THE OUTLOOK FOR HEALTH CARE IN 2023:

What you need to know about the forces reshaping our industry.

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Research

Are the barriers to commercial risk insurmountable? Here’s why they might be.

    Is the future of commercial payment in value-based care or elsewhere? It’s an important question with serious implications on the future of value-based care that, surprisingly, has received little attention to date. Hypothetically, if all the major commercial health plans committed seriously to value-based care, they would have the scale to push the rest of the industry.

    We’re prone to be optimistic about Medicare and Medicaid risk and pessimistic about commercial—many share that view. But it’s worth remembering that many smart people can disagree on value-based care and particularly the future of commercial risk. With that in mind, implementing risk-based payment in the commercial population carries distinct challenges.

    The future of value-based care

    Medicare and Medicaid risk is progressing (slowly) – but commercial risk will determine whether the industry tips toward a new cost and quality standard.

     

    What makes commercial risk so hard?

    It comes down to this: What the commercial population needs and how they’re covered makes it significantly harder to extract meaningful cost savings.

    • The patient population is younger and healthier so there’s less avoidable cost.
    • There is significant patient “churn,” which means less time to generate meaningful savings.
    • Cost savings opportunities are harder to capture given the number of commercial plans.
    • Employers may be the most important stakeholder in determining success—and it is unclear how much they’re willing to drive transformation.
     

    Parting thoughts

    The majority of executives we’ve spoken with say they are optimistic about the future of value-based care—but they are more tempered when discussing the future of commercial risk.

     

    Next up

    In the second part of our series, we will examine the other side of the argument—what makes commercial risk an opportunity worth pursuing.

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