Tag: strategic planning

The Opportunities & Challenges Of VBR – Making It Work On The Ground

By Monica E. Oss, Chief Executive Officer

Despite significant movement, behavioral health is trailing the rest of health care domains in value-based reimbursement contracting. Forty-five percent of specialty provider organizations have some value-based reimbursement (VBR)—compared to 72% of primary care organizations (for more, see, The OPEN MINDS 2022 Survey On Value-Based Reimbursement In Specialty And Primary Care). And at the health plan level, 22% of plans report having some form of VBR for mental health services in 2021, compared to 79% in the cardiovascular services and 54% in respiratory services (see 56% Of Payers Had Outcomes-Based Provider Reimbursement In Place As Of September 2021).

This gap is due to a combination of factors. Some are due to the structure of financing and reimbursement in health plans. (For more on key opportunities for specialty provider organization value-based contracting, see Treatment Transformation Ahead and The Sustainability Challenge – Capitalizing On Emerging Market Opportunities In Behavioral Health.) Others are due to issues as diverse as consumer choice and provider organization readiness.

How can executives of provider organizations and health plans work together to make this happen in the behavioral health space? Getting to the answer for that question was central to the recent 2022 OPEN MINDS Health Plan Partnership Summit session, “Looking For Quality Outcomes? It Starts With Innovative Value-Based Contracting,” delivered by Monica Collins, senior director, system transformation, Magellan Behavioral Health of Pennsylvania, and Charlotte Chew, vice president, outpatient operations, Pyramid Healthcare.

In January of 2018, the Pennsylvania Medicaid program implemented new requirements for the value-based purchasing (VBP) initiative for the behavioral health HealthChoices program. The state’s goal was to have an increasing percentage of total medical expenses paid through VBP over a three year period (for more, see Pennsylvania Medicaid Moving To Value-Based Reimbursement For Behavioral Health and Pennsylvania Medicaid Managed Care Contracts). Pennsylvania’s value-based strategies requirements fall along a continuum. There are fee-for-service payments linked to performance (low risk), supplemental payments attached to shared savings and risk (medium risk), bundled payment arrangements (medium risk), and global payments based on quality measures (high risk). Eventually, 30% of total medical cost must be in VBR arrangements by year five (originally set for 2022). Pennsylvania originally set staggered targets, beginning with 5% in year one, and increasing to 10% each year.

While the pandemic has slowed the implementation timeframe, Ms. Chew and Ms. Collins discussed the planned value-based relationship between Magellan and Pyramid Healthcare—and the steps required to make it work. In the model, there are limited shared savings models based on spending targets that encourage coordination of behavioral health care. The model also requires addressing social determinants of health (SDOH) issues.

But challenges to getting this up and running are substantial. There are multiple provider organizations among consumers and across episodes of care, which makes it harder to coordinate care. There also exists a lack of medication assisted treatment (MAT) services available and resources for follow up care. The speakers offered two pieces of advice—develop a collaborative model to solve problems and engage at a ‘grassroots’ level to assure success.

Work together to solve hurdles. Operationalizing value-based models has a number of hurdles to overcome—including attribution, managing care transitions, and having the right staff in place. Much of the time well spent involves connecting consumers through various points of care transitions from inpatient to outpatient community models. It’s also difficult to define what ‘value’ is and what drives outcomes—from reduced emergency room visits, medication adherence, better nutrition, less comorbidities, etc. To maximize effectiveness, the whole care delivery system needs to work together to attribute consumer outcomes back to the providers that serve them (see Specialty Primary Care As A Growth Strategy). Magellan and Pyramid Healthcare recommend having weekly touchpoints to examine data, discuss successes and opportunities, and share information among teams to clinically shape what happens next.

Get to the grassroots level. For both payer and provider organization management teams, this requires a cultural shift, centered around the consumer experience, utilizing peers, and making sure all the right information gets to provider organizations (see Nimble Applies To Information Too). Ms. Chew explained how “much of the work has to happen at a local level in different pockets or pilots, balancing expectations and taking the best parts of certain programs and models and adapting and integrating them into others.” One strategy that Pyramid Healthcare introduced is an alumni program, where consumer peers can continue to be involved and integrated into the community, with certified training, job placement assistance, and linkages to wellness programs.

Specialty provider organization executive teams need to renew their focus on getting in ‘first-position’ with health plans by creating opportunities for financial alignment—and for increasing revenues through achieving superior outcomes. In a health care landscape where fee-for-service reimbursement is not keeping pace with inflation (even before this year of hyper-inflation), this shift is a key to sustainability.

For an assessment of organizational preparedness for value-based reimbursement, take the OPEN MINDS Value-Based Reimbursement Readiness Assessment. For more information on value-based reimbursement strategies and partnerships, checkout these resources in the OPEN MINDS Industry Library:

And for more discussion on value-based payment and strategies, join me for the following executive seminars at The 2022 OPEN MINDS Management and Best Practices Institute in Newport Beach, California on August 30: How To Build Value-Based Payer Partnerships: An OPEN MINDS Executive Seminar On Best Practices In Marketing, Negotiating & Contracting With Health Plans.

Metrics-Based Management: Using Analytics For Strategy Implementation & Business Optimization

By Joe Naughton-Travers, Ed.M.

If you have great staff and great infrastructure, your organization still needs a strong management team—and management practices—to make sure that organizational plans to deliver great performance becomes reality. To do this, management teams need well-designed, real-time performance metrics. In successful organizations, metrics-based management happens in two contexts: managing strategy implementation and optimizing business operations. The key is to ensure you have the right data and the right analytical tools to report these performance metrics.

