Approximately half of hospital systems in the US are currently experiencing small operational margins, if they experience positive margins. The business model is a challenge, since hospital costs increase faster than hospital organizations can increase prices. It is likely that government payers do not increase their rates enough to cover the increase in costs, and commercial payers are not different. The “value proposal”, if it is successfully, can provide hospital systems for a different and improved business model and a CIN will provide an improved operational margin immediately immediately, while paving the way for these margins to be carried out with The payers.
All these elements were clear to me while working with colleagues to create a CIN, with myself as a medical director of the network. In our case, the medical staff of the Hospital de Cristo in Cincinnati wanted to anticipate the value/health purchase curve of the population that was coming and, as such, we founded a clinically integrated network in 2013. That CIN was initially responsible for administering spending the health plan of the hospital system. At that time, the hospital spent $ 43 million annually for 5,000 employees and their dependents in the health plan (total lives of approximately 12,000). We fuse the data of the TPA (third -party administrator) with clinical/pharmaceutical data to identify the group’s cost drivers, both patients who were already expensive, and those who will soon be so. In any health effort of the population, the key to administering an expense of any group is to identify and involve 15 percent of the group that will boost 80 percent of the cost.
As in any effort of this type, before any savings are shared with individual doctors, the results must be audited by a third party. During the first six years of our efforts, we save the hospital system $ 50 million. We lower the expense “per member per month” at the same time that we improve our clinical quality, six years in a row; And more than 90 percent of the savings we generate, we request the operating margin of the hospital. Save money every year we operate for ten years and distribute money to participating suppliers every year. Everyone wins, the hospital, doctors and patients.
Why this is important
How can a clinically integrated network demonstrate such savings and such quality? The fact is that CIN have clear advantages over responsible care organizations (ACO), including:
• CIN are easier and more cheaper to configure. The ACOs can generally cost $ 5 million or more to launch and have the additional uncertainty of IF/when the effort is financial. That difference is crucial.
• CIN are easier to understand by all interested parties involved. Most doctors do not understand the details of the effort.
• Financial rewards may or may not be carried out in an AC, which presents a difficult proposal to begin a system with challenged operating margins.
• CIN do not require any new software, only a few FTE. Starting costs are equivalent to a fraction of those of an ac.
• The risk/reward ratio is fantastic. There is almost no inconvenience, gigantic rise, and leadership will gain new confidence to enter risk -based contracts. Suppliers know how to win in this new sand.
• CIN are a better and more agile solution for employers. Employers are approximately half of the total of total medical care dollars, and probably almost the entire operating margin. Let’s be realistic, we should have an offer of greater value to propose.
The following figure illustrates our experience with the tendency “By member per month” or PMPM. Greater costs for the population every year, five years in a row. These are audited results.
