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A growing number of payers and providers are leveraging PHM to improve quality and cost outcomes

The realities of today’s healthcare landscape — an aging population, the growing chronic disease burden and the shift to value-based payment models — have led many health plans to explore cost reduction measures beyond the traditional bounds of care. One of the most interesting, and perhaps most impactful, focuses on improving the health of member populations at large.

According to a Grand View Research report out last week, the market for population health management (PHM) solutions is set to more than triple over the next 10 years, reaching a value of nearly $90 billion. A press release summarizing the report calls PHM “the best option available to reduce expenses and contain high-cost medical care.” The market is set for commoditization, a recent IDC Health Insights report suggests, with an increasing number of solutions focusing on analytics or disease-specific population solutions.

Though there are a multitude of approaches, all PHM initiatives seek essentially the same outcomes: By helping organizations identify at-risk populations, collaborate with providers and communicate with communities of patients, PHM can help health plans focus on preventive care and early intervention, based on a better understanding of the risks of their populations.

Improving a population’s health is not a new concept — it’s been an important focus in the academic, philanthropic and public health sectors for more than 20 years, according to the Robert Wood Johnson foundation. But the Affordable Care Act (ACA), which specifically called out the “improvement of population health outcomes” as one of its core objectives, has spurred payers and providers to expand their population health improvement efforts beyond clinical care.

“As healthcare organizations transform to value-based reimbursement and care, the need for tools and methodologies to improve clinical and financial outcomes becomes critical,” research Cynthia Burghard pointed out in a press release. “At this nascent stage of population health management, the approaches have been based on historic approaches; with maturity, the need to be more precise in our analysis, more personalized in care plan development, and more proactive in patient engagement will grow.”

The good news for health plans is that there is a solid business case for investing in PHM. In a Robert Wood Johnson-funded study published by Northeastern University’s Institute on Urban Health Research and Practice, researchers found that an increasing number of health plans and provider systems are willing to invest in population health because they “understand that investments in certain population health strategies are necessary to improve quality and cost outcomes and to respond to payer performance expectations.”

The study tracked five health plans and provider organizations that are currently investing in population health initiatives. Some initiatives focused on patient panels with interventions outside the delivery of clinical care, while others focused on the broader community of patient populations. As the study’s authors note, the most successful initiatives shared collaborative strategies across health plans, provider systems and other partners.

Implementing large-scale PHM initiatives will require significant effort. But health plans who invest in them stand to reap significant rewards. At the most basic level, plans will gain significant insight into the health of their populations. An Express Scripts report indicates exchange plans may be missing out on millions of dollars because of undocumented risk and the resulting inaccuracy of risk payments. According to the report, plans are not receiving credit for an estimated 10 to 20 percent of their population’s true risk. Some of the most common risk reporting gaps are due to lack of timely member insights and inconsistent member behavior.

PHM solutions aim to provide a more accurate picture of the risks their member population presents and the means to address those risks through preventive measures. Effective PHM initiatives, conducted at a large scale, have the potential to significantly impact the U.S. healthcare system — by both helping more people avoid preventable conditions and live healthier lives and significantly reducing medical costs for all stakeholders.

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