The game is rigged against population health management: How payment policy drives ROI

Feb. 26, 2016 / By L. Gordon Moore, MD

Return on investment (ROI) is driven in part by our payment decisions, and many of our current choices stack the deck against the possibility of achieving ROI through population health management.

‘There is no obvious reason why ROI is more relevant to some clinical situations than to others. So why do we focus so heavily on ROI when the topic is chronic illness but rarely mention it when the topic is cancer? A huge amount of the cancer care we deliver provides such small personal and social gains that, were those gains monetized, the endeavor’s ROI would be deeply negative. And yet we ask, “What’s the ROI of that program that keeps chronically ill patients out of the hospital?” but not “What’s the ROI of treating advanced lung cancer?”’¹

The authors of the recent New England Journal of Medicine article titled “Asymmetric Thinking about Return on Investment” then pose three reasons:

1: Payment

Cancer care generates high rates of payment. This is a reflection of our values. We value cancer care more than care resulting in keeping people with chronic conditions out of hospitals.

2: Complexity

Avoiding hospitalization for people with chronic conditions is complex. There are significant costs associated with figuring it out and doing it well. The high value we place in cancer care continues to fund that complex work.

3: Asymmetric reward systems

Population health management rewards are posed often as a negative: e.g. reduced payment for hospital readmissions or reducing volume of services in a predominantly volume-based payment system. Cancer care rewards are a positive in the predominant system: more care leads to more revenue.

As suggested in the article, we could make different choices. Goroll et al proposed a primary care payment strategy that could solve all three reasons noted above.² Primary care is under-funded relative to its value and is the foundation of high-performing health care.  

The number of programs in place to support better population health outcomes is growing steadily, but many are coupled with resources inadequate to meet their needs. Too many come with small resources and big requirements while constraining inventiveness to narrowly focused interventions.

Some options to consider:

  • Focus more on outcomes and less on process. Rather than dictating that a primary care practice hire a diabetes nurse educator, consider the rate at which people with diabetes achieve improved quality of life or even the rate of potentially preventable hospitalizations or emergency room visits.
  • Reduce the burden of participation. Primary care practices struggle with program participation demands that include complex and costly data abstraction and reporting focused on details of care. The details of care are important in their everyday work, but we mostly lack the engines to elegantly extract and report those details. We can, however, use lower-burden data sets to verify that a clinician is performing well: claims based proxies, patient reported outcomes, etc.
  • Fund the work. Primary care is under-resourced. Effective population health management requires an increase in people, skills and tools to support the core features of effective primary care.

– Access – eliminate barriers to care.

– Whole-person focused relationship over time – not just managing disease.

– Comprehensive services – more one-stop shopping and less fragmentation.

– Coordination across the continuum – eliminating the silos across not only the healthcare delivery system but engaging community resources that address critical needs.

We need an open and ongoing discussion of the value our society places on effective population health management. At the moment, it might appear that the value is more lip service than substance. Programs and policies with the goal of improving population health outcomes should consider bringing to bear resources adequate to the full scope of effective primary care and population health management.

L. Gordon Moore, MD, is senior medical director for populations and payment solutions at 3M Health Information Systems.

¹ Asch, David A., Mark V. Pauly, and Ralph W. Muller. “Asymmetric Thinking about Return on Investment.” New England Journal of Medicine 374, no. 7 (February 18, 2016): 606–8. doi:10.1056/NEJMp1512297.

² Goroll, Allan H., Robert A. Berenson, Stephen C. Schoenbaum, and Laurence B. Gardner. “Fundamental Reform of Payment for Adult Primary Care: Comprehensive Payment for Comprehensive Care.” Journal of General Internal Medicine 22, no. 3 (January 9, 2007): 410–15. doi:10.1007/s11606-006-0083-2.