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Population Health: Not Your Father’s HMO

By Dr. David C. Pate, News and Community
May 5, 2015
Editor’s note: This is the fourth part of an eight-part series that previously appeared in an abridged form in Becker’s Hospital Review.

Last week, I discussed the necessary transformation of the business model to support population health and lower U.S. healthcare costs: a transition from pay for volume (fee-for-service) to pay for value.

To promote the investment of the necessary time, energy, and resources into improving the health of people who are not yet patients, some kind of per-member, per-month payment would be necessary. This would perhaps be analogous to a gym membership.

Further, if we are to also address the second-bucket costs that I have previously referenced in this series, namely the provision of low-value/no-value services, we must address the incentives in the current reimbursement system that promote the use of these services.

It seems to me that the most effective way to structure a workable model is to provide capitation or a percent of premium payments that move health care toward evidence-based medicine and away from inefficiencies.

You may ask, “What is the difference between what I am proposing and the HMOs of the ‘80s and ‘90s?”

My response, and I will deal in generalities since there certainly are exceptions, is that the HMOs, other than a few provider-based HMOs, were driven by insurance companies. I see PCMHs, ACOs, and the integrated delivery networks necessary to truly deliver on the promise of population health to be provider-led. That’s a big difference.

In addition, whereas the focus previously was on just the cost, today’s population health managers must truly embrace better health, better care, and lower costs. To these ends, providers should not be rewarded for decreased costs unless they first can satisfy certain quality and safety measures.

In fact, the financial rewards should consider both quality improvements as well as cost savings, but quality measures must be the threshold for cost savings rewards.

In the ‘80s and ‘90s, though some providers were capitated, most weren’t. Most were paid on a fee-for-service basis, but in a self-defeating model, in which the provider took steep discounts that encouraged the provision of more services while the insurer attempted to control services through denials. Ideally, the population health managers of the future should hold the performance risk and handle utilization internally.

And though HMO stood for “health maintenance organization,” the focus was disproportionately on sick care, rather than promoting the health of a population. Unfortunately, people changed their health plans often enough that it didn’t make sense for most of these organizations to spend a lot on health, when they were unlikely to see the return on that investment.

And finally, the early models relied on a primary care gatekeeper system. While it is my belief, as a primary care physician myself, that most everyone should be cared for by a primary care physician, there are many conditions that demand early attention by a specialist and other conditions that are better cared for by a specialist. The model needs to be one in which the primary care physician is coordinating care but should not be an impediment to prompt attention by a specialist when needed.

The future entails specialists supporting many primary care providers by tele-consults with the patient in the primary care physician’s office, with electronic access to the complete medical record and tests, and a real-time assessment of the patient to determine in those tough or uncertain cases whether the primary care physician should initiate treatment and follow-up or whether referral is cost-effective.

Keys to the success of population health that often were not employed fully in the early models of care are patient-centeredness (the patient needs to be at the center of the decision-making process and providers need to assess and take into consideration the patient’s treatment goals), an integrated electronic health record which the patient and all care providers have access to, seamless care without the need for the patient to re-register and fill out a separate health history for each visit, an emphasis on quality and safety measures and performance, provider accountability for the outcomes of care and the costs of that care, and a focus on health.

Next, I’ll look at health subpopulations.

About The Author

David C. Pate, M.D., J.D., previously served as president and CEO of St. Luke's Health System, based in Boise, Idaho. Dr. Pate joined the System in 2009 and retired in 2020. He received his medical degree from Baylor College of Medicine in Houston and his law degree from the University of Houston Law Center.