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Tip of the week, part 2: Succeed in performance-based contracting

Managed Care Weekly Advisor, August 15, 2007

Performance-based contracting (PBC) should not be construed as a revenue-cycle management program or an isolated academic project. Organizations must launch a full-fledged program to improve quality and leverage pay for performance (P4P) as the driver of hospital and physician collaboration. Here's how:

  1. Package healthcare data as a value added for payers: Most health systems offer and sell services such as occupational medicine, wellness, fitness, and on-site screenings but don't track these services in relation to the volume of office visits or admissions by employer. Roll this type of data into performance-based contracting (PBC) as an opportunity to partner directly with payers and provide value-added data to employers.

  2. Help payers market themselves to employers: High-performing provider networks represent a boon for health plans, too. A provider who can show they improve care on a risk-adjusted basis using universal standards gives employers a good reason to send fellow employees to the network.

  3. Help employers to reduce their healthcare costs: Once you've developed a relationship with local employers, approach them with deidentified patient data and suggest problem areas in which the hospital and physicians can help lower cost and improve quality. Focus on areas such as workers' compensation, disability management, disease management, ancillary services, and claims costs. Make yourself accountable for reforming the delivery system and suggest mechanisms to share the savings-for example, a 50/50 split of all savings or a percentage performance bonus on savings that exceed 5%.

  4. Start now: Hospitals and physicians will spend more money trying to reestablish themselves as quality facilities later than they will taking a leadership role today. Arranging investments and determining your specialties within the market now saves a great deal of time and money later.