The Business Model Transition To Value-Based Care

Hello again from sunny Clearwater, where we are wrapping up The 2016 OPEN MINDS Performance Management Institute. It’s been a power-packed three days – with a focus on the evolution of pay-for-performance and value-based contracting. The discussion has left me with some new thoughts about the strategies needed for success in the decade ahead. Managed care and integrated service delivery models are definitely causing a “reordering” of the market value chain for the financing and delivering services for consumers with complex care needs. More specialty services are being delivered, and will be delivered, in primary care settings. The current role served by targeted case management will likely be assumed by new programs and players. To respond to the many new opportunities, provider organizations need more entrepreneurial service line development – and the access to capital to make that happen. And, all of this brings big advantages to organizations that have scale.

The fundamental change for health plans and provider organizations alike is the emergence of a new business model in this new value-focused environment. The traditional role of optimizing the volume of services delivered is being gradually replaced by a model that aligns organizational success with giving the consumer (and their payer) what they want and need (see Will Good, Cheap & Easy Win the Day?). This shift to consumer sovereignty as the driver of success (see Consumer Sovereignty As Success Strategy and The Key To Success With Integrated Service Delivery? A Seamless Consumer Experience) creates a new leadership and management challenge – making performance management a core competency.

Are You Really Ready For Value-Based Payment? Planning Your Move

So how do organizations accelerate their path to performance management excellence? There are three key steps:  measurement, metrics-based management, and developing a performance-driven culture.

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Decide what to measure and measure it – The first step on the path is deciding on the measures that your executive team needs to navigate their way to performance excellence. There are the customer-facing metrics (HEDIS and SMS Stars measures for payers and consumer experience and web site analytics for consumers). And, there are the metrics you need to manage the enterprise – from cash on hand to productivity. Automate your measurements and measure routinely.

Establish a metrics-based management system – Metrics-based management is the path from information to action. It’s the system for knowing both your current performance on every measure and the performance you’re looking for – and the actions needed to bridge the gap.

Build a performance-driven culture – Performance measurement is only part of the equation. Using the data to change the organization is the key – and this requires a performance-driven culture. In short, an executive team and a management style that actually improves performance through talent management, goal alignment, and employee engagement.

So the question for most executives teams – is your culture a performance-driven culture? Can your organization thrive in the market environment where performance and value are the determinants of success? For more, check out my presentation, Are You Really Ready For Value-Based Payment?, from today’s institute. And, tomorrow, we’ll review the characteristics and competencies of the organization that is ready for results. And, in the meantime, check out our archived coverage of The 2016 OPEN MINDS Performance Management Institute on Twitter @openmindscircle#OMPerformance.