain and require ongoing investment in the latest medical technology and equipment. They also must meet a myriad of constantly evolving and changing regulatory requirements to stay open for business and competitive. With a fixed number of inpatient beds, they need to fill them as much as possible to cover those costs and enhance their bottom lines—in direct contrast with the push to reduce utilization and move care to the safest low-cost setting. Hospitals are increasingly treating only the sickest, highest-cost patients. In addition, they look to expand their referral base by buying into physician practices and enhancing their referral base for outpatient and other services

Control: Hospitals don’t “own” the patients, who are assigned or attributed to primary care physicians–except through employed or owned physician practices or exclusively contracted through an independent physician association (IPA) or clinically integrated network (CIN). Similarly, they do not often control admissions referred by physicians. And like physicians, hospitals handle only part of the care continuum unless they are in the driver seat with physicians in a CIN, IPA or other risk-bearing entity. In addition, the standard level of care is not typically available seven days a week, creating some delays in the care continuum.

Workforce: Hospitals face ongoing challenges with nearly every clinical role on their teams, from medical assistant to advanced practitioners, exacerbated by pandemic burnout and people leaving healthcare as a career.


Engaging physicians as deliberate, formal partners in the broader population health management team will change thinking and actions. Hospitals need to integrate with physicians through aligned contractual and operational strategies such as CINs, IPAs and similar risk-bearing organizations. They also must support physician collaboration with community-based organizations under the umbrella of properly structured value-based payment arrangements.

Hospitals also need to prioritize cost reduction through right-sizing and focusing on key services best deployed in each facility. They need to evaluate their services, including using patient satisfaction surveys, and make necessary changes. They should carefully choose where to compete, dropping expensive services that are underutilized or other providers do better.

They also need to allow employed practices to move expensive services to more cost-effective facilities or reduce pricing to community levels. As they make these care shifts, hospitals need to work on lowering their costs by reducing readmissions and reconfiguring and resizing direct assets.

By reducing unit costs, they can be more competitive and capture a higher volume of procedures from all providers, not just owned providers. Similarly, efficient, high-quality providers can become preferred providers for plans.

Finally, hospitals need to support and engage with physicians as leaders and participants in building out and operating a team-based medicine model that ensures all members of the team, whether inpatient, outpatient, community, ambulatory or wrap-around care management, are working at top of license and understand their role with relation to other team members.


Health plans
Costs: Many payers have not invested in either the IT systems or required expertise to better handle capitation and adjudicate that and other global risk models. They face investing to optimize their current people, processes and technology or procuring what is missing or inadequate, both of which can represent a significant financial outlay that can be daunting without a clear view to resultant growth and increased profitability.

Control: Under population health, more providers are or will be interested in taking on managed services responsibilities traditionally handled by payers. Payers need to create the internal capabilities and operational opportunities for providers to take delegation for key administrative, care management, utilization management and other functions.

Relationships: Historically, relationships have been somewhat adversarial between payers and providers under fee-for-service. Success in population health management calls for collaboration and efficiency that aligns and benefits all stakeholders through thoughtful value-based payment agreements.


There’s a bit of a chicken-and-egg situation with payers: They generally don’t trust providers to succeed at capitation, so they aren’t committing to investments and other changes to help providers succeed with capitation in particular or other global risk payment models.

Change needs to start at the top, with senior leadership prioritizing capitation or at least well-designed global risk arrangement opportunities, along with the necessary employee and contracted provider education, new tools and technology to implement them successfully.

Payers need to manage and share their data differently, too. They should leverage it transparently when working with providers to set appropriate pricing, savings goals and services. Plans also should overhaul how they supply data to providers, making it timely, specific, simple, and actionable in formats suitable and usable to providers.

By working more closely with providers to ensure they focus on and refine what they do best, cost-effectively, health plans can help build a more competitive market with greater patient choice.


Choice: Many Americans are used to having a great deal of leeway in choosing physicians or other providers, including specialists. They may have had poor experiences with HMO and other narrow-network, primary-care gatekeeper products and not had experience with more recent, higher-performing versions that are supported by the right people, processes and technology.

Cost: Consumers are shouldering an ever-increasing share of their medical costs, making affordability an issue for nearly everyone. It’s much worse, of course, for those without insurance or with such high deductibles that they don’t seek care unless it’s a catastrophe.

Access and equity: Treatment is a real challenge for underserved people in rural, suburban and urban areas, often leading to emergencies. Preventive and regular care is even harder to come by. Biased health care has been demonstrated in some areas, so a focus on equity is urgent.

Quality: People generally have low health care literacy, especially around cost and quality of services. They tend to rely on recommendations from friends and family.


Health plans that truly partner with providers to grow business and market share together will find a more willing partner to build out capacity and improve access to lower-cost, high-quality care throughout targeted communities with enrolled membership. In the same vein, partnered providers and provider-managed risk-bearing entities that are in well-designed risk arrangements are better equipped to engage and integrate into their network behavioral health and community-based care options that can address both medical and social determinant healthcare needs.

Provider networks and payers can collaborate on expanding more convenient options that also offer greater access, including telehealth. Digital tools and apps also can be deployed to track biometric data, integrated with patient records, to help spot any problems early and encourage healthy patient behaviors.

Patient education on objective quality measures and population health management is also critical to securing buy-in and understanding. Beyond those basics, offering educational opportunities that deal with different health issues or diseases, plus providing transportation and other services that address social determinants of health and health care bias, also can raise satisfaction and engagement. Consistent, linguistically and culturally sensitive communication that is coordinated between payers and providers is another critical success factor.

In all areas, health plans can facilitate the changes by setting performance metrics and financial incentives to reinforce the behavior with both providers and patients.


Moving forward
By acknowledging and resolving the legitimate issues each stakeholder group have over value-based care and payments, health plans and providers will make much greater strides, faster.

Much depends on ensuring clinicians and other staff:

  • Understand their evolving roles and responsibilities
  • Receive necessary information, training and tools
  • Are compensated for their new behaviors, use of best practices and other key performance indicators
  • See the improvements in quality, patient outcomes and patient satisfaction
  • Align incentives across all stakeholders
  • Work as a team, not as an individual entity

The key is keeping culture at the forefront at each step of the transformation.


For information on how COPE Health Solutions can help build cultural alignment in the value transition, please contact us at info@copehealthsolutions.com.

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