Health Care Value Networks
Changing Industry Focus from Volume to Value
Ron Present , CNHA , CALA , FACHCA
The transition to a health care delivery model that positions care and payment based upon the value of the care is a dramatic change from the traditional method of being paid based upon the volume of care provided . The goals of this new model are focused on in the Institute of Healthcare Improvement ’ s Triple Aim , which can be summarized as better patient outcomes , reduced cost of care and an improved patient experience .
Narrow Networks
One strategy for the value-based service delivery method increasingly being adopted by acute providers and payors is the development and utilization of a postacute preferred or Narrow Network of providers .
The transition to value-based services and payments has altered the current management and care of postacute patients , creating even greater risk for skilled nursing facility ( SNF ) operators and owners . The industry is increasingly experiencing a shift of select patients that historically would have gone to a SNF for short-term rehabilitation services but are now often bypassing the SNF and going home from the hospital with home health care , which is a less expensive care alternative . The SNFs that do get referrals are having to deal with higher acuity patients combined with pressures to reduce the length of stay and improve outcomes .
The increase of alternative payment models has also seen a growth of at-risk insurance options , including Managed Medicare or Medicare Advantage plans . According to the Kaiser Family Foundation , total Medicare Advantage enrollment grew by about 1.4 million beneficiaries , or 8 percent , between 2016 and 2017 . On average , Managed Medicare plans reimburse nursing home operators about 20 percent less than the typical Medicare payment of about $ 500 per day , according to Senior Housing News . The managed plans are also usually more aggressive about controlling patients ’ length of stay and getting them discharged more quickly to a lower cost setting .
These pressures are some of the reasons post-acute providers are often eager to join a Narrow Network . Additionally , if they do not , they may have their referrals for short-stay Medicare and Medicare Advantage patients reduced and even eliminated . This very real threat has prompted some post-acute providers , in particular independent SNFs , to view Narrow Networks as a survivability strategy . They recognize that they often do not have the capital , other resources and skillset to compete with larger , better capitalized chains and must take action .
Building a Narrow Network
Once created , there are several challenges to optimizing a Narrow Network . According to a Premier Inc . survey , “ while 85 percent of health system leaders are interested in creating or expanding partnerships with preferred and local post-acute care providers , more than 9 out of 10 report they may experience challenges in creating these partnerships .” Several health systems have implemented a Narrow Network , including Banner Health , Catholic Health Initiatives , the Cleveland Clinic and the Henry Ford Health System .
To determine which post-acute providers should be part of a Narrow Network , careful due diligence must be completed . The acute providers cannot rely upon those to whom they have discharged the majority of patients historically . Those referrals are often based upon personal relationships between hospital discharge planners and post-acute provider marketing and admissions personnel , emotions , and ease of discharge based upon frequency .
Instead , the selection of the Narrow Network members should be based upon at least these five criteria :
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