Navigating Healthcare Payment Models: Timing and Strategic Shifts (Full Transcript)

Speaker 1: Hi, I'm Joe Pfeiffer, President and CEO of HFMA. Welcome back to our web video series. This month I'm talking about timing. Maybe you've heard the Arnold Palmer quote that timing is everything in life and in golf. You may not know that timing is also important in fishing. A longtime colleague and an old buddy of mine used to talk about this. When fishermen are on the water and the fish are biting, but a storm is brewing, what do they do? They have to balance the risk and the reward. How long can they stay out and enjoy the best fishing of the day while getting safely to the dock before the storm hits? Sometimes they just can't go in, even though they know they should. Healthcare leaders actually have a similar situation when it comes to fee-for-service versus value-based payment. They know the value-based payment storm is coming, but fee-for-service revenue is still strong, and the value storm doesn't seem imminent just yet. That's why some people are holding off on value-based payment experiments. Those experiments, though, are crucial because they will shape the business models that will eventually prevail. First of all, we shouldn't minimize the drive to hang on to fee-for-service revenue as long as possible. That's a big part of this, and it's understandable. But as I've talked about before, that's a short-term strategy. There are other reasons for the delay, too. Here's one we hear about pretty often. Value-based savings typically accrue to health plans, not providers. The argument is basically this. Health systems aren't motivated to invest scarce resources in reducing the cost of care if they're simply padding health plan profits in the process. Health systems already provide millions of dollars in charity care to needy patients. They're certainly not in the business of subsidizing health plans. That might be true. Again, our advice is to take the long view. In the long term, the business model will change, and incentives should align. That alignment is not guaranteed, though. There will be winners and losers. Providers that figure out how to align all incentives, including the ultimate cost to purchasers, will win the business, in part because of what they learned in the process. And when Medicare pursues value-based payment more aggressively, the providers that have practiced it will be poised to succeed. Remember the phishing analogy we started out with? When the market hits the value tipping point, the providers that are still out there reeling in fee-for-service revenue may find that the value-based payment storm has finally arrived and it's overwhelming their boats. They stayed out phishing too long. Thanks for watching. I'll see you next month.