Summit Series Session: Adapting to Complexity

The Summit Series is increasingly becoming the forum where industry leaders drop by to share wisdom and learnings about the turmoil and turbulence that have become the norm for health system operators.

 

That’s what happened when Clint Hailey, SVP & Chief Managed Care Officer of Tenet Healthcare, joined Sasha Boghosian, Chief Strategy & Innovation Officer at BPD, for some straight talk about the challenges facing health systems in today’s healthcare landscape.

 

Mr. Hailey covered a variety of issues during the hourlong conversation, ranging from what he’s seeing among payors related to prior authorization, to the latest in Medicare Advantage (MA) contracting, and top-of-funnel growth strategy among health systems trying to resolve friction around access barriers for their patients. The audience of nearly a hundred attendees — all health system leaders and industry insiders — engaged with a barrage of questions and comments that made the session feel like an intimate conversation.

 

During the session, Mr. Hailey also shared his thoughts on capitation, a payment model that has been held up by some as a major lever for addressing rising healthcare costs at scale. In Mr. Hailey’s view, a simple math equation can show the model’s limitations and temper the faith that many in our industry are placing in it.

 

The view that Mr. Hailey outlined (in just a few minutes, no less) was the simplest and most insightful analysis of capitation we have heard from an industry insider, so we thought it deserved additional airtime.

 

The promise (and limitations) of capitation

 

The predominant belief for the last decade has been that the answer to “fixing” healthcare lies in value-based care. More specifically, many experts have put their faith in adopting the Accountable Care Organization (ACO) model and in restructuring the payment model.

In some instances, we’ve seen providers develop payor arms to achieve a degree of vertical integration (you may have heard of the term “payvider”). Others have leaned heavily into capitation, or a predictable, upfront, set amount of money to cover the predicted cost of all or some of the healthcare services for a specific patient over a certain period of time.

But for all its promise, capitation can’t achieve the scale necessary to meaningfully impact healthcare costs. To understand why, you just need to do some math:

333 million. That’s the total US population, so that’s the universe we’re working from.

Now, let’s start subtracting the parts that we can’t capitation…

 

Stay in Touch