The Chartis Forum

White Paper

Leading the Conversation: New Channels for Provider Contracting

The healthcare marketplace is in the throes of a fundamental change in how healthcare delivery will be packaged, priced and purchased. Historically, the healthcare value chain has been driven by a series of negotiations between the “purchaser” and health plans; and health plans in turn negotiate with providers; all in an effort to create the right package of services, for the right price, to meet the needs of the consumer. In this world, roles were clearly delineated – employers operated as purchasers on behalf of consumers, brokers/consultants as agents, health plans as aggregators, and health systems as providers. The basis for health system payment rates centered on their ability to negotiate with health plans using an argument of differentiation across high-end specialty services, access to a broad base of physicians, and/or an expansive footprint across a given geography.

Multiple factors such as the Affordable Care Act, the economic downturn of 2009, the shift of financial responsibility to employees and the rise in consumerism have precipitated a change in this dynamic. They have placed downward pressure on historical fee for service revenues and at the same time opened new channels for health systems to gain access to a greater portion of the premium dollar. The early effect has been a disruption of historical relationship channels and roles, with self-funded employers and providers contracting directly with each other. Providers, as the deliverers and directors of care, are in the best position to influence and manage total medical spend.

Providers have a decision to make regarding the role they want to play and the degree of responsibility they want to assume in managing a greater portion of the premium dollar. To do so, providers need to develop a clear understanding of their desired position in these emerging new relationship channels and what benefit – and risk – such new relationships present.

For More Information:

Add Chartis to your Home Screