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Let’s Start Working on Success in Tomorrow’s Business Environment
Our field’s future success will depend in part on how well we compete with other healthcare specialties for funding. This may seem odd until one remembers we are no longer a separately funded field. Our revenue will increasingly flow from large, consolidated systems in which we provide services. Some services may be based on contractual arrangements, but many of these systems will own our programs.
Two types of systems, health plans and health systems, will dominate the value-based care (VBC) arrangements gaining favor today. One system used to focus on providing health insurance and the other on providing healthcare. Companies of each type are now conglomerates with a mix of business.
Practitioner groups and facilities have consolidated into today’s large health systems. Health plans have grown horizontally as payers and vertically as healthcare providers. Let us focus on health plans to illuminate tomorrow’s business environment and especially how VBC will work.
Surveying the Landscape
UnitedHealth Group exemplifies these developments. According to its website, UnitedHealth Group is “a healthcare and well-being company with a mission to help people live healthier lives.” While still a payer of services, its preference to identify more as care provider is not misleading. For example, UnitedHealth Group is the largest employer of physicians in the US.
UHG’s lead in this category was established years ago, but it now boasts of having 70,000 employed or aligned physicians across more than 2200 locations. This business segment resides under the Optum Health division, its care delivery arm with revenues of $71 billion in 2022. Optum includes recently acquired Refresh Mental Health, a behavioral network of more than 300 outpatient sites.
Optum Health CEO Wyatt Decker articulates the strength of the company in this way:
The reason it’s been hard to make healthcare and the healthcare system work better in the United States is because it’s rare to have patients, providers—especially doctors—payers, and data, all brought together under an organization. That’s the rare combination that we offer. That’s truly a differentiator in the marketplace.
Competitors have been paying attention, and this model is not as rare as he suggests. Cigna has decided to rebrand as the Cigna Group, with Cigna Healthcare providing health benefits and Evernorth Health Services delivering a wide array of care services. Anthem and Humana have split their businesses similarly into an insurance segment and a healthcare services segment.
Value-Based Care is a New Approach to Managing Costs
Our field needs a sense of urgency as it examines the ramifications of this growing consolidation. Clinicians generally think about operational issues when they discuss integrating medical and behavioral care, but business leaders are focused on owning and controlling the segments to be integrated. Are we ready to be owned or controlled?
Managing care may become less outwardly conflictual as we transition to payers having leverage over the providers of care. Care providers have historically worried about remote payer representatives issuing medical necessity denials. This will not go away entirely, but the future involves less distance between payer and provider than we have experienced.
The future will see global payments to health plans and health systems with the goal of funding both general and specialty care. These large, integrated enterprises are well prepared to fund and manage care. They hope to reduce conflict about patient-level decisions by ensuring greater alignment on goals between payers and providers. This includes specialties like behavioral healthcare.
Because not all behavioral programs and services will be acquired, what are the challenges for contractors? The first hurdle is gaining sufficient funding. Next, costs must be managed within a budget tied to that funding. Managing within a fixed budget is familiar, but getting the revenue to ensure adequate care will be challenging. Executives need to prepare their value messages to secure adequate funding.
Many healthcare specialties have a similar story. They have unmet patient needs due to funding shortfalls. Tomorrow’s impassioned debates will involve gaining an adequate slice of the healthcare funding pie, and our long independent field is the least well-known or understood specialty.
This emerging world of global population budgets is part of the broad category of value-based care. We should be very cautious about embracing its vague promises. Many believe VBC has great potential to foster integrated, holistic care, and this is a possibility. It may be a better model than fee-for-service care, but it is no panacea.
Anyone familiar with accountable care organizations (ACOs) knows that behavioral healthcare can be funded in global budgets at nearly skeletal levels. Some ACOs have been allowed to limit the cost of care by using narrow behavioral networks. Will this dismal path be a common one taken under VBC? While VBC is often praised for its focus on outcomes, let us remember its primary goal is cost containment.
Executives need to prepare for a future where every specialty campaigns for adequate funding. Our field has compelling arguments for the urgency of fully meeting a population’s behavioral needs. Good arguments matter, but so too do strong relationships and influence. Let us begin to engage the leaders of these powerful systems.
Ed Jones, PhD is currently with ERJ Consulting, LLC and previously served as president at ValueOptions and chief clinical officer at PacifiCare Behavioral Health.
The views expressed in Perspectives are solely those of the author and do not necessarily reflect the views of Behavioral Healthcare Executive, the Psychiatry & Behavioral Health Learning Network, or other Network authors. Perspectives entries are not medical advice.
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