ROI for pop health IT still not quite in view

A report from KLAS and CHIME finds that hospitals and health systems are still investing in population health management tools, but many are "becoming less optimistic" about the near-term prospects for value-based reimbursement.
By Mike Miliard
05:03 PM
Small walking figures connected by lines

A survey from the College of Healthcare Information Management Executives and KLAS suggests that many IT decision-makers are still seeking clear signs on how much return on investment they can expect from the technology deployments they're making as the industry shifts, slowly, from fee-for-service to value-based care.

WHY IT MATTERS
In the era of accountable care (still less than a decade old), many hospitals, health systems and ACOs are still trying to get a handle on how the population health management and quality improvement tools they've been buying in recent years will pay off.

The KLAS report draws on data from CHIME’s 2019 HealthCare’s Most Wired survey, KLAS 2019 Population Health Management Cornerstone Summit and KLAS Decision Insights. It notes that, even as those polled acknowledge that "rising costs and stagnant outcomes of fee-for-service are not sustainable," more and more healthcare executives are becoming "less optimistic about how quickly value-based reimbursement will outpace FFS."

Indeed, most of those execs surveyed thought it could be at least three – or perhaps as many as eight – years before value-based reimbursement outpaces fee-for-service revenue.

As of now, VBR contracts now account for slightly more than one out of every four dollars of hospital revenue, according to the KLAS report – and just 10% of revenue is tied to downside risk.

Despite some early optimism that ROI could be quick, "the lack of significant progress toward VBR has eroded healthcare organizations’ confidence that the change will happen in the near future," said to KLAS researchers. "The biggest factors limiting adoption of VBR are uncertainty that an ROI will be achieved and a lack of needed infrastructure."

When it comes to technology, providers are focused first on their electronic health record to drive value. But EHRs "have historically struggled to provide the nuanced views needed in these areas, so organizations often opt for third-party solutions that provide additional analysis, visualization, and ad hoc reporting," according to KLAS

They're investing in analytics, care management, patient engagement and other tools too, of course, but some are still questionable about how much return on investment they represent. Certainly those able to demonstrate the clearest ROI are the species of software decision-makers most favor.

"For example, solutions that help organizations identify and act on care gaps see some of the broadest adoption as they can be helpful with just about any VBR contract," researchers said.

The report also notes that "functionality is a significant driver in PHM purchase decisions, as providers look to integrated EHR systems and broad-based analytics deployments to help them gain insights needed to compete on value-based contracts.

"In this quest for consolidation, organizations are seeking to eliminate ad hoc interfaces and replace vendors who haven’t delivered on functionality or quality."

THE LARGER TREND

This is not the first report to find hospitals and health systems grappling with the inherent challenges of a new way of reimbursement.

Early this year, Chilmark Research issued a study showing that even providers described to be "at the pinnacle of strategic intent and maturity" are still having a hard time defining a clear ROI for their pop health programs.

There are ways to help track it, however. Commonwealth Fund, for instance, offers an ROI calculator to help health systems better understand how their social determinant investments and community partnerships might pay off in savings and reduced utilization as they manage the health of their highest-need patients.

And, as Montefiore's 300% ROI from its SDOH investments has shown, big value can be achieved with smart strategies and creative thinking.

ON THE RECORD

"Based on CHIME’s Most Wired data, an average of 26% of hospital revenue in the U.S. comes from VBR contracts," according to the KLAS report. "The specific percentage varies from state to state, and those states with higher averages often have one or two large organizations that have adopted VBR more rapidly than their peers. South Carolina and Pennsylvania have the highest average percentages of revenue from VBR contracts; at double the national average, Arkansas and Indiana have the highest adoption of downside risk."
 

Twitter: @MikeMiliardHITN
Email the writer: mike.miliard@himssmedia.com

Healthcare IT News is a publication of HIMSS Media.

The Business of Health

This special collection of stories, which will be updated throughout the month, explores how hospitals, health systems and physicians are attempting to not only financially survive, but thrive, under the new normal.

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