TRENDS
The Game of Risk Your customers are playing it. You should too.
Todd Nelson, FHFMA, MBA, director of partner relationships and chief partnership executive, Healthcare Financial Management Association
Hospitals and medical practices were introduced to risk-based contracting decades ago, with the advent of
health insurance. In 1982, Medicare raised the bar for hospitals by introducing prospective payment in the form of DRGs, or diagnosis-related groups. Since then, the stakes have kept rising. Today, Medicare, Medicaid and private insurers are pushing ahead with value-based contracts, putting pressure on providers to offer high-quality care cost-effectively. As providers assume more risk, they need their suppliers to help.
Todd Nelson, FHFMA, MBA, director of partner relationships and chief partnership executive with the Healthcare Financial Management Association, addressed the impact of value-based contracting on healthcare providers and their suppliers at the 2021 IMDA/HIRA annual conference in September. Repertoire followed up by asking Nelson about risk and what it means for healthcare providers and suppliers. Nelson served as vice president and CFO of a rural Midwest hospital for 15 years prior to joining HFMA. 40
February 2022
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www.repertoiremag.com
Repertoire: It seems that hospitals were forced to assume risk when the feds introduced DRGs in 1982. Would you agree? Why or why not? Todd Nelson: Hospitals did assume some risk when DRGs were introduced, but they quickly learned the levers to pull to mitigate that risk. Those levers were mostly financial (controlling labor and supply cost, length of stay, etc.) and they were able to recover some through various payment mechanisms for higher cost/ LOS [length-of-stay] cases. Additionally, not everything
