Hospitals and Health Systems Prepared to Increase Risk Assumption, Analysis Suggests

Navigant survey conducted by HFMA shows providers planning to advance
commercial and Medicare model, Medicare Advantage, and
provider-sponsored health plan participation

CHICAGO–(BUSINESS WIRE)–$NCI–Healthcare providers are ready and planning to assume increased levels
of risk through commercial payer and Medicare contracting models and
Medicare Advantage, according to a new Navigant (NYSE: NCI) analysis
based on a survey conducted by Healthcare Financial Management
Association (HFMA).

According to the survey of 170 hospital and health system senior finance
executives, 72% both believe their organizations have the capabilities
needed to support increased levels of risk and plan to take on
additional risk in the next one to three years across the following:

  • Commercial payer contracting models: 64%
  • Medicare value-based models: 57%
  • Medicare Advantage: 51%

Survey results also show providers are partnering on or launching
provider-sponsored health plans (PSHPs) as a part of their
risk-assumption strategy. Forty-four percent of respondents say their
organizations are already part of a PSHP (25%) or plan to launch one in
the future (19%).

“The Affordable Care Act left many providers assuming that risk-based
models would be the new normal, but the transition has not been as
successful or widespread as anticipated,” said Richard Bajner, Navigant
managing director and healthcare value transformation practice leader.
“With most health systems anticipating continued downward pressure on
margins, accepting risk can represent a lever for revenue growth, as
long as providers clarify internal accountabilities and commit enough of
their resources to risk models. These results show the value-based
movement may be coming full circle, and this time providers will benefit
from previous experiences in designing their approach.”

Market trends impacting provider margins include the addition of
approximately 10,000 people to Medicare each day, consumer demand for a
more connected care experience, and declining demand for inpatient
services.

While Medicare and commercial
payers
are increasing their value-based contracting offerings, there
remains varying levels of engagement on risk arrangements in local
markets, according to Navigant’s
2018 CEO Forum
executive panel.

“Sharing risk must be a collaborative pursuit between payers and
providers,” said Kai Tsai, managing director, Navigant. “It’s clear that
providers are building the capabilities needed to support enhanced
levels of risk and are planning to increase their risk assumption. Both
entities need to partner more closely to lessen the gap between the
supply of and the demand for risk arrangements in markets nationwide.”

Having the appropriate technology underpinning is essential to
payer-provider risk arrangements. When asked in what areas they’re
planning to increase investments (financial, labor) to enhance
collaboration with payers and support increasing levels of risk, 62% of
respondents suggested technological capabilities with more than half
citing physician (57%) and member (56%) engagement.

Among executives suggesting their organizations will not pursue
increased risk levels, 56% cited a lack of local market demand. In
addition, 42% of executives suggested operational processes, such as
contract execution and care coordination and management, as the top
challenge with maintaining risk-based capabilities.

Even with their increased risk-assumption interest, providers will
inevitably continue to operate in a market primarily driven by
fee-for-service (FFS) payments. But the path forward does not have to be
an either-or scenario. Hospitals and health systems can drive revenue
and margin growth in both FFS and value-based worlds through strategies
focused on engaging physicians on clinical standardization, targeted
cost of care reductions in areas such as post-acute care, and building
tight provider network relationships, the analysis suggests.

View full survey results at www.navigant.com/RiskReadiness.

Navigant’s
Healthcare
segment is comprised of consultants, former provider
administrators, clinicians, and other experts with decades of strategy,
operational/clinical consulting, managed services, revenue cycle
management, and outsourcing experience. Professionals collaborate with
hospitals and health systems, physician enterprises, payers, government,
and life sciences entities, providing performance improvement and
business process management solutions that help them meet quality and
financial goals.

About Navigant

Navigant Consulting, Inc. (NYSE: NCI) is a specialized, global
professional services firm that helps clients take control of their
future. Navigant’s professionals apply deep industry knowledge,
substantive technical expertise, and an enterprising approach to help
clients build, manage, and/or protect their business interests. With a
focus on markets and clients facing transformational change and
significant regulatory or legal pressures, the firm primarily serves
clients in the healthcare, energy, and financial services industries.
Across a range of advisory, consulting, outsourcing, and
technology/analytics services, Navigant’s practitioners bring sharp
insight that pinpoints opportunities and delivers powerful results. More
information about Navigant can be found at navigant.com.

Contacts

Kyle Bland
Navigant Investor Relations
312.573.5624
[email protected]

Alven Weil
Navigant
704.995.5607
[email protected]

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