Managing Strategy Implementation

The use of metrics in implementing a strategic plan is considered a core element of strategic management built around key performance indicators (KPIs). Simply put, KPI’s are the ‘metrics’ that measures progress towards your strategic objectives, as well as whether your organization has achieved them. Some metrics are a direct measures of success. For example, if a strategic objective is to operate at a 10% positive financial margin, then the KPI for this objective is the margin, which is reported at least monthly. In other instances, you may choose process or proxy metrics that measure progress made in various initiatives to accomplish a particular strategic objective.

There are four important steps to selecting these KPIs and managing strategy implementation:

Step #1: Start with your strategic plan.  It should have a short list of quantifiable strategic objectives, initiatives for accomplishing them, timelines, assignments, and budgets.

Step #2: Select metrics for success. These are your key performance indicators (KPIs) calculated from obtainable data that indicate organizational performance in progressing toward and accomplishing strategic objectives. An effective KPI is specific, measurable, and actionable. Use a ‘balanced scorecard’ framework that includes metrics that report financial performance, customer performance, organizational innovation, and effective internal operations.

Step #3: Create a KPI reporting system. Ideally, this is from a business intelligence (BI) or data analytics software application that includes management dashboards to report the metrics, showing a comparison to the performance trend from past to present. Minimally, the KPIs are reported monthly with the trend data as well as against performance targets. This reporting system and its use communicates the importance of the organization’s strategic objectives and the executive team’s focus on them. As Peter Drucker said, “You can’t improve what you don’t measure.”

Step #4:  Coach your staff to use the KPIs. Engage in ongoing monitoring and proactive management using the KPIs with your executive team and staff. Modify the KPI metrics if needed to ensure progress in implementing your organizational strategy.

Much has been written about the development of KPIs and models for selecting both leading and lagging financial and non-financial indicators of performance. The challenge, beyond selecting the measures, is two-fold: developing the ability to routinely report the measures using data from existing software systems or databases (or expanding current information systems to collect the data) and analyzing the KPIs monthly to develop or update organizational strategies to improve performance.

Optimizing Business Operations

Metrics-based management also plays a key role in optimizing business operations for specialty provider organizations. What exactly is business process optimization? It is the management discipline that promotes efficiency and effectiveness of organizational process—employing methods, policies, management practices, software tools, and metrics to optimize an organization’s activities across the business process life cycle.

Optimizing business operations is critical for provider organizations. All aspects of service delivery (referral, admission, routine services, and discharge or transfer) and administrative operations need to run smoothly. Processes should be standardized to be effective and consumer and staff friendly. Data and analytics are critical tools for doing this.

Organizations that have superior process management performance share a few key competencies—corporate strategy that is connected to performance indicators as described above, process and project management expertise, deliberately designed process models that promote service quality, access to information, support of management for process improvement initiatives, and incentive-focused employee compensation.

It sounds simple. But if business process management is so simple, why do so many organizations have bad performance from bad processes? Author Janne Ohtonen, in an article titled, “Enabling strategic growth and improved performance through Business Process Management,” offered some interesting insights. His list of the ten key capabilities needed to be successful with business process management and optimization include:

  1. Co-workers have confidence and trust in each other
  2. There is open communication between employees and managers
  3. Managers share vision and information with employees
  4. The organization is able to respond to changes in markets quickly
  5. Senior management has confidence and trust in managers
  6. There are efficient communication channels for transferring information
  7. The organization has appointed people responsible for processes
  8. The organization extensively uses information systems
  9. No one has to worry about losing his or her job because of process changes
  10. Managers support changes in processes

How does your organization stack up in terms of using data and analytics to drive strategy and to optimize operations? Your team can’t perform or manage without the metrics to support both of these. In fact, I would argue that, beyond strategy, metrics and metrics-based management competency are the most fundamental ingredients for organizational success for providers in today’s market. Why?

I’ve seen executive teams of organizations with all sorts of other competencies—but with no access to timely performance metrics or the ability to use them—fail to optimize performance. Without real-time performance metrics for your management team:

  • Identification of performance issues is often delayed
  • Organizational performance relative to competitors is more a matter of opinion than a measured achievement
  • The identification of performance problems requires constant observation—and is often anecdotal
  • The “causes” of poor performance are harder to identify (and often the subject of disputes between team members)
  • It is difficult to sort out persistent performance problems and separate “trends” from short-term issues
  • It is challenging to prioritize operational improvement initiatives and investments

I could go on…

If current performance data is not the focus of your management team meetings, it will be more difficult for your team to respond to evolving consumer and payer demands, a rapidly changing health care market, or emerging competitive threats. I liken it to flying blind; the airline pilot without the dashboard.

Key elements of an organization with metric-based, performance-driven culture:

  1. Visible metrics—both customer-centric and organizational—and the data and analytical tools for reporting them routinely
  2. Actionable insights based on rich data and identification of the actions needed to improve performance
  3. Clear team member accountability for specific performance metrics
  4. Real-time performance feedback at all levels of the organization
  5. Targeted coaching based on performance data with individualized goals to improve team member performance
  6. Recognition of great performance
  7. An interactive strategy and budgeting process
  8. Nimble and data-driven service line reengineering and development

So, collect the data and teach staff how to use metrics and analytics to improve your business operations and achieve your strategic objectives. Metrics-based management is one of those “must develop” competencies for health and human service organizations. Organizational performance—including financial, service, quality, compliance, etc.—matters more to the sustainability and success of organizations every passing year.