On the face of it, providers and payers have the same objective – to dispense high quality, evidence-based care in an efficient and cost effective manner to ultimately improve outcomes. Somewhere along the line, however, reality diverged from the mission statements, often resulting in a "them" vs. "us" mentality.

 

Emad Rizk, MD, president of McKesson Health Solutions, argued in his recently-released book, "The New Era of Healthcare: Practical Strategies for Providers and Payers," that it is possible to not only play well together but to actually achieve the type of symbiotic relationship that is beneficial to everyone involved.

 

"The economic incentives for payers and providers are very different," Rizk said of one of the reasons we've arrived at today's uneasy rapport. "The payers, in general, take on risk and look at the reimbursement, and they squeeze the reimbursement down. They think that by reducing that, they'll be able to reduce the cost of care," he noted.

 

However, since providers have an entire infrastructure built upon their set fees, a decrease in reimbursement results in a negative balance sheet. "If you take the payment down, then to make up, they (providers) have to increase frequency. The quality begins to give way because they don't spend as much time with patients … they have to see more just to stand still," he explained.

 

The second issue for both providers and payers is the overwhelming administrative burden attached to healthcare in America. The amount of paperwork on both sides is voluminous, particularly since many tasks are not automated.

 

To try to combat shrinking reimbursements, Rizk said larger integrated delivery systems have formed over the past decade to take advantage of economies of scale both in terms of decreasing operational costs and increasing leverage with payers. Unfortunately, while providers were getting bigger … so were the payers.

 

"It really has been a very stressed relationship between the providers and payers, and that relationship has to change 100 percent," he affirmed.

 

In his book, Rizk said the need to work well together is less about altruism and more about practicality.

 

"From the payer's point of view, most costs – 85 percent – are devoted to patient care and the administration that goes with it. My vision is to break the endless cycle of push-and-pull around those costs and to finally align payers and providers toward their common goals," he stated, adding that common sense dictates payers should find a way to work with the people that control 85 percent of their costs. "For providers, it makes sense to accept responsibility for the health and well-being of the patients they care for and share the risks and rewards of good outcomes. And for everyone involved, reducing bureaucracy and inefficiency makes sense."

 

How to bring about this change is, of course, the crucial question. Rizk said it really all boils down to the universal themes of any relationship … openness, honesty and mutual respect.

 

"It has to start with building some level of trust between them," he said, adding there must also be a level of transparency and financial and administrative alignment. "When the payers and providers are focused on the same outcome, everyone benefits."

 

To be effective, this alignment must happen on three fronts: clinical, economic and administrative. Rizk added that each partner in the relationship has powerful data the other needs. Providers have the clinical information that should be the foundation of evidence-based medicine protocols, and payers have historical claims data that should also inform decision-making when it comes to dispensing efficient, effective care.

 

Unfortunately, rather than share information, Rizk said both sides often use their data to check up on the other. In his book, he called this shared data "the linchpin" to the entire process. With the information exchange, providers and payers have the ability to agree up front on the best evidence-based medicine, mutually determine appropriate care and set up protocols for cases that require treatment outside the set guidelines.

 

Furthermore, Rizk said economic risks and rewards should be established up front with an advance agreement on the reimbursement of costs and payments for hitting target outcomes.

 

"The magnitude of the task is daunting," he admitted. "It's almost mind-numbing to think we're going to change 20-30 years of history."

 

However, he continued, it's a necessity if medicine is to move forward. The starting point, he continued, is with grassroots efforts on a regional basis.

 

"If you are a practice, start looking at your payer mix. Look for the critical mass," Rizk counseled. Then, he continued, go to the largest payers in that mix and discuss how you want to effectively manage the patients under their umbrella.

 

Rizk pointed out that nearly three-quarters of the healthcare costs in the United States come from the top five chronic diseases – diabetes, congestive heart failure, hypertension/coronary artery disease, chronic obstructive pulmonary disease and asthma. Research also tells us that these conditions are not adequately diagnosed and managed. Therefore, he suggested physicians offer to share data and take a bit of financial risk off the payers' hands in exchange for financial rewards for hitting outcome targets … particularly with patients with chronic disorders where solid disease management evidence exists.

 

"What do payers get out of it?" he questioned. "They get less hospitalizations and less emergency room business … and that's where the big cost is."

The New Era of Healthcare: Practical Strategies for Providers and Payers

 

These types of outcomes-based incentives … rather than the traditional negotiated fee-for-service model … put an emphasis on what is best for the patient. Rizk added that McKesson Health Solutions has launched several pilot projects – including programs in Mississippi and Pennsylvania – that have worked well because the parameters were set forth on the front end so that both providers and payers knew the expectations, risks and rewards at the onset.

 

"We've enjoyed a great deal of success in these programs because we have the providers and the patient in the center of the model," he said.

 

While Rizk is realistic that this kind of transformation won't happen overnight, he is hopeful that more providers and payers will begin to focus on their common interests to the benefit of everyone involved … most importantly, the patient.