The Care Transformation Business Model

14 Tactics to Aggregate Covered Lives and Build a High-Performing Care Delivery Network

Attain financial returns from care transformation by assembling a low-cost network, identifying and securing new lives for management, and operating a performance-based care network.

Health systems are struggling to make population health financially sustainable.

We've outlined the most effective strategies for building an attractive network, adding covered lives, securing favorable contracts, and attaining strong long-term network performance.

Creating a virtuous cycle of growth

To be sustainable, a population health business model requires more than just effective clinical care management. Organizations must assemble a comprehensive and purposeful network that meets the needs of purchasers, whether those are local employers or national payers; increases the number of covered lives; and rewards physicians for high-quality, low-cost care delivery. Together, these elements generate a virtuous cycle of growth.

Demonstrated cost and quality improvements for existing patient populations serve as proof-of-concept, allowing organizations to appeal to even more purchasers. This facilitates new business—and long-term sustainability.

Four building blocks of population health ROI

1. A comprehensive, attractive network is the foundation for value-based success—but it's just the first step to achieving population health ROI. Top performers shift their business strategy and refine preferred partner networks to match population health goals, which typically means investing in primary care, urgent care and retail space, behavioral health, and telemedicine.

2. The second component is growing covered lives to scale beyond the pilot stage of population health. This improves actuarial stability, reduces the per-unit cost of care management, and facilitates cultural change. Systems should capitalize on their existing population health strengths and initially grow within a single payer type, then expand into complementary populations, and finally, explore use of a provider health plan.

3. As seen with many shared savings programs, contract terms can have a powerful impact on financial success, and it’s critical to achieve sustainable contracts that reward effective care management and engage patients in their own care. Look for terms that ensure effective attribution methodology, narrow network product design, upfront financing for population health infrastructure, and regular access to claims data.

4. Finally, cross-continuum performance management is essential for long-term sustainability. Systems should tighten networks by identifying the biggest areas of network leakage, channel referrals to physicians and post-acute care partners that provide the lowest-cost, highest-quality care, and redesign compensation and bonus distribution to reward and encourage dedication to population health goals.

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