June 2021 | Point of View

Digital patient engagement is key to success with global capitation payments

Digital is for everyone, and fee-for-service and value-based models can be allied around digital solutions, capabilities, and experiences

Digital patient engagement is key to success with global capitation payments

One might think a global pandemic would drive up healthcare spending. But as office visits and elective treatments declined, health systems nationwide lost billions. In fact, according to the Kaiser Family Foundation, COVID-19 is the first recession in which health spending decreased

This dramatic loss in revenue—along with the impact on access and cost of care to the wider population—reignited a push for value-based care and the stable revenue stream it can provide. Policy experts, for instance, are increasingly advocating for capitation reimbursement structures, which can be a tremendous avenue for health systems to retain cash flow during downturns like COVID-19. Global capitation is also proven to drive meaningful improvement in value-based care, providing heightened flexibility, integration, and coordination between payers, providers, and patients. From a regulatory standpoint, however, the future of value-based-care is rife with unknowns, even while it’s clearly on the horizon. 

Amid these shifting headwinds, it would be easy to see fee-for-service and value-based-care as foes. But both can leverage common capabilities, and together they can form a diversified portfolio that helps prepare health systems for an unpredictable future, particularly as patient demand rebounds from the impacts of COVID-19. 

In what follows, we’ll explore exactly what we mean by that, with a recommendation of how to go about it.

Managing the rebound and diversifying revenue streams 

In 2019, a comprehensive study indicated that new revenue streams represent an urgent priority for 90% of hospital and health system executives. What’s more, every executive acknowledged the need to diversify revenue—a need which will only be heightened for those looking to recover from financial losses incurred in 2020.  

In this context, value-based-care presents an intriguing opportunity. Under capitation programs, health systems receive predictable revenue that helps protect against downturns (e.g., COVID-19) and which in turn enables these systems to focus on retaining patients across all revenue streams. This was the case for the medical groups ChenMed and Iora Health, which, instead of cutting services during the pandemic, ramped them up—boosting telehealth offerings, supporting home delivery of food, and keeping their clinics open for urgent care.  

For now, at least, changing regulations support these additional revenue streams as CMS policies for capitated plans are getting less and less restrictive with each passing year. In 2020 alone, updates allowed benefits such as meal delivery, transportation for non-medical needs, and in-home services.  

There’s a pragmatic move to be made while regulatory and service utilization uncertainties are ironed out: Health systems and providers can focus on digital offerings that support engagement of all populations, both fee-for-service and value-based care, especially for those patients under Medicare.

Challenge your assumptions about digital patient engagement 

Demand from Medicare patients will likely be high as elective services rebound. For one, these populations were disproportionately restricted in their ability to seek traditional healthcare during COVID-19: According to Avalere Health, outpatient care utilization dropped year-over-year by over 50% in April 2020 and 32% in May 2020. Preventative services utilization, meanwhile, dropped through the third quarter of 2020, and this population’s need for such services—coupled with the worsening of conditions for those who did not utilize such care during COVID-19—will bolster demand even further.  

It sounds almost like a contradiction in terms: Aren’t older patients likely to be the least digitally-savvy? And how is strategic attention to Medicare digital engagement going to set you up for value-based arrangements? 

For one, the needle has moved in regard to who digital is “for”—the view of it as the sole proprietorship of younger generations is—if technologies and platforms like Welltok, eHealth, Tivity, and Linkwell Health are any indication—becoming a thing of the past. In other words, considering the digital-first approach many Medicare payers are successfully taking (as well as the dramatic spike in digital, remote services of all kinds over the course of the pandemic), the 65+ crowd are increasingly becoming digital consumers in their own right. 

There’s also the fact that patient engagement is not simply a light switch capability that can be flipped on and immediately mastered. There’s real value and wisdom to taking a focused approach initially and broadening from there as your digital engagement offerings and strategy gain strength. We believe the Medicare population is a perfect proving ground for digital product and experience development.

Managing demand, containing costs 

Much of this comes down to demand and cost. The Medicare patient population is the most likely to lead the rebound of elective services in fee-for-service and be more costly to treat under a capitated model. It’s also well worth noting that this healthcare consumer group is expected to reach all-time highs this year: CMS estimates that around 26.9 million people will enroll in such plans in 2021, up from about 24 million in 2020. 

Taken together, these factors point to Medicare patients as an ideal consumer base for developing digital patient engagement capabilities, allowing healthcare organizations to promote patient engagement (and improve patient experience and retention) in the near term, while readying a foundation that helps manage costs and resources for the eventual shift to capitation.   

For these reasons, a strong, cost-effective patient engagement portfolio for Medicare patients seems like a must-have. In today’s healthcare landscape, that means digital tools and capabilities developed with a human-centric approach designed for simplicity and ease of access. Part of the value of human-centric design in healthcare is that it fundamentally insists on the patient experience as the organizing principle for technologies and processes, rather than jumping at the shiniest new technology on the market.  

In many cases, as we’ve discussed elsewhere, health systems and providers may already have the necessary technologies to create these kinds of seamless experiences for their patients—they’re just in need of what we call “digital unification,” which is expressly about orienting technologies to the experiences you want to create and support for your existing patient populations.  

If digital unification is a matter of unlocking the value of technologies in which an organization has already invested—in other words, as transitioning from IT to digital—then there’s a clear parallel to be drawn to unlocking the potential of Medicare patients to be digitally engaged healthcare consumers in the context of diversified revenue streams, utilization management, and cost containment.

Seizing the opportunity in uncertain times 

After the dramatic conditions of 2020, hospitals and health systems realized the downside of fee-for-service models and the potential for value-based care and capitation models. Utilization of telehealth and other remote services skyrocketed. And meeting consumers’ needs for seamless digital experiences grew exponentially more important.  

2020 also challenged our assumptions. For it is no longer simply the young who benefit from and demand digital experiences. It is increasingly older populations, especially Medicare patients, who seek these offerings to build trust with their healthcare providers.  

But as pent-up demand is unleashed, hospitals, health systems, and providers have an immediate opportunity to excel at patient engagement that supports fee-for-service structures and as a stepping stone to global capitation, laying the groundwork for converting key patient populations to value-based care in the years to come.  

Therefore, healthcare organizations would do well to leverage digital solutions that make seeking care simple, build trust with older patients, and demonstrate how they’re working to ensure safety and deliver the best care possible. And while digital experiences are important for all consumers, being selective in how you build your engagement strategies and technologies will help support use case-oriented practices and tactics that will serve you well in the long run as you expand.

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