New York, NY – Amid ongoing developments calling into question the future of healthcare delivery and payment models, a new analysis by leading global professional services firm Alvarez & Marsal (A&M) identifies six strategic imperatives that are vital for healthcare providers’ future success regardless of recent or near-term legislative, regulatory or executive actions. The report, “Provider Survival Strategies in an At-Risk Environment,” provides an in-depth framework highlighting how provider leaders can prioritize, plan and execute the listed initiatives in order to best position their organizations for success.
“Healthcare is rapidly reaching its tipping point,” said Dr. David Gruber, Managing Director and Director of Research with A&M’s Healthcare Industry Group, who authored the report. “With services and medications becoming increasingly unaffordable, and the population aging rapidly, a sense of urgency is taking hold that will force the industry to transition from a fee-for-service to value-based care model. This change isn’t a matter of if, but when. Providers looking to compete in this new landscape have to prepare now for what will be a systemic paradigm shift.”
The survival strategies detailed in the report include:
- Patient care (delivery) transformation, which requires an increased focus on patients’ comorbidities, social determinants, the total cost of care and the entire care continuum, rather than just acute intervention.
- Population health management, specifically the five to 10 percent of patients accounting for 43 to 68 percent of costs, as focusing on the entire population results in a diffusion of effort.
- Payment reform risk management, with an emphasis on the centrality of payment reform to enterprise risk. For example, the report introduces the concept of a provider hybrid, designed as a provider with risk management understanding similar to payers, but without the depth of investment, capabilities and regulatory approvals necessary to actually create a joint venture or sponsor a health plan.
- Actionable insights (“big data”), which require more than improved data management, reporting and dashboards, but data extraction and ultimately the generation of insights that enable improved decision-making and leads to measurable progress.
- Sustainable physician behavior change (alignment) that reflects feelings of disengagement, loss of autonomy and productivity, and reduced income, especially among older, primary care physicians. This strategy also reflects gaps in perception between physicians and administrators regarding involvement, role and trust.
- Sustainable patient behavior change (engagement) that fundamentally shifts provider approaches to patient interactions from “push” to “pull.” This includes bidirectional, frequent contacts focused on developing self-management and caregiver support skills.
According to Dr. Gruber, implementing these strategies will require healthcare leaders to consider factors specific to their organizations and localities. Operational capabilities assessments, followed by the implementation of targeted performance improvement initiatives, will be essential when considering cost constraints. Market context is also required, as all healthcare is local.
Challenges to strategic progress include balancing prospects for revenue growth associated with fee-for-service reimbursement with the transition to at-risk, value-based reimbursement. Portfolio rationalization may also be required, as nearly every health system has under-performers. Change will be especially difficult for successful health systems with leading market share and strong orthopedic/spinal, cardiovascular and oncology service lines.
“Real organizational transformation toward a value-based model will be difficult for most providers, requiring executive leadership, effective execution, change management and fact-based decision-making,” said Dr. Gruber. “However, visionary approaches to change will result in competitive advantage, increased market share and importantly, a more efficient and effective care delivery system.”
The A&M report is available for download at https://www.alvarezandmarsal.com/sites/default/files/am_hig_providersurvivalstrategies_10_final.pdf.
About Alvarez & Marsal
Companies, investors and government entities around the world turn to Alvarez & Marsal (A&M) when conventional approaches are not enough to make change and achieve results. Privately held since its founding in 1983, A&M is a leading global professional services firm that provides advisory, business performance improvement and turnaround management services.
With over 3000 people across four continents, we deliver tangible results for corporates, boards, private equity firms, law firms and government agencies facing complex challenges. Our senior leaders, and their teams, help organizations transform operations, catapult growth and accelerate results through decisive action. Comprised of experienced operators, world-class consultants, former regulators and industry authorities, A&M leverages its restructuring heritage to turn change into a strategic business asset, manage risk and unlock value at every stage of growth.