Five Ways Medical Groups Can Prepare for Value

8 September, 2015

Five Ways Medical Groups Can Prepare for Value

By Marc Mertz, MHA, FACMPE, Vice President, GE Healthcare Camden Group

Healthcare payment is transitioning from fee-for-service to value-based. Although individual markets and organizations are at different stages of this transition, recent actions of the Centers for Medicare & Medicaid Services and commercial payers clearly indicate that the industry is moving in a single direction.

Here are five things that medical groups should be doing right now to prepare for value.

1. Reduce Costs

To prepare for success under value-based payment models, including risk-based contracts, medical groups need to take a critical look at their costs. The majority of medical group operating costs are in just a few areas: physicians and other providers, staff, facilities, equipment, and supplies. Physician compensation warrants its own discussion (see below), but groups should develop cost-accounting capabilities to evaluate and monitor the other cost categories. Each category of expense should be regularly compared against industry benchmarks. As outliers are identified, groups should quickly develop action plans to bring the expenses in line.

As groups advance into value-based models (including shared savings and risk-based models) they will be held accountable for the cost of care provided. Groups should prepare for this scenario now by collecting total claims data from payers and implementing systems for monitoring and reporting costs by clinical category and by physician.

2. Evaluate Contracting Opportunities

Medical groups are responding to the industry’s shift to value by beginning to develop population health management and care coordination capabilities. While these new approaches are largely about eliminating waste and providing the appropriate care at the right time, they may reduce a group’s payment under a fee-for-service contract. Any reductions in utilization or costs may help the patient, and certainly the payer’s bottom line, but do little to compensate the medical group that has invested in the care model redesign, IT, and staffing necessary to implement population health management.

Medical groups should take a more aggressive and proactive approach to payer contracting. Rather than waiting for health plans to offer new payment models while they invest in care redesign, groups should identify opportunities to negotiate care management payments or shared savings arrangements that allow the group to share in the cost reductions it generates. As the group gains experience, it can consider more advanced models, including risk-based models.

3. Update Physician Compensation and Incentives

As payment models change, medical groups should consider redesigning physician compensation models. Most physician compensation plans are predominantly based on volume—work relative value units, revenue, or charges. As groups progress down the path to value, they will need to implement performance measures such as patient satisfaction, access to care, quality scores, and other indicators that support population health management. Rewarding the behavior changes and the clinical cultural transformation necessary for success in the new value-based models is critical.

Consider the use of a physician compensation committee to ensure compensation plan design and performance measures reflect the objectives and values of the group, and to gain buy-in and support. The committee should include administrators and a representative number of primary care, specialty, and hospital-based physicians.

A new compensation plan should be implemented in a way that allows physicians to modify behaviors based on the new incentives. Consider a phased-in approach or “shadowing” process, in which physicians are paid under the old model but receive reports regarding projected performance under the new model.

4. Create Dashboard Reports to Monitor Performance

Ready access to data allows an organization to quickly respond to opportunities and to correct underperformance before it becomes a major issue. During the transition to value, medical groups should continue to monitor traditional key performance indicators such as physician productivity, revenue cycle performance, and operating costs while beginning to track value-based indicators such as cost of care, quality, patient satisfaction, patient access, and gaps in care. To facilitate this level of monitoring, the organization must develop dashboard reports that quickly indicate group performance relative to targets, and that highlight deficiencies. These reports should be shared often, and action plans developed to address any instances of underperformance.

5. Evaluate Your Fee Schedule

Groups should be aware that price transparency is increasing at a rapid pace. Reporting organizations are collecting charge data from medical groups and sharing it with the public via websites and other forums. Meanwhile, the prevalence of high-deductible health plans is increasing and patients are taking a more active role in deciding what care they receive and where they receive it. Groups with high published rates may very well see patients avoiding their services.

Hospital-based clinics that charge a facility fee in addition to professional fees should evaluate whether the high payment is being offset by decreased volume and higher patient dissatisfaction. All medical groups should evaluate their fees in the wider context of their market and consider how patients would view those fees. Groups then should consider promoting transparency by posting the prices for common services on their websites.


