Population Health Management: 2018 Market Trends Report

Population health management (PHM) has evolved since the analytes released their first PHM report in 2015. The idea’s close association with value-based care and payments cements its reputation as both a key strategy and technology enabler for transforming the U.S. healthcare system to achieve the goals of the Triple Aim. Value-based payment models have evolved, though not all providers have participated. Such models are more prevalent among provider organizations than they were a few years ago but the continued viability of fee-for-service (FFS) contracts has restrained enthusiasm for risk sharing. The PHM market’s growth closely mirrors the growth in value-based reimbursement (VBR).

Technology solutions, while not entirely mature, are improving, with vendors fielding increasingly robust product capabilities in each of the four domains of PHM functionality: data aggregation, analytics, care management, and patient engagement. That said, an all-in-one PHM platform remains elusive; even solutions that provide capabilities across all four domains don’t always appeal to all potential PHM buyers. While there is greater clarity in the market for PHM solutions in 2018 than there was in 2015, healthcare organizations (HCOs) must complete due diligence in choosing solutions to support their PHM strategies.

Elements of PHM

While PHM means different things to different people, it is broadly defined as the transformation of care delivery and payment models for the purposes of improving the health status of a group of patients and, by extension, improving health outcomes for individual patients.

Despite uncertainty about the pace of this transformation, due in large part to provider resistance to taking on financial risk, the range of activities that qualifies as PHM is growing. ACOs, MSSPs, bundled payment programs, Medicare Advantage, certain Medicaid programs, and even value-based employee benefit design all constitute PHM to some degree. Amid this variety of models, PHM programs share some common elements

The potential for PHM programs to demonstrate value depends on an organization’s ability to navigate a complex set of external and internal factors. External factors include the populations and communities they serve, the payees or employers they partner with, and the changing federal regulations that shape how they do business. Internal factors, meanwhile, range from maturity of VBC business strategy to network design to providers’ enthusiasm to transition to VBC and PHM. Since so few providers have scaled their PHM programs to the point that they fully address such factors, vendors have supplemented their technology offerings with consulting services that address needs both strategic and tactical needs.

Key PHM Market Drivers

While the ongoing uncertainty emanating from CMS and HHS complicates planning and has led to a pause in PHM adoption, fundamental market drivers will not change, and prospective PHM buyers should be reassured. The reality of unsustainable healthcare spending growth, coupled with the demands of an aging and/or multi-chronic population, guarantees that most healthcare stakeholders are at least open to alternative ways to deliver and pay for healthcare.

The business mandate for providers to embrace PHM slowed in the last 12-18 months. Concerns about revenue or market share losses have dampened enthusiasm for changing the fee-for-service (FFS) status quo. But the over-all trend is moving in one direction: Away from FFS. While not all providers and payers have embraced value-based care and payments, the need for enabling PHM solutions will continue to grow. CFOs and CIOs find it more challenging to find capital for PHM purchases. Restricted access to capital could change some provider expectation for healthcare information technology (HIT) vendors.

The prevalence of hosted or cloud solutions in this market tends to makes it easier for organizations to put these projects on operating rather than capital budgets. While many vendors have talked about risk-based pricing in the past, live examples have been few and far between. Providers may become more assertive about their vendor’s assumption of some payment risk or at least to condition payments on some level of savings.