Today’s Most Timely Challenges in Value Based Care Enabled Specialty Networks: Our Survey

We tell founders to spend as much time as possible with customers. So we went directly to the source and asked 20 healthcare organizations about their biggest challenges.

As of the end of 2022, the Chartis Group reported that nearly 69%of PCPs are in some kind of VBC contract, with 20% in partial or full risk capitation agreements. Yet, as the regulatory environment continues to shift, specifically squeezing payments, it is apparent that primary care organizations need to be more diligent re: total cost of care and specialist utilization. To do this effectively, more practices will need to revamp how they work today, especially in terms of how they contract, partner, and work with specialists.

To help us think through this challenge, we spoke with roughly 20 healthcare organizations about their current challenges, complications, and potential solutions. For simplicity, we will refer to ‘Providers’ as any physician group taking risk — hospitals, CINs, ACOs, at-risk PCP independents/groups. Here are a few key takeaways:

1) Many provider organizations, especially those at stand-alone provider organizations, do not feel they have access to adequate specialty networks that are aligned from a financial perspective.

In fact, optimizing high-quality specialty care networks is a top three priority for every organization. Nearly all have made material technology changes (replacing or adding data partners, launching new EMR workflows for referrals), established physician education programs, and entered new and more at-risk specialty relationships. One VP of Specialty Care at a national Payvider reported employing at least 5 FTE per market just focused on calling provider practices to confirm demographics and quantify new patients to be accepted. No one feels they have enough at-risk specialty provider coverage and cited 1) lack of specialist incentive 2) local dominant specialty provider leverage and 3) limited referral volume per specialist as the top reasons why negotiations weren’t more fruitful.

2) Despite lots of dollars being invested in the provider directory market, basic demographic information on providers is still a large challenge.

Without accurate information (provider address, phone number, emails) organizations are unable to understand the scope and strength of their networks. An SVP of Pop Health at a large urban health system indicated that he had better demographic information for his affiliated network than employed physician base — because he made yearly demographic updates a requirement for affiliate physicians to participate in the systems’ VBC deals. Another President of a Payvider reported receiving directories with deceased physicians and those out of practice for 10+ years. This lack of a strong foundation makes further refining and optimizing referral patterns even more difficult. With inaccurate and inconsistent demographic data, many providers felt that layering on quality data was of limited value. As described below, they cited challenges both in accessing and interpreting quality data but also their ability to leverage that data to materially change physician or patient behavior to change the end referral pattern.

3) Organizations deploy multiple data vendors to better understand quality and outcomes, but still have large data gaps, while the most in-demand data element is provider availability.

Many primary care organizations tend to leverage multiple different vendors to try and build a full picture of specialists. Yet most organizations that we spoke to indicated that they frequently find errors in vendor data (missing TIN/NPIs, infrequent refreshes), so they incorporate it, but don't hold it as gospel. Far and away, the most requested information was scheduling availability. As one Chief Pop Health Officer put it “Great, so now we know who the best endocrinologist is within five miles of most of our patients, but if she doesn’t take new patients, what good is this information?” More than 60% of the organizations that we spoke to had teams (sometimes exclusively) dedicated to provider outreach, most importantly, asking about how many new patients providers would take. This underscores that access is still the barrier for many organizations.

4) Data sharing between providers and health plans is fundamentally flawed.

Specifically, Providers feel they don’t get sufficient quality or quantity of reporting from health plan partners, making it more challenging to close care gaps, improve outcomes, and get paid. Most providers reported receiving infrequent care gap reporting (initial reports 100+ days into the year) with insufficient detail. These reports are meant to outline how a provider/group is performing against their VBC quality metrics, help direct care activities, and track performance against their goals. As you think about focusing on reducing medical cost and making timely changes, access to this data as quickly as possible is incredibly important. Additionally, harmonizing data across payers is a constant challenge. Providers reported inconsistent quality determinations for example, Payer 1 rating Dr. Tim “do not refer”, but Payer 2 a “referral recommended” — often without indication how or why this determination was made.

5) Implementing new referral patterns operationally is really, really hard on the provider side.

Many provider groups cited building custom ranked referrals in the EMR and quarterly referral pattern reviews with individual providers as the most effective to shift behavior. Most organizations look to thread the needle between meeting their PCPs where they are (including a provider’s personal top 3 referrals per specialty) and supplementing with data-driven workflows in the EMR. Operationally, Provider groups have enabled EMR workflows that first filter for insurance acceptance, then attempt to optimize around office distance, language/gender preferences and quality. They report reviewing referral patterns with individual providers quarterly, sharing reporting to demonstrate individual vs practice referral patterns, outcomes data from referred patients (if they have it) and continually providing education as to why referrals to top quality partners are important. Many administrators lamented the cultural challenges—figuring out how didactic to be in setting referral parameters, what ‘carrot vs stick’ incentives should be employed, etc.

6) Even if you change the provider behavior, changing patient behavior is still a large hurdle.

We heard that this was particularly true when referring to an independent provider versus a premier hospital brand. Organizations estimated patients ignore 20-30% of referrals. Patient education and provider perception rose to the top of the reasons referrals don’t materialize. As one CEO of a CIN put it, “Sometimes it's hard to get a patient to go to Dr. X, even if our data tells us he’s the best provider for this patient — takes their insurance, close to their home/office, has good quality scores, good office atmosphere — versus going to a brand like Johns Hopkins.”

Going back to where we started, one of the biggest challenges is the reality that many specialists are still in FFS agreements. There are different schools of thoughts about what could drive a change here, but it does not seem like there will be a silver bullet — we think regulatory incentives/penalties, improved data support, cultural shifts, new financial structures, all need to materialize. The worst case scenario is that high quality providers remain committed to existing (FFS or ‘VBC lite’) contracting structures, which financially compromises PCPs, threatening the broader market shift to value. From a technology perspective, it is clear that…

1) A better provider data ecosystem must be established.

We were surprised this problem hasn’t been solved yet and we believe that portfolio companies like J2 Health have a unique ability to help change this reality. We also believe that new technologies, like GenAI, could meaningfully improve the quality and scale of data collected.

2) As VBC advances, it will become clearer which providers can bend the cost curve and we will see a “flight to quality,” which will increase provider contracting competition.

Provider organizations must be ready to identify these cost-curve-bending providers and offer them attractive partnerships. Our hypothesis is that this could become a more dynamic marketplace, with clear software opportunities to facilitate this.