Mr. Mertz is a vice president with GE Healthcare Camden Group and has 18 years of healthcare management experience. He has 15 years of experience in medical group development and management, physician-hospital alignment strategies, physician practice operational improvement, practice mergers and acquisitions, medical group governance and organizational design, clinical integration, and physician compensation plan design. Mr. Mertz has managed private practices, hospital-affiliated practices, and academic physician practices. The Medical Group Management Association (“MGMA”) has identified practices under his management as “Best Performing.” He may be reached at marc.mertz@ge.com.  

11:37 min
#24 - New Method for Managing Physician Burnout Cover Image
Jeff Terry and Gabriella Devine discuss how OHSU Mission Control implemented Treatment ...
Jan 13 · 11:37 min
Jeff Terry and Gabriella Devine discuss how OHSU Mission Control implemented Treatment Team Workload Tile, a new app ...
Jan 13 · 11:37 min
21:16 min
#23 - Patient Manager Tile v3 at AdventHealth Cover Image
This episode describes the use, configuration and deployment of Patient Manager Tile at ...
Dec 22 · 21:16 min
This episode describes the use, configuration and deployment of Patient Manager Tile at eight AdventHealth hospitals in ...
Dec 22 · 21:16 min
11:01 min
#22 - Patient Manager Tile - A Personal Command Center for Caregivers Cover Image
This is Patient Manager, the Tile that puts a command center at every caregiver’s ...
Oct 29 · 11:01 min
This is Patient Manager, the Tile that puts a command center at every caregiver’s fingertips. Patient Manager helps ...
Oct 29 · 11:01 min
04:39 min
#21 - Patient Manager Tile - Profiles and Search Cover Image
It's so important that users can work at speed in the Patient Manager Tile. This video ...
Oct 15 · 04:39 min
It's so important that users can work at speed in the Patient Manager Tile. This video shows a bit about profiles and ...
Oct 15 · 04:39 min
04:19 min
#20 - Patient Manager Tile with Downgrade Module Cover Image
Who is ready and eligible for downgrade to another level of care? All information at once.
Oct 5 · 04:19 min
Who is ready and eligible for downgrade to another level of care? All information at once.
Oct 5 · 04:19 min
05:52 min
#19 - Advanced Illness Tile Cover Image
The Real Time all-the-time Tile helps to manage the cohort of patients who have advanced ...
Sep 28 · 05:52 min
The Real Time all-the-time Tile helps to manage the cohort of patients who have advanced illness and may be planning ...
Sep 28 · 05:52 min
07:02 min
#18 - Patient Manager Tile Introduction Cover Image
The Patient Manager Tile a game changer for two reasons: it enables multidisciplinary ...
Jul 14 · 07:02 min
The Patient Manager Tile a game changer for two reasons: it enables multidisciplinary teams to problem solve in Real ...
Jul 14 · 07:02 min
06:25 min
#17 - Procedural Snapshot Tile Cover Image
The Procedural Snapshot Tile provides situational awareness as well as patient-level ...
Jul 9 · 06:25 min
The Procedural Snapshot Tile provides situational awareness as well as patient-level actionable alerts to help keep ...
Jul 9 · 06:25 min
06:34 min
#16 - Obstetrics and Neonatal Tile Cover Image
Following an evidence-based standard of care, the Obstetrics and Neonatal Tiles improve ...
Jul 7 · 06:34 min
Following an evidence-based standard of care, the Obstetrics and Neonatal Tiles improve the situational awareness for ...
Jul 7 · 06:34 min
06:14 min
#15 - Anesthesia Exceptions Tile Cover Image
The Anesthesia Exceptions Tile is used to coordinate and assist the flow of complex ...
Jun 30 · 06:14 min
The Anesthesia Exceptions Tile is used to coordinate and assist the flow of complex procedural cases across an array of ...
Jun 30 · 06:14 min
07:37 min
#14 - ED Expediter Tile Cover Image
The ED Expediter Tile is useful in advancing patients through emergency departments and ...
