Blending Network Strategy & Product Strategy

As more and more health systems and provider organizations successfully manage the shift from volume-based patient care to value-based population health management, health plan strategic planning should be blending network strategy with product strategy as a key factor in the ability to achieve clinical and financial goals. The majority of providers are savvy at managing pay-for-performance and upside risk arrangements and, as providers have seen their margins narrow and plateau, they are more willing to step out into more advanced risk-sharing deals, plans have had to adapt and move beyond simple incentivizing for behavior change. Systems that have ventured into managing downside risk and percent of premium arrangements and have been successful have an appetite for more. Certainly, moving up the food chain from a provider to a payer has been a topic of conversation among Chief Executive Officers of large integrated delivery systems. They have worked hard to align referral networks and build physician trust, develop relationships with diverse community support organizations, forge a strong brand recognition in their local communities, and negotiate contracts with health plans that have met and exceeded care and cost containment goals.

Historically, health plans have based a large majority of their decisions regarding expansion areas on the financial feasibility of the markets. Understanding the desire and direction of health systems in general coupled with the alliances plans have worked hard to develop in their current markets, the trend has been to include a network assessment as part of the new market feasibility. Knowing the local players, their appetite for risk, hospital alliances, the Accountable Care Organizations (ACOs) in the market, along with modeling the potential partners against Centers for Medicare & Medicaid Services (CMS) network adequacy standards, can play a significant part in the success or failure in any expansion market.

As we have met and strategized with provider systems from their baby steps into pay-for-performance incentives to negotiating their first risk deal, there has been, and still is, a strong reliance on health plans to set clinical pathways and benchmarks. From the provider perspective, the reporting, transparency and willingness to share in the financial successes with the plan partners, is a key consideration in who to collaborate with.  Systems are starting to explore the administrative support organizations available and realize stepping out to become their own health plan doesn’t seem as scary as it may have five years ago. From the plan perspective, the need to partner with providers and health systems with a depth of understanding in risk adjustment and Stars along with the clinical skill set, and often non-clinical support services, to truly provide a holistic approach to patient care has never been more critical to success.  The directive for potential new network adequacy requirements and more tele-health options will allow room for plans to become even more innovative with their benefits. The ability to blend network strategy and product strategy will likely be evident of how successful plans are.

For plans and providers, knowing your local healthcare market, who the key stakeholders are, and keeping open communication will be paramount to the development of a strategy that puts you ahead of your competition.