Editor’s note: This is the third part of an eight-part series that previously appeared in an abridged form in Becker’s Hospital Review.

Population health management has emerged with hope and promise to improve health care and lower healthcare costs.

First, let’s look at precursors and the role they play in the future of population health management.

There are many versions of patient-centered medical homes (PCMHs) and Accountable Care Organizations (ACOs) serving different populations in variously structured reimbursement methodologies.

Some have not been successful, some have been successful in some areas and not others, and a few have been very successful. Following are broad, general observations that may not be true of all PCMHs and ACOs.

PCMHs and ACOs are models largely focused on care coordination, the third bucket of cost savings opportunity I wrote about last week.

Generally, PCMHs and ACOs are paid on a fee-for-service basis, but in the case of the PCMH, may receive an additional payment for those higher-cost patients, and in the case of the ACO, may receive a pay-for-performance award or shared savings based upon meeting certain quality measures and achieving certain cost reduction goals.

Their success is often measured in terms of decrease in emergency room visits and avoidable readmissions. These areas of focus make sense, as we saw in part 2 how those patients are older, chronically ill, and have socio-economic and mental/behavioral health issues that make their care disproportionately costly.

At the same time, PCMHs and ACOs still are enhanced fee-for-service approaches to the treatment of patients. That means they are unlikely to be successful in improving either of the other two big buckets of healthcare costs and spending without transformation of the business model and the care model.

That transformed business model must pay a provider-based organization or ACO a per-member, per-month fee to provide health education, health screenings, preventive care, risk factor mitigation initiatives and strategies, and wellness promotion in order to impact bucket number 1, and a fixed payment (capitation payment, percent of premium, or other fixed budget arrangement) to reverse the incentives of fee-for-service that reward the provision of low-value/no-value services I referenced in bucket number 2.

This probably sounds a lot like the HMOs of the ‘80s and ‘90s and next week, I will explain why I think things are different now.

Transformation in the payment model will enable healthcare organizations to provide a system of care to a population. That said, this approach to population health must account for subpopulations, and I’ll address how I think that can work later in this series.