Jun 25 · 07:37 min
The ED Expediter Tile is useful in advancing patients through emergency departments and providing patient level alerts ...
Jun 25 · 07:37 min
06:02 min
#13 - Transfers Tile Cover Image
The Transfers Tile aggregates information on the individual patients queued to transfer ...
Jun 23 · 06:02 min
The Transfers Tile aggregates information on the individual patients queued to transfer into the system.
Jun 23 · 06:02 min
14:18 min
#12 - Discharge Barriers Tile Cover Image
The Discharge Barriers Tile outlines the key actions the care team can take to facilitate ...
Jun 18 · 14:18 min
The Discharge Barriers Tile outlines the key actions the care team can take to facilitate patients who are identified ...
Jun 18 · 14:18 min
10:31 min
#11 - Boarders Tile Cover Image
The Boarders Tile provides facility and system level visibility to all inbound pressure ...
Jun 16 · 10:31 min
The Boarders Tile provides facility and system level visibility to all inbound pressure on the system to take patients ...
Jun 16 · 10:31 min
14:43 min
#10 - Capacity Snapshot Tile Cover Image
The Capacity Snapshot Tile provides insight on bed capacity both in the moment and after ...
Jun 11 · 14:43 min
The Capacity Snapshot Tile provides insight on bed capacity both in the moment and after we process decisions.
Jun 11 · 14:43 min
07:36 min
#09 - Critical Resources Tile Cover Image
From State-level to Unit-level, Real Time awareness of available beds.
Jun 9 · 07:36 min
From State-level to Unit-level, Real Time awareness of available beds.
Jun 9 · 07:36 min
06:46 min
#08 - Infectious Disease Tile Cover Image
The Infectious Disease Tile was developed in response the COVID-19 pandemic. It provides ...
Jun 4 · 06:46 min
The Infectious Disease Tile was developed in response the COVID-19 pandemic. It provides visualization of patient load ...
Jun 4 · 06:46 min
05:08 min
#07 - Post Acute Placement Tile Cover Image
The Post Acute Placement Tile is used to reduce excess days and facilitate outplacement ...
Jun 2 · 05:08 min
The Post Acute Placement Tile is used to reduce excess days and facilitate outplacement of patients from an inpatient ...
Jun 2 · 05:08 min
06:49 min
#06 - Imaging Expediter Tile Cover Image
The Imaging Expediter Tile provides Real Time visibility to available capacity by ...
May 28 · 06:49 min
The Imaging Expediter Tile provides Real Time visibility to available capacity by modality and supports operational ...
May 28 · 06:49 min
04:20 min
#05 - Care Progression Tile Cover Image
The Care Progression Tile provides hospitals the ability to track patients throughout ...
May 26 · 04:20 min
The Care Progression Tile provides hospitals the ability to track patients throughout their inpatient stay.
May 26 · 04:20 min
05:15 min
#04 - Risk of Harm Tile Cover Image
The Risk of Harm Tile provides visibility to track variations in practice versus hospital ...
May 21 · 05:15 min
The Risk of Harm Tile provides visibility to track variations in practice versus hospital defined care plans.
May 21 · 05:15 min
05:51 min
#03 - Seniors Care Tile Cover Image
The Seniors Care Tile helps ensure geriatric inpatients outside the geriatric unit ...
May 19 · 05:51 min
The Seniors Care Tile helps ensure geriatric inpatients outside the geriatric unit receive best practice care in ...
May 19 · 05:51 min
08:46 min
#02 - Discharge Planning and Escalation Tile Cover Image
The Discharge Planning Tile empowers rounding across the system by providing a fast way ...
May 14 · 08:46 min
The Discharge Planning Tile empowers rounding across the system by providing a fast way to review patients, log ...
May 14 · 08:46 min
06:34 min
#01 - Clinical Deterioration Tile Cover Image
The Clinical Deterioration Tile brings real-time, all-the-time awareness of the status of ...
Aug 1 · 06:34 min
The Clinical Deterioration Tile brings real-time, all-the-time awareness of the status of the most critically ill ...
Aug 1 · 06:34 min
172.16.41.37