Health system leaders who participated in the survey said the percentage of their net patient revenue generated as part of risk-based contracts is expected to be 12.3% this year, up from 11.9% in 2018. But it’s a small sample size. Representatives from 51 systems completed this year’s survey, and some didn’t answer that question.
Hospital finance experts said percentages near 12% sound suspiciously high.
“When I hear those numbers, I have this visceral reaction where I almost start to discount them,” said Joseph Fifer, CEO of the Healthcare Financial Management Association.
Even more interesting was the wild variation in responses from health systems. From a whopping 85% from Edward-Elmhurst Health in Naperville, Ill., to a group in the middle who said between 15% and 35%, down to about half who said between 0% and 5% of their net patient revenue came from risk-based contracts.
All this underscores what many in the industry see as an inherent problem with value-based care and risk-based contracting: There are no set definitions that govern what’s what. Each health system executive who responded to that question likely interpreted it differently.
“You hear me say ‘pay for quality, pay for performance.’ That’s a fundamental problem,” said Howard Cutler, vice president of payer strategies in the acute-care division of King of Prussia, Pa.-based Universal Health Services, the fourth-largest for-profit chain.
Others wondered whether to include Medicare’s mandatory value-based purchasing component.
“Technically that’s a risk-based program, but you don’t get to opt in or out of it,” SCL Health’s Wade said. “So it’s never really clear whether you should count that.”
Edward-Elmhurst’s 85% includes all arrangements in which part of its payment was affected by performance, including the Medicare Shared Savings Program and contracts with its large commercial payers, said Shawn Roark, the system’s vice president of payer strategy.
And what about providers in states with managed Medicaid programs? Dr. Joshua Liao, associate medical director of contracting and value-based care at UW Medicine in Seattle, said such programs are the norm in many states. “They are doing it, but they may not count it because it’s the way it has always been,” he said. “What is considered value makes a difference.”