More providers are entering shared savings contracts with public and commercial payers—but even with the savings potential, in the near-term revenue rarely reaches the level accrued under fee-for-service models. Therefore, providers must strive to optimize contractual terms to minimize potential losses.
This research identifies five financial flashpoints you should avoid to ensure sustainable risk-based contracts.
Many providers are currently entering into shared savings contracts with both public and
commercial payers. But even with the savings potential, in the near term revenue rarely
reaches the level accrued under fee-for-service due to the demand destruction required
to meet cost targets.
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As such, some finance executives question the sustainability of the model and are
looking to quickly progress into capitated contracts. Yet the extensive population health
management and actuarial capabilities necessary to succeed under these global
contracts preclude a rapid move; many providers will need to gain experience with
agreements that contain less risk and gradually gain the competencies necessary to
accept full risk for a population of patients.
As shared savings arrangements are often a part of this evolution, providers must try to
optimize contractual terms minimize potential losses. This white paper examines five
financial missteps in this process, as well as strategies for avoiding each to ensure
sustainable risk-based contracts.
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