Why Are Payors and Providers Better Together?

Why Are Payors and Providers Better Together?

Given their rapid rise in popularity in recent years, payor-provider partnerships seem set to become one of the next big trends in the health care industry. In 2016, new product launches were announced at a steady pace, and the market also saw a much stronger focus on deeper, long-term collaborative partnerships with a high prevalence of joint ventures. But why exactly are so many payors and providers deciding that now is the right time to team up? A recent article from Oliver Wyman Health offers five reasons why these new partnerships are gaining significant ground in today’s marketplace.

  1. There is too much disconnection in the system.

Today’s health care consumers are frequently bewildered by the system, and with good reason: there is all too often a critical disconnect between key aspects of the consumer experience. Making things even more difficult is the fact that it’s not always clear who is responsible for which aspect; as a result, dissatisfied consumers don’t know where they should direct their frustration in order to see an improvement in their situation.

For example, providers are often the target of blame in the case of an out-of-network denial, even though this is typically a payor issue. Likewise, some Medicare Advantage measures are viewed as payor categories even though their most direct influence comes from the provider experience.

However, when payors and providers join forces, it’s possible to achieve much better coordination of care and alignment of the consumer experience. This in turn drives higher rates of patient engagement and satisfaction, which benefits payors, providers, and consumers alike.

  1. Narrow networks are not sustainable.

Narrow-network plans—in which enrollees are limited to a specific pool of providers that have negotiated favorable rate contracts with payors in exchange for volume shifts and limited risk—may be a popular option at the moment given their cheaper premiums (which can be up to 17% lower than broader-network plans), but they are not a sustainable, long-term solution. Too often, inadequate networks or a lack of accurate, up-to-date provider directories result in patients ending up on the hook for unexpected out-of-network provider services or not receiving the level of care they require.

To properly deliver value-based services that are effective from both a cost and an experience standpoint, significant changes are needed to the underlying product and its associated incentives. And because these adaptations affect the payor and provider side alike, they are best achieved when both parties are working together in a collaborative partnership.

  1. Too many middlemen are clogging up the system.

Today’s health care system has unfortunately become encumbered by middlemen. With such a piecemeal collection of disconnected vendors standing between payors, providers, and the employer customers they serve—and each receiving a per member per month (PMPM) payment into the bargain—it’s little wonder that the system has become slow moving and expensive.

To correct this, proper organization and integration is needed, with specific focus on identifying the areas that deliver strategic control and where real ROI is possible. But this level of integration and frank dialogue cannot come about when payors and providers are on opposing sides of the negotiating table; rather, it requires the end-to-end, long-term perspective found in a deeper, more engaged partnership, without third parties blocking the discussion in the middle.

  1. New data capabilities are needed.

Today, the goal of delivering the right care at the right time to the right customers is closer than ever before thanks to the massive data sets and advanced analytics capabilities we have available to us. But to leverage this data to maximum effect, we need to be able to draw from both the payor and the provider side of the equation; it’s at the digital intersection of these two spheres that the potential for transforming health care delivery exists.

Historically, the question of data sharing between payors and providers has been a contentious one, with neither side being fully comfortable with the level of exchange needed to create designs for truly effective, value-based delivery. New partnership models, however, which are based on mutual trust and benefit, could provide the all-important foundation for the future of health data analysis.

  1. Today’s transactional relationships are limited in what they can achieve.

Industry experts agree that our health care system is in desperate need of a full-scale overhaul. But the level of collaboration required for such an overhaul, which involves defining objectives, designing strategies to realize them, and mapping the path to scaling up, is almost impossible to achieve within the context of typical contracting negotiations, which usually involve contentious discussion as each side attempts to get what they want with little regard for the other. The more productive dialogue that can result when both payors and providers are on the same side is a critical first step in charting the future of the system and justifying the levels of investment needed in order to improve care delivery, consumer experiences, and health outcomes.

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