Engaging purchasers in value improvement.

Health systems that wish to engage employers and other healthcare purchasers directly in initiatives to improve health should consider a number of steps, including: Setting a reasonable goal around a critical mass of covered lives the health system could attract and maintain through such an approach. Finding likeminded customers and partners. Anticipating competitive responses from the market. Creating a distinctive brand.

Delivering value to multiple stakeholders: 2013 and beyond.

To deliver greater value, top payers and providers should: Measure the value they deliver to their business partners and customers, Create value through continuous performance improvement, Package and price value to optimize their margin, mission, and market share, Organize for value through new legal entities, employed medical groups, or both.

Implementing clinical and financial collaboration between payers and providers.

An IPA learned three important lessons while implementing a clinical and financial collaboration with its payers: Eliminate mixed messages. Focus on delivery and operational changes, not just payment change. Set realistic expectations and deliver on them.

Payment reform: complexities to consider.

Providers and payers should take the following actions to prepare for imminent payment reforms from CMS and commercial payers: Adopt industry standard value-based pricing principles. Identify variations in costs, reimbursement rates, and payment terms within your managed care contracts and day-to-day operations. Establish core, evidence-based costs and payments to cover those core, evidence-based costs. Adopt new delivery tactics to manage a sustainable margin on lower unit reimbursement increases.

Budget planning under payment reform.

Healthcare reform makes budgeting topline reimbursement, volume, payer mix, and collections more difficult than in the past. Finance should take the lead at educating physicians and operators on what reform will mean to unit reimbursement, collections, volume, and payer mix. The team should analyze future scenarios for each variable before finalizing the budget, rather than assuming revenue cycle or managed care will come through with a last-second rate increase as they have in the past.

Aligning managed care contracts, compensation plans, and incentive models.

Today's pure production-based compensation and incentive models are lagging behind new, third-party, "value based" payment models, such as shared savings, bundled payments, and pay for performance. Financial executives are struggling with the emerging disconnects between new, external payment models and traditional methods providers use to distribute funds internally. To begin to align internal payment models with emerging third-party payment models, providers should inventory the misaligned incentives within their own organizations, engage their physicians and payers in a dialogue on what needs to be paid and how, and learn from past mistakes. No perfect payment distribution model exists. Rather, providers should choose a best-fit model based on their market position, culture, and readiness for change. Ultimately, finance executives should take the lead in aligning their organization's internal and external payment models.

Managing your margin after reform: the strategic margin plan.

CFOs should develop a strategic margin plan to maintain their margins and bond ratings post-reform, following four key steps: Project the expected revenue gap due to payment reform and competition. Benchmark "Level 1, 2, and 3" unit cost and utilization savings opportunities. Implement short- and long-term operational and financial management tactics to close the margin gap. Integrate margin management tactics with clinical delivery improvement plans to ensure that patients benefit.

Payment reform, accountable care, and risk: early lessons for providers.

Several organizations have begun to design and even implement accountable care organization (ACO), payment reform, and risk sharing pilots. Here are some early lessons: Providers should not design and implement ACOs, payment pilots, and risk models in a vacuum. Providers should tackle five core decision areas that underlie all ACOs, payment pilots, and risk arrangements. Providers should invest in analytics to inform tactical and strategic decisions simultaneously. Successful organizations implement pilot programs before going into full production mode.

Managed care contracting and payment reform: avoiding a showdown.

Health reform promises to fundamentally change what and how CMS and commercial payers reimburse providers. Providers need to transition from their traditionally adversarial, transactions-based payer relationships to ones that optimize purchaser and patient value for the dollar. To avoid negotiation table showdowns and to prepare for reform, commercial payers and providers should take three actions: Recognize the dead ends with their historical relationships. Formulate their road map to value-based contracting. Avoid operational pot-holes along the way.

Payment change: 3 ways to set your course for success.

Healthcare organizations can take three approaches to preparing for significantly slower spending growth: Reflect on lessons learned from past spending cuts. Chart their course for the payment reform journey. Learn from early adopters: accountable care organizations.

Beyond the "pay me more" strategy.

To move beyond the "pay me more"/"pay you less" black hole, providers and payers need to work with their internal constituencies and each other to: Inspire their organizations to develop a disciplined "pay me right" strategy. Understand patients' price sensitivities and purchasing behavior. Redesign what and how they are paid. Hold each other mutually accountable to a multiyear implementation plan that shares risks and rewards.