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Blog Post: By aligning financial incentives, Intermountain Healthcare will help everyone who’s involved in healthcare get better results for more affordable cost

Blog Post: By aligning financial incentives, Intermountain Healthcare will help everyone who’s involved in healthcare get better results for more affordable cost

By Joe Mott, Vice President, Healthcare Transformation

Jan 14, 2015

Updated Nov 17, 2023

5 min read

transforming costs

In the traditional healthcare model, hospitals and physicians are rewarded for providing more services, health plans are rewarded for managing expenses and the use of services, and patients are often uninformed, unengaged, and — from a financial perspective — only aware of their out-of-pocket expenses. At Intermountain, we believe we need a model of care that rewards hospitals and physicians for providing the right care rather than just providing more care. And we need health plans that encourage and reward patients for being engaged in their personal health and healthcare choices. When everyone has aligned incentives — when they’re all on the same team — everyone’s much more likely to get the results they want.

Aligning incentives will help all of us work for the same purpose, which is articulated by Intermountain’s mission: We’ll help people live the healthiest lives possible.

One of the key ways to create alignment is to discontinue paying hospitals and doctors based simply on how much care they provide and instead to pay them for providing the most effective and appropriate care that patients need, including tools to promote prevention and wellness. In this model, delivery systems like Intermountain would receive a “total cost of care” payment from insurers. That way, we would have the funds needed to invest in prevention, we would be able to support physicians and their staffs by helping educate patients, and the model would eliminate the inherent adversarial role that exists between providers of care and the payers of care.

It works like this: Instead of being paid after services are provided, hospitals and physicians are paid ahead of time by insurance companies and government payers for taking care of a group of people for a fixed time, with measures in place to ensure high-quality outcomes. Quality measures encourage the provision of the best care. Prepayment takes away the incentive that exists under the fee-for-service model to provide more care and instead incentivizes more effective care.

We’ll continue to provide the best evidence-based care proven to improve outcomes. And equally important, we’ll help patients improve their lifestyles so they are more likely to avoid the health concerns in the first place. When everyone has aligned incentives — when we’re all on the same team with the same goals — everyone wins.

Here’s an overview of how Intermountain will align financial incentives for everyone who’s involved in healthcare:

  • PATIENTS AND HEALTH PLAN MEMBERS - SelectHealth is designing health plan benefits that reward members for being more engaged in their personal health and wellness and more involved in their personal healthcare decisions. In the future, we expect other insurers will also design benefits that increase incentives for health and wellness.
  • HEALTH PLANS - Intermountain and SelectHealth are creating a new health plan product based on Shared Accountability principles that will be available to large employer groups by January 2016. We’ll keep the average annual premium increases on this plan close to the general inflation rate. That will provide a significant cost savings for everyone. SelectHealth already offers two accountable-care products: 1) SelectHealth AdvantageSM, a Medicare Advantage plan; and 2) SelectHealth Community CareSM, a Utah Medicaid ACO plan.
  • PROVIDERS - Teams of Intermountain’s leaders and physicians are developing new models for paying hospitals and physicians based on measures that assess the quality of care, patient satisfaction, and total cost of care.
Intermountain launched a pilot of a new physician payment model in the fall of 2013. It includes about 7,500 patients served by 383 providers at 15 clinics. In the model, physicians are paid for the care they provide, plus they receive incentives for meeting quality, service, and “appropriate use” goals. New tools that are part of the model give physicians data to support their care decisions and measure the clinical results. We’re evaluating these tools and will make modifications as we prepare for future expansion. Our commercial Shared Accountability health plan will reflect the things we learn in the beta test of this new physician clinic payment model.