Barriers to Performance Based Healthcare Networks and Medical Cost Savings

 Understanding the need to align care models, payment, products and networks

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[Number 4 in a series of 6]

By Sam Mupalla – Vice President, McKesson Health Solutions, Network Performance Management (NPM)

I wanted to follow up on last month’s ME-P discussion about Performance-based Networks and Medical Cost Savings. I wrote about the need to align care models, payment, products and networks, and then promised to address some of the barriers standing in the way of achieving alignment. Well, that’s what I’m writing about today.

Strategic Difficulties

Health plan operations responsible for supporting the intent of the provider network designs will find it increasingly difficult to maintain strategies that provide affordable care by applying existing methods and systems.

Currently, the systems and processes that enable these operations are frequently based on systems that are neither integrated nor automated, rather relying on various manual interventions to achieve some scale of efficiency. Creating and maintaining innovative value-based offerings in this environment requires process excellence coupled with tight coordination executed across multiple departments. As the complexity and frequency of demand for these offerings increase, this approach becomes more challenging to sustain, thus risking long term success of the affordable care promise.

Figure 1: Today’s operational engine interactions are not optimized for enabling innovation.

The traditional systems and processes that health plans have used to respond to specific client demands appear in Figure 1.

For example, product demands from consumers may come in through the sales team, which manually interacts with the product management, care management, network development, and health economic teams to design a product to meet the market need. This first set of interactions, in effect, becomes the innovation engine for value-based product designs. Additionally, it becomes the starting point for a myriad of manual and highly paper-based interactions that ripple throughout the enterprise.

The interactions within this innovation engine then set forth a series of parallel and independent sequences with three different operational engines: the provider contracting department, the provider management department and the claims operations department. Each of these areas relies heavily upon their own set of manual and paper-based processes and interactions. The inefficiency of this current approach suggests the potential for an annual administrative cost savings opportunity of $5-25 million, depending on the health plan’s size and current system architecture.

In addition to administrative costs, this approach creates inefficiency and waste in IT costs and medical costs that could be between $40-100 million.

Assessment

So, how can you unlock these savings and eliminate this waste? We’ll discuss that next week. I’ll say only three words here: Integrated Building Blocks. I’m not going to say a word more — but if you can’t wait for next week you can read the entire Unlocking Affordable Care by Aligning Products white paper; it’s available on our website now.

Conclusion

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Conclusion 

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