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Why the Trump administration does not mean the end of population health

April 11, 2017

    Despite uncertainty around where health reform is headed, the need for population health management continues. This is the first in a series of four posts focused on the role industry members can play in supporting provider transitions to value-based care.

    For the last few years, shifting reimbursement has incentivized hospitals and physicians to better manage the cost and quality of care they deliver as a means of controlling Medicare spending. This is what we're referring to when we talk about "population health management." 

    And although population health may change in name under the Trump administration, we're certain that the underlying drive for providers to deliver high quality, cost-efficient care is here to stay.

    The origins of population health management

    The push toward population health was prompted by three main factors:

    1. Americans are getting older. Caring for an elderly population is costly, in part because individuals tend to use more medical services as they age. Given that between 2010 and 2050, the U.S. population aged 65 and older will nearly double and the population aged 80 and older will nearly triple, our country will likely face higher per-capita expenditures among this population. And most of these costs will fall on the largest payer: Medicare.

    2. Americans are getting sicker. In 2012, the Centers for Disease Control and Prevention (CDC) estimated that about half of all U.S. adults, amounting to about 117 million people, had one or more chronic health conditions. Moreover, the Kaiser Family Foundation reports that in 2011, 66% of the Medicare population had three or more chronic conditions. Caring for patients with chronic conditions is expensive—chronic conditions and the health risk behaviors that cause them account for the majority of U.S. health care costs.

    3. The traditional Medicare reimbursement structure rewards volume over value. When paying hospitals and physicians on a fee-for-service basis, Medicare lacks tools to reward providers for delivering high quality care. Moreover, critical services like care coordination across an episode do not neatly fit into the fee-for-service lexicon, leaving providers unrewarded for these types of services.

    Given the persistence—and even exacerbation—of these factors, providers' imperative to manage population health will likely stand the test of time.

    The present and future of population health management

    With the passage of the Affordable Care Act (ACA) in 2010, the Obama administration tried to rein in health care spending through pay-for-performance, bundled payment, and accountable care organization (ACO) programs. These alternative payment programs hold providers financially accountable for the quality and cost of the care they deliver, incentivizing providers to holistically manage patients' care and control spending within and beyond the four walls of the hospital.

    Given that the specific programs may change, I'll avoid getting bogged down in the details. Instead, I want to emphasize that at their core, these programs use new payment methodologies to rein in our country's health care spending. And while the means may change, the end enjoys bipartisan support. The Trump administration may tackle rising health care costs by continuing to roll out alternative payment programs. However, they may also move to reduce Medicare reimbursement rates.

    In short, regardless of the route the new administration takes, focusing on population health management is a no-regrets investment for your provider customers.

    What this means for suppliers and service providers

    Over the past few years, we've stressed the many ways that suppliers and service providers can support providers' transition to population health. These imperatives are still alive and well.

    Don't throw your provider segmentation strategies by the wayside. While providers may not, in the future, be required to participate in alternative payment programs, it's still important for you to consider your provider customers' needs as they relate to their path towards population health management.

    And though population health management may take on new forms, providers must continue to manage patient care holistically, controlling spending across care episodes and ensuring the highest quality of care.

    This presents an opportunity for you to help connect providers across the continuum. However, you must also recognize that your products and services may be evaluated by new stakeholders that are looking for clear return on investment in the form of reduced costs and improved outcomes. The better you can demonstrate the value of your products and services in this market, the better you'll fare.

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