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Managing risk: WHAT’S the point!

“WHAT’s the Point” is not a question. It’s the key to managing risk.

Managing risk is a common, daily experience. We continually face the loss of things valuable when we seek to gain a reward. For example, driving to the grocery store seems like a simple activity not usually associated with risk. But a car accident will make us wonder about the reward of food over the risk of life and health. We are so used to managing small, common risks that we don’t consider all the factors that inform our risk/reward calculation.

Now consider how you would approach risk if you were a health care provider organization taking on upside and downside risk with annual value-based risk (VBR) contracts. Information is critical to managing the risk/reward, and the more data, the better. But what kind of information? It takes both comparative and predictive information to assess the level of risk/reward, actionable information to help make critical adjustments during the year, and quantifiable information to determine success or failure.

From “What’s Up?” to “So What?”

Simply having the information isn’t’ enough. It must be transformed and elevated before it helps us manage risk. Even with modest enhancements, raw information typically only answers the question: “WHAT’s Up?” Tallying “counts and amounts” will not be sufficient for determining significance. It takes comparative values to reach the  level of “So WHAT?”

  • How does our information compare to benchmarks, expected values and competitive insights?
  • Where are values predicted to trend from historical measurements?

Determining this information helps assess the areas of risk and the levels of reward.

Now What?

Risk management requires actionable insights for “Now WHAT?” For instance, health care providers with VBR contracts must maximize revenues and minimize medical spending. They need to know where to adjust utilization levels throughout the year, which patient populations to focus on more intensely, and how to better coordinate care and referrals to prevent network leakage.

After managing risk during the year, quantifiable information helps measure impact.

  • Which areas proved most and least profitable?
  • Were any spending trends reversed, and did outreach programs help to avoid expected levels of medical spending?

This type of information will become the “WHAT’s Next?” and will inform the future strategy for improvement.

What’s next for VBC?

Unless information can be transformed from “WHAT’s Up” to “So WHAT”, “Now WHAT” and “WHAT’s Next” the effort of risk management will be uninformed. For VBR-based health care provider organizations, there are significant levels of risk and reward. The complications of managing the outcome of VBR contracts can seem overwhelming. When it comes to managing risk, WHAT really is the point.

Element Consulting has solutions to help you get actionable insights from your data. Connect with us to learn more.