Shared
savings
programs
are
useful
for
nudging
providers’
behavior
toward
value,
but
they
aren’t
a
true
payment
model
that
can
sustain
a
health
system,
according
to
one
executive.
“Shared
savings
contracts
are
a
really
great
mechanism
for
getting
people
to
start
to
pay
attention
to
value
—
but
their
structure
is,
by
definition,
not
overall
how
we’re
going
to
get
paid
for
our
care,”
said
Patrick
Runnels,
chief
medical
officer
of
University
Hospitals
in
Cleveland,
during
an
interview
last
month
at
Reuters’
Total
Health
conference
in
Chicago.
He
pointed
out
that
University
Hospitals
earned
about
$50
million
in
shared
savings
last
year,
but
that
was
still
less
than
5%
of
its
total
revenue.
Even
if
the
health
system
doubled
or
tripled
that
amount,
shared
savings
would
not
be
a
major
revenue
driver,
Runnels
stated.
To
meaningfully
shift
incentives,
health
systems
need
either
more
downside
risk
and
more
capitated
contracts,
or
much
larger
shared
savings
incentives
than
exist
today,
he
declared.
In
his
eyes,
the
economics
of
value-based
care
are
simply
misaligned
—
every
value-based
dollar
earned
often
requires
giving
up
more
lucrative
fee-for-service
dollars.
Runnels
said
University
Hospitals
is
working
with
a
healthcare
economist
to
identify
the
inflection
point
at
which
reducing
low-value
care
becomes
financially
rational
under
current
incentives.
“Most
systems
are
going
to
be
reluctant
to
shift
their
economic
engine
to
a
value-based
payment
mechanism
that
is
actually
going
to
make
them
less
money
and
be
less
sustainable.
As
a
caveat
to
that,
certainly
part
of
the
idea
behind
value-based
contracts
is
that
we
reduce
overall
spending
and
overall
costs
—
and
health
systems
have
work
to
do
to
figure
out
how
to
reduce
costs,”
he
explained.
He
noted
that
lower
utilization
only
works
if
costs
are
reduced
as
well.
For
example,
University
Hospitals
increased
colorectal
cancer
screening
from
roughly
40%
to
75%,
which
cut
surgeries
by
half.
But
if
the
health
system
doesn’t
decrease
the
cost
structure
around
colorectal
surgery,
it
still
carries
the
same
fixed
costs
despite
lower
surgical
volume,
Runnels
said.
Many
hospitals
are
not
built
to
lower
their
internal
cost
structures
quickly,
he
added.
He
also
mentioned
that
most
of
University
Hospitals’
shared
savings
come
from
Medicare.
Runnels
believes
CMS
should
change
payment
incentives
—
not
necessarily
by
eliminating
fee-for-service
models,
but
reshaping
them
so
that
they
reward
high-value
care
and
penalize
low-value
care.
Options
include
increasing
shared
savings
percentages,
adjusting
fee-for-service
rates
to
favor
high-value
services,
and
temporarily
paying
more
for
avoiding
unnecessary
procedures,
he
said.
Until
those
incentives
change,
he
warned,
shared
savings
will
remain
a
useful
pilot
—
but
not
a
scalable
business
model.