1+1=7: Leveraging Value-Based Healthcare for Positive ROI

By Gregory T. Reinecke

Gregory T. Reinecke-healthcareChange is about change! In the healthcare industry, the Patient Protection and Affordable Care Act of 2010 included another definition for clinical success. The government determined success to mean a patient does not return to the clinic within thirty days of original discharge. This is now old news. Yet a survey in 2017 showed that 59 percent of healthcare organizations (up from 33 percent in 2016) still had concerns about the Affordable Care Act. The consensus was that dealing with this move from a volume-based care requirement to a value-based one is still of concern.

The shift from fee-for-service to a value-based model is driving change and a rethinking of doctor/clinic and patient relationships. With change you are forced to review allocation of resources, investment strategies, and even to do more with less. In this changed landscape—in a value-based environment—how do you define ROI? Where do you invest?

With a greater awareness and focus that past practices in treating and releasing patients will need to be revamped, new consideration on non-clinical patient information has become important. In the current approach, the doctor is concerned with the patient in a one-on-one relationship. In the new environment, the interaction with the patient goes beyond the clinic and into non-clinical areas.

What is in the patient’s home environment that supports or does not support healing and wholeness? What external factors are detrimental to a patient’s ideal recovery? These factors have been noted to include social and physical determinants. How does one sort these new factors and determine where to invest?

Value-based healthcare clearly shifts the practice to include more people-side intangible factors—into areas not as comfortable for the medical practitioner. The practice of medicine deals mostly with specifics, not with non-specifics such as feelings and emotions. The new practice of medicine is moving into a full partnership with intangible factors, especially social determinants that affect success of healing and wholeness for a patient.

A 2018 report of data collected from 300,000 Americans identified factors that create healthy living environments. They reported that only twelve factors contributed to 90 percent of the variations in the well-being of people across the country. These factors were related to demographics, clinical care, social and economic factors, and the physical environment.

It is clear the welfare of patients is no longer focused in the clinic, but has broadened into a holistic, community enterprise. You have heard it said that it takes a village to raise a child; now it takes a community to help people heal! No doubt this recognition of the broadening healthcare enterprise may be part of the reason 59 percent of health providers find the new healthcare expectations challenging.

As a means to begin to understand how to peel back this onion, we have looked at what options healthcare organizations have in making change. A good place to start is to follow where we currently spend money and use resources and then decide where we need to reallocate funding for the new healthcare needs. So which investments might lead to a more applicable and responsive patient care program?

In every organization, there are seven types of investments available. In the outline below, we view each of the seven investments from the perspective of the current Fee-for-service focus to the Value-based focus. For each investment, we have imagined what change result might be desired. The first five capitals followed with asterisks are people or people-derived investments.Understanding the patients’ demographics as well as well as geography will be important in characterizing diverse subgroups in communities under consideration. Click To Tweet

HUMAN CAPITAL

  • Fee-for service: Patient is a number
  • Value-based: Patient is a person
  • Change desired: Consider a clinical team focused on what an ideal (people focused) value-based healthcare system could be

RELATIONSHIP CAPITAL

  • Fee-for service: Transactional: buyer (patient) and Seller (doctor)
  • Value-based: Familial: cooperative solutions, especially post-clinic
  • Change desired: Need to better engage patient in their community; build relationships, understand subgroups

SPIRITUAL CAPITAL

  • Fee-for service: Formal (culture, satisfaction, norms)
  • Value-based: Informal (family-like: culture, satisfaction, personal, relationships)
  • Change desired: Need a support network for patient: partner and co-fund with community groups for health and wellness; environmental integration

CUSTOMER CAPITAL

  • Fee-for service: Cordial formal service
  • Value-based: Collegial informal service; partnering together for health
  • Change desired: Need a new mindset to think health and wellness, holistically; see patient in their environment.

ORGANIZATIONAL CAPITAL

  • Fee-for service: Clinic and equipment support
  • Value-based: Invest to support patient beyond the clinic
  • Change desired: Need to imagine ways to connect/build wellness infrastructure to include community partners and ancillary health groups

PHYSICAL CAPITAL

  • Fee-for service: Focus on clinical needs and technology
  • Value-based: Invest in post-clinical and discharge needs
  • Change desired: Need to fund ongoing support, such as with out- patient wellness support to include wellness integration aides

FINANCIAL CAPITAL

  • Fee-for service: Revenue generation first
  • Value-based: Patient satisfaction followed by Revenue generations
  • Change desired: Need to fund ongoing support, such as with an out- patient ‘wellness’ aide

We have previously shown that an investment on either the task or people sides requires an investment on the opposite side to reap optimal ROI.  For example, an investment of new technology requires an investment in people to maximally exploit the technology. Or if one invests in people to do work, look for ways to invest in materials or technology to help people optimally perform. Since 71 percent (five of seven) of the investment opportunities are on people or people-derived assets, investment opportunities are mostly on the intangible, soft side.

Value-based healthcare investments are thus people-side ones. Understanding the patients’ demographics as well as well as geography will be important in characterizing diverse subgroups in communities under consideration. In order to plan for investments, a strategic approach is needed to tactically allocate resources. We believe that what underpins an effective tactical response is knowledge and understanding of situations and challenges on the ground. They directly affect why people get sick but also can expose the environmental factors that will slow their recovery and adversely affect ROI. Proactively responding to complex challenges at the core must fundamentally go beyond traditional 1+1=2 solutions and embrace a broader range of intangibles into the equation. Depending on the desired change result, one invests accordingly. With this mindset, we are certain that the ROI will be better than 1+1=2, and more like 1+1=7!

Gregory T. Reinecke, President, GeoDimensional Decision Group LLC has over three decades of experience delivering powerful value-driven solutions focused on ROI to healthcare, public safety and government agencies. GeoDD creates solutions that help clients manage risk and solve difficult problems, utilizing big data, geography, geospatial engineering, plus social science and demography to reveal new solution possibilities. For more on Gregory T. Reinecke, please visit www.geoddgroup.com.