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Amid extraordinary uncertainty and change across the healthcare industry, one trend is clear: the accelerated movement toward broader risk adoption by provider organizations.
As more providers look toward value-based models amid COVID-19, their clinically integrated networks (CINs)—traditionally an underdeveloped and underperforming asset—hold new promise.
CINs can become the springboard for long-term sustainability by serving as the vehicle for provider organizations to successfully manage advanced risk-based payment. Under this new strategic posture, the CIN becomes the owner and aggregator for managing the operational and clinical capabilities, talent and infrastructure that are required to succeed in two-sided risk contracts.
Through this process, the CIN also transforms into a hub for innovation—housing the essential elements that provider organizations will need to survive through payment evolution.
However, CINs will first need to overcome the last decade’s worth of stunted growth.
There are several hundred CINs in the market today, yet a vast majority of their sponsoring entities have not realized their full strategic and financial value.
Why not? Simply stated, most provider organizations have not made the necessary ongoing investments to realize their CINs’ full strategic and economic benefit.
Over the last decade, CINs have largely served as strategic assets—an offensive or defensive play to align physicians and/or respond to competitive actions—and have not been subject to traditional financial return expectations.
Premier’s work with healthcare providers over the last several years has shown that even some of the most successful CINs have taken a number of years to achieve a financial breakeven point and many today continue to exhibit uneven financial performance.
Thus, due to a long investment horizon and uncertain return on investment, provider organizations have largely been unwilling to inject the additional capital required to maintain, grow and evolve their CINs.
As a result, the average CIN today has:
It should be noted that CINs have helped drive several industry advancements, including enhancing provider relationships and care coordination. Perhaps the single most striking success from CIN development has been their early and sustained achievements in quality improvement.
Premier helped Henry Mayo Newhall Hospital, in Santa Clarita, CA, build a high-value CIN consisting of more than 230 physicians. Within the first year of implementation, Henry Mayo realized $3 million in savings by reducing length of stay and standardizing supply and device costs. At the same time, the organization improved its 30-day readmission rates in several key disease states.
The widespread prevalence of the CIN model also suggests that their strategic positioning must evolve to remain relevant and drive utility for their sponsoring organizations.
How can leaders unlock the strategic and financial value of their CIN? The answer is to move CINs beyond their legacy application and place them much more squarely in the rapid migration towards risk-based payment.
Should all CINs undergo this strategic repositioning? Not necessarily. While organizational readiness is an essential consideration as CINs evolve, the relative maturity of a market may be equally—if not more—important in setting the strategic direction of a CIN.
It should be noted that not all markets will support advanced risk-based contracting. CINs need willing partners, including payers, employers and physicians. Some markets will remain in a transitional state for several years as local market players adopt a deliberately slower path to payment evolution. Other markets will transform quickly due to a new partnership between unconventional entities or an unexpected market entrant—think of the venture capital-backed physician aggregators–that can change the basis of competition overnight.
The table below illustrates key characteristics of markets that are ready for two-sided payment models.
Premier’s CIN Market Maturity Model
In addition to market readiness, there are six must-haves for CINs to perform well in two-sided risk arrangements. Ideally, these essential elements are largely in place before an organization commits its CIN to manage more advanced risk-based payment.
All CIN-sponsoring entities should assess the merits of repositioning their CIN to become the central platform for managing two-sided risk. Start by determining whether market conditions will support risk-based payment and assessing where your CIN stands with the six requirements for success described in the prior section.
Expect that CIN repositioning will require sustained financial investment and management time and energy, and that CIN development must occur at a much faster pace than the last several years. The velocity of industry change—growing competitive threats from new market entrants and the increasing attractiveness of per capita payment models in light of COVID-19—is forcing incumbents to accelerate strategic decision making and execution.
The average CIN today is an undeveloped and underperforming asset. However, the next three to five years will showcase the reemergence of the CIN as a key to success in the value-based care world. Provider organizations that critically examine their CINs and reposition them to extract their full financial and strategic value stand poised to be rewarded for risk.
A panel of Premier experts will be discussing how provider organizations can advance their CINs to support long-term sustainability during a webinar on Friday, Nov. 20, at 1 p.m. ET. Register here and learn more about how Premier can help transition your CIN into an innovation hub for risk-based payment.