Why do hospital executives need to invest in population health?

Population health has an incontrovertible impact on patient care, costs of care, and providers and payers. Components of population health management include conducting community health needs assessments, relationship building with community partners, risk stratifying and targeting vulnerable groups for interventions, collaborating with public health agencies, engaging in community-based participatory research, and demand capacity planning with respect to hospital and community resources. Growing research demonstrates how population health management yields improved health outcomes, provider satisfaction, and cost-effectiveness.

Yet, the capacity of health care organizations to effectively design and implement population health initiatives can vary. Hospitals that do not have sophisticated health information technology, for instance, are less likely to invest in population health initiatives (Population Health Initiatives Among Hospitals: Associated Hospital Characteristics). In the setting of patient-driven incentives through an aging and increasingly more co-morbid population, health care organizations are going to be compelled to embark on population health initiatives despite an initial perceived reduction in revenues. The negative revenue impact of the COVID-19 pandemic has actually accelerated hospital entry into capitated and other full-risk payment arrangements (Investing in Population Health). Additionally, value-based reimbursement and the creation of more integration, comprehensive health information technology are payer and provider-driven incentives for sustaining population health management in health care organizations (The Second Curve of Population Health).

Value-based reimbursement entails several potential incentives generated by the payer. For example, a predetermined price and quality level can be established for a particular population with respect to predefined services. A significant number of hospitals are already seeing fee-for-service contracts transitioning into risk-based contracts (Investing in Population Health). Conversely, if this predetermined level is not adjusted for the existing structural determinants of health inequity burden in communities, hospitals that serve vulnerable patient populations would be disproportionately penalized and this would be a barrier that would need to be addressed. Similarly, health care organizations that serve rural populations will likely not have the same infrastructure to execute large-scale population health initiatives and another incentive could be to consider them as part of larger networks in contracts that include larger, more well-resourced hospitals.

Health information technology enables providers to preserve high-quality care through metrics that can now be feasibly measured such as cost of care, inequality measures, and health status. Integration of data through collaboration with community partners facilitates both cost-effectiveness and care coordination, such as through the use of social workers and case managers, to optimize care delivery. Additionally, it supports providers serving vulnerable populations, such as in rural settings, by providing the infrastructure for telemedicine to be feasible.

A business-based solution entails greater transparency in the cost of services to patients and measures risk-adjusted for social vulnerability. Holding hospitals to these standards that include providing equitable care would incentivize hospital executives to invest more in population health initiatives. Both for-profit and not-for-profit hospitals can have the funding they receive through Medicare and Medicaid require that certain health equity-oriented measures be met. We already know that “most Medicare spending [will be] tied to value-based payment arrangements by 2025” (Investing in Population Health). The financial benefit of improving care for vulnerable groups, such as patients experiencing housing or food insecurity, would be incentivized for public insurers through a resultant decrease in the use of other social services outside of the hospital.

Private sector partnerships can capitalize existing frameworks for addressing these structural determinants of health inequity without necessitating increased use of resources by these public insurers. One example entails addressing the lack of access to reliable transportation. Ambulances are very costly and are often covered by public insurers, such as the case with the Colorado Medicaid Medical Transportation benefit in this state. There is also a significant cost associated with delayed or missed appointments outside of the transportation itself and there is growing evidence showing how ride-share based EMT services can reduce health care costs (Rideshare as Nonemergency Medical Transportation).

The business case for the hospital executive team, outside of the benefits to payers, would be reducing costs for patient care that will not be reimbursed. Through value-based reimbursement, the hospital would need to work on reducing costly visits to the emergency department and subsequent inpatient admission by transferring resources to care coordination and other population health strategies. Greater investment in health information technology would also allow hospitals to capitalize on existing community resources without using more of their own by partnering with community-based organizations to address various social needs for patients that could prevent future utilization of costs health care services and improve their quality of life as well.

Specifically, investment in more sophisticated health information technology infrastructure would enable hospitals to not overly rely on human capital that can be quite costly and potentially not as efficient. Conventionally, many hospitals employ community health workers, patient navigators, and case managers. Health information technology facilitates the implementation of machine learning and other artificial intelligence tools to optimally deploy closed-resource referrals, maintain up-to-date resource directories, and support data interoperability and system integration with community partners (Mapping the Navigation Systems of Pennsylvania).

In the long term, the health information technology infrastructure can support community information exchanges that capitalize on resources that already exist in social sectors outside of the hospital. The resultant consolidated big data can be utilized to assess what interventions are truly cost-effective as there is still a dearth of evidence of population health initiatives that positively impact both health outcomes and cost-efficiency. It can support increased financial incentives through payers for reimbursement of “nonmedical services”. Recent changes in Medicare Advantage rules now allow plans to extend benefits coverage to services related to food insecurity, transportation, and housing instability, with more than 900 plans offering such benefits in 2021 (What is the Outlook for Addressing Social Determinants of Health?). Ultimately, there will continue to be increased pressure from both public and private markets for hospitals to engage in population health management and it would behoove executives to start being proactive in restructuring services and reimbursement strategies now.


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