In Part 1 of this two-part series on provider-supplier risk-sharing, we recapped the state of risk-sharing in 2019. If you missed it, here's the gist: Most providers are interested in these agreements because they push suppliers to take on more cost-quality performance risk and are an opportunity to improve clinical quality. Still, the pickup for these agreements has been slow as parties have been stymied by some formidable obstacles. More specifically, providers point to the challenges inherent in selecting metrics that are both measurable and meaningful, investing in requisite data extraction and analysis capabilities, and brokering a long-term partnership whose benefits are uncertain from the outset.
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How Philips IGT overcame 3 challenges associated with risk-share agreements
With this as a backdrop, we got wind of a risk-share contract that Philips Image Guided Therapy (IGT) signed with Holston Valley Medical Center. IGT manufacturers diagnostic and treatment devices that advance minimally invasive cardiovascular (CV) procedures. Holston Valley Medical Center is a hospital in Kingsport, Tennessee, now affiliated with Ballad Health and renowned for its expertise in CV care.
While we're certain it's not the only risk-share agreement in the market today, we were drawn to this story because 1) the agreement has resulted in improvement across all at-risk metrics and because 2) the obstacles that IGT overcame align with the three aforementioned industry-wide challenges. While no two risk-share deals are the same, our hope is that learning how one organization overcame those challenges can offer some lessons to those suppliers interested in pursuing these kinds of agreements.
Here's how it happened.
Challenge #1: Selecting metrics that are measurable and meaningful
Through the agreement, IGT guaranteed, for all non-myocardial infarction (MI) patients undergoing a percutaneous coronary intervention (PCI):
- A 50% reduction in the overall number of PCI 30 day readmissions for target lesion revascularization (TLR)/target vessel revascularization (TVR);
- Lower total cost per non-MI PCI case;
- Lower PCI complication rate, i.e. acute kidney injury (AKI) rate; and
- Equal or more same-day discharges.
IGT developed a picklist of 12 metrics that it felt confident it could inflect. Holston Valley then chose the four metrics that were best aligned with its strategic goals. Importantly, IGT took on the risk for non-product factors and for all patients undergoing elective PCI.
In exchange, Holston Valley committed to increasing its utilization of FFR/iFR (fractional flow reserve/instantaneous wave-free radio) and IVUS (intravascular ultrasound) up to the national average, and in line with the established appropriate use criteria (AUC).
Challenge #2: Investing in data extraction and analysis
At the time, IGT assumed it would be able to use the health system's historical data as a performance benchmark. But as Brian Fennel, senior manager of Value-Based Healthcare Solutions at IGT, noted, trying to find that baseline data was like "hunting for a lost penny in a couch." The data was spread across EHRs, inventory systems, billing systems, physician logs, equipment logs, and one-off spreadsheets. A single Philips product often had different names in different systems, and there were instances where the raw data needed some additional context. For example, if a patient came back through the ED with chest pain (regardless of whether the patient returned to the cath lab or was classified as an inpatient), that encounter would have been counted as a readmission, ultimately overstating the actual "readmission" rate.
Recognizing that neither party had the time or resources to adequately manage the data—but refusing to let the agreement stagnate—IGT hired an FTE to extract, compare, and analyze the data. That programmer met with Holston Valley's IT department weekly and developed a strong working relationship wherein they cleaned, queried, and validated the data. That investment paid dividends beyond tracking performance for at-risk metrics.
As soon as IGT started sharing the data back with the facility, its physician leader, Mark Chang, asked if they could use that platform to pull some derivative data on start times, procedure times, and turnaround times. All of this data was being collected as part of the organizations' efforts to measure procedure costs; using this data for further performance improvement was an unintended benefit of the partnership. So while IGT intended to go at risk for specific quality metrics in order to show the power of their devices, in the end the organization developed a much broader, data-based partnership that helped build organizational stickiness.
Challenge #3: Committing for the long haul
When we spoke to Kristen Richards, senior manager of Healthcare Economics at IGT, she emphasized that the agreement with Holston Valley was a new type of contract for IGT and, as such, it took around eight months to finalize. From there, it took another four months for the two organizations to iron out data extraction tactics and build the right dashboards. Only once that was in place could they start to track results. Both parties agreed they'd need several months', if not years', worth of data to determine whether the products truly contributed to better outcomes.
Partnership results to date
As part of the initial terms of agreement, IGT and Holston Valley agreed to evaluate results at a midway point. While improvements were being made, IGT came up short of two goals and ended up crediting Holston Valley a sum equal to 50% of the facility's incremental spend on IGT devices. Undeterred, IGT doubled down on its promise, and the facility continued to see performance trend in the right direction.
As of September 2019, IGT reports improvement on all of the outcomes that it went at risk for. More specifically, the organization:
- Showed technology reduced 30-day revascularizations from 2.1% to 1.8%;
- Reduced annual procedure supply costs by $99,939;
- Increased same day discharge by 12.5%, resulting in 16 fewer patient days; and
- Showed a lower AKI rate with the use of technology (8% vs 9.1% w/o).
On top of that, IGT built trust and interest among physician leaders who are now using IGT's data platform to measure and improve performance unrelated to the product, including lab utilization rate, on-time starts, and patient turnaround time.
Though IGT has demonstrated improvement on the at-risk metrics, Fennel maintains that this was not a pricing play. Instead, it was an "opportunity to build a real world evidence story that shows clinical and financial benefit over a time horizon that's meaningful to both payers and providers."
Back in 2018, we asserted that while risk-sharing deals may not take off in the hundreds, the upside lies in "bolstering trust, collaboration, and a foundation for creative partnerships with a handful of progressive provider organizations." Eighteen months later, Philips IGT and Holston Valley have proven that true.
Want to continue the conversation?
If you have any questions or are interested in discussing your own experiences with risk-share agreements, please reach out to me directly.
We’ll also be covering this and related content in our upcoming webconference next month. Register online or reach out directly to your Dedicated Advisor.
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Get an overview of risk sharing: what it is, why it's a major issue for providers, how your company could benefit from it, and how it might affect relationships with your provider customers.