How insurers and hospitals intend to contain costs

The biggest organizations involved in the health care system should lead the changes that are inevitably coming, says KPMG, the accounting, tax, and consulting firm. “Organizations are clearly considering the effectiveness of their fee-for-service business models, but migration to more value-based models will take some time, and will include a mix of old and new delivery and payment systems,” says Ed Giniat, KPMG’s national sector leader for health care and pharmaceuticals.

In other words, things can get sloppy as the Affordable Care Act encourages more mingling of health plans and providers, but Giniat says it doesn’t have to be that way. “The only way for more rapid integration to occur is for these stakeholders to lead the change and make it happen, but many of these organizations are using techniques more aligned with sustaining existing models.”

Survey data for “Transforming Healthcare: Emerging Business Models” were collected between January and June from 104 executives of hospital-led systems, 51 health plan executives, and 54 pharmaceutical company executives. Purchasers were not questioned.

Health plan executives expect that information technology, evidence-based medicine, disease management, and pay-for-performance incentives will be most effective in curbing costs. They are also concerned about large employers ceasing to offer insurance, say KPMG officials.

In response to cost shifting , health plans expect employers to demand lower costs and increased use of wellness and health management programs.

Likelihood of more integrated care delivery in the next 5 years

Expected employer response to cost shifting over next five years

Which cost-containment approaches will prove effective?

Source: “Transforming Healthcare: Emerging Business Models,” KPMG, Aug. 22, 2012