Coker ValuePath™ Risk Management Services
Moving from a volume- to a value-based business model can be a formidable prospect, one that many providers and healthcare administrators consider too risky.
At Coker Group, we understand this reticence; however, we also believe that value-based reimbursements and risk-based population health management contracts are the waves of the future. Hospital or physician groups who ignore this sea change in the healthcare economy do so at their peril.
The question, then, becomes how to manage the risk effectively in this change process and mitigate the potential downsides of moving from the current predominantly fee-for-service (FFS) reimbursement model to a primarily fee-for-value (FFV) payment system.
We believe that several crucial capabilities can help providers manage this risk effectively, which include:
Timing the switch carefully from one business model to the next
No two organizations are the same regarding their particular market environment. Some will need to make changes quickly to keep pace with new reimbursement models. Others have more time and can plan more deliberately.
Redesigning the structure and function of the care delivery system
The current model, which works quite effectively for most in a FFS system, simply won’t reliably provide the high-quality and cost efficiency demanded by an FFV system.
Understanding and reducing costs
Providers can no longer use notoriously inaccurate proxies for cost, such as charge-to-cost ratios. Instead, they will need to know how to use more sophisticated cost accounting systems and learn how to project costs going forward to reduce expenditures in an organization systematically, where delivering high quality at low cost will be the key to success.
Accessing global reinsurance markets
Even the best of providers are prone to unexpected risks. These outlier costs, however, can be mitigated through reinsurance. At Coker, we believe this protection can be achieved most effectively through the formation of provider-owned insurance captives, such as those that have been used in the past to manage liability risk for providers.