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Payer insights

Integrated care 2012

Filed under: Payment & delivery innovation

Health systems around the world face common challenges, including the growing burden of chronic conditions (especially given population aging and the explosion of ‘lifestyle diseases’), the seemingly inexorable increase in hospital activity, unrelenting technological change, and costs rising at a rate faster than the general economy. In addition, many health systems have become concerned that they are failing to meet the expectations that many people—particularly the elderly and those with chronic conditions—have for service delivery. Common problems patients encounter include loss of independence, avoidable admissions, and the frustration that arises from having to deal with, and repeat information to, a confusing array of professionals. Against a backdrop of tough economic times, these challenges have led to a common feeling that the current trajectory is unsustainable and must be changed.

Many health systems are responding to these challenges in a similar way. Whether they call their new approach ‘integrated care’, ‘coordinated care’, or ‘accountable care’, health systems are increasingly encouraging groups to work together across organisational boundaries to help people maintain their health and independence, improve the outcomes achieved from care delivered, and change the trajectory of healthcare spending.

In September 2012, we convened our fifth annual Integrated Care Conference in Boston. At this conference, a select group of healthcare leaders from around the world met to discuss the complex issues they are facing in trying to deliver integrated care at scale and to share ideas on how innovations can be used to improve patient care and deliver value.

Although these leaders came from a range of healthcare organisations—with important differences in how they deliver and reimburse for care—their comments made it clear that the most successful integrated care efforts share three common traits. They focus their energies on the patient segments most likely to have high healthcare spending, such as the elderly and those with chronic conditions. They change their core care-delivery processes to enable multidisciplinary teams to function effectively. And they put in place several crucial components to support their integrated care efforts, including aligned incentives and reimbursement models, accountability and joint decision making, information transparency and decision support, clinical leadership, and patient engagement. The conference participants agreed that implementation of these elements is difficult, and success cannot be achieved quickly. But if the elements are in place, integrated care can work in almost any organisation.

However, the discussions revealed that healthcare leaders have been making very different strategic choices as they have applied these elements within their organisations. The differences involve five key questions:

  1. On whom should you focus? A large majority (68%) of the leaders who attended the conference said they focus on the top 20% of patients (those who utilise 80% of healthcare resources) in hope of delivering better care and controlling costs; many also expressed the view that this focus could avoid further deterioration in the patients’ conditions. An additional 11% of the leaders said they use an even more focused approach: they concentrate only on the very sick, very expensive top 2% of patients to ensure that their interventions are as cost-effective as possible. Just 21% of the leaders said that they include all patients, because they believe that they would miss the opportunity to prevent disease if they focused on only the top 20% or 2% of patients.
  2. How prescriptive should you be? At the conference, 62% of leaders said that the most effective way to drive standardised, high-quality care is to disseminate explicit guidelines and protocols that physicians are expected to follow. For example, ChenMed, a primary care–led physician group in the southern United States, ‘hard wires’ its clinical protocols into its electronic workflow; it also holds case conferences three times a week in each market to ensure that best-practice care is implemented. The remaining 38% of leaders thought it would be quite challenging to engage physicians meaningfully unless the physicians retained the autonomy to make clinical decisions. These leaders also suggested that the use of stringent clinical guidelines would make it difficult to innovate based on emerging evidence or to tailor care delivery to local needs. These leaders said that they would prefer to establish clear accountability for care quality and cost but allow considerable clinical autonomy within those boundaries. One of the best examples of such an approach that was cited is Intermountain Healthcare, an integrated system in the western United States that uses a blend of autonomy and protocols. Physicians are not required to follow the system’s standardised protocols, but they are expected to achieve good outcomes. If they consistently achieve better outcomes than the protocols are delivering, their approach is incorporated into the protocols, thereby creating an ever-evolving set of guidelines based on feedback from physicians and the emerging evidence base.
  3. What share of spending should be allocated to innovative reimbursement mechanisms? Notably, not a single one of the healthcare leaders at the conference thought that a purely fee-for-service world is best. However, the majority (57%) said that health systems should take a relatively cautious approach to risk-based payment models by initially allocating only 5% or 10% of reimbursement to innovative value-based reimbursement mechanisms. Their rationale is that the shift from fee-for-service to capitation is such a major change that health systems should develop an understanding of what works before they roll out the change more broadly. Health systems should continue to test and pilot these models; as (and if) the evidence builds, they can move providers slowly along the risk spectrum. Some of these leaders even thought that their organisations might choose to keep the risk-based proportion low over the longer term, on the belief that physicians will waste time optimising specific metrics if too much of their reimbursement is performance-based. However, the remainder of the leaders at the conference (43%) preferred a much bolder approach—a rapid shift of more than half of provider reimbursement to risk-based models. These leaders stated that the time for pilots is over; because significant scale is required to overcome inertia, more than half a provider’s total revenue should be tied to outcomes or value.
  4. What incentives should you provide to individual physicians? Even within value-based models, there are different degrees of risk that physicians are exposed to. At the conference, 58% of the leaders said that they choose to focus purely on upside incentives—they reward good performance to encourage innovation and avoid defensive behaviour. These leaders believe that when used in combination with performance transparency, upside incentives are a highly effective lever. However, 42% of the leaders said that they would be willing to impose a downside risk for poor performance, because they thought that this will be more effective in the long term. (Many people, they noted, respond to upside rewards only for a short period before expecting the rewards as a baseline.) These leaders also shared a fundamental belief that you should not reimburse poor-quality, inefficient care.
  5. How should you engage patients? Only 30% of leaders at the conference thought that information and support are enough to encourage patients to change their behaviour and lead healthier lives. In comparison, 70% said that incentives are necessary. Evidence of the need for incentives, they noted, can be found in public-health campaigns (antismoking efforts, for example), which have found that education alone is not sufficient to shift people’s behaviour. A series of positive and negative incentives has been required to lower smoking rates, including easier availability of nicotine-replacement products, higher cigarette taxes, and restrictions on where people are allowed to smoke.

As these examples illustrate, there is no single right answer as to how integrated care should be implemented. As long as the basic elements are in place, healthcare leaders have the flexibility to tailor solutions to their own context and to how they believe healthcare delivery will evolve.

The articles in this publication, which are based on the presentations at our September conference, are designed to help payors, providers, and health systems overcome the challenges ahead and leverage integrated care effectively to deliver better patient care at a lower cost. If you would like more information about any of the topics discussed in these articles, please contact one of the McKinsey partners you work with regularly. He or she will be happy to connect you to the right experts.

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