Thought Leadership

Payer-Provider Reset: Building Relationships in a Shifting Landscape

By Revive
posted Jan 21, 2024

Summit Series Session with John Poziemski, Kaufman Hall

The Summit Series is a virtual series of sessions where we host conversations with the best and the brightest experts in healthcare about the challenges facing healthcare providers — and what to do about it. In our latest session, Revive welcomed John Poziemski, Managing Director and Strategy Practice Leader at Kaufman Hall.

John pointed to macroeconomic shifts that are driving providers to rethink their relationships with payors. From increased labor shortages and burnout to major consolidation on both the provider and payor front, to declining commercial business and increased government payor volume, the pressures healthcare providers face feel like they are here to stay. The payor strategies they have pursued in the past simply may not address the pain points that are now a seemingly permanent part of their operating reality.

This begs the question: How do health systems find their footing in an environment when significant pressures aren’t going away?

In this session, John shared how health systems and health plans can craft effective, sustainable partnerships while facing an uncertain future. If you missed the session, not to worry — we’ve developed a few key takeaways below.

Growth is a priority for all, but it looks different now.

Because of these changing market dynamics, growth is a priority for all parties. Both payers and providers are looking at growth in some way, shape, or form – both organic and de novo – but the old ways we used to rely on changing.

For payors, membership growth is important, but given the shrinking commercial market, not as reliable as years past. As a result, many payors are also turning their eye toward diversifying their services. Vertical integration, i.e.: infiltrating and assuming the role of provider, will ensure their relevance and grow market share. Furthermore, the push to shift care delivery settings from acute care to home and virtual care are likely to continue, saving payors money, and forcing health systems to rethink their service offerings and reimbursement models.  

For providers, consolidation and acquisitions remain key themes, just as they do for payers, but they differ in the sense that provider growth also looks like evaluating care delivery and patient touch points. This includes integrating lower cost outpatient settings and becoming more of a predominant player in patient decision-making. Between the diversification of payors, and the introduction of disruptor brands – those that weren’t historically considered healthcare providers (think Amazon, Apple, Google Health, 3M, etc.) – providers need to think differently about growth – and the role payors have in it. Perhaps a previously unconventional partnership may help dry up volume leaks and minimize barriers to care – solving not only their own concerns, but patient satisfaction concerns, too. Easy growth is a thing of the past (at least for now) – providers will need to take some big risks for an opportunity to achieve profitability.

This may be the year of thinking ‘unconventionally’. 

If we take a moment to “step into the other person’s shoes” – in this instance the payors – the challenges they are facing, including capped growth margins, increased scrutiny from regulators, an eroding value proposition, make it plain to see they’re scrambling to create a sustainable business model.

While health systems ultimately need to negotiate strong rates, knowing the payors’ objective creates opportunities to think creatively about language, value, and risk that can be more enticing and therefore effective in reaching a new agreement. Plans want a commitment to cost of care reduction, a willingness to collaborate on care model re-design, and competitive pricing[BP(R1] [SB2] .

The key: True collaboration that positions both payors and providers with a path to growth.

Value capture is key.

Long-term sustainability for any business is built from creating value for your customer. Historically, in payor/provider relationships that was almost exclusively about driving costs down. Healthcare consumers today care about costs, sure, but they’re also driven by other kinds of value, including uninterrupted access to care, choice in providers, and simplified payment processes. Whether it’s working together to co-manage a book of business and share in the risk, or improving the denials process to create better efficiencies for both payors and providers, capturing value for the shared end user (patients/members) is where both parties can come together to form a mutually beneficial partnership.

Three questions to consider for payer-provider partnerships:

  • What opportunities exist for creating paths to growth?
  • How do we capture value in ways that adequately compensate participants?
  • Who are the right partners?

Sound interesting? Don’t miss the rest of the Summit Series, where we bring together top managed care executives, legal experts, and renowned thought leaders to discuss the state of our industry and how we can chart a successful path through its challenges. Register for the next session in our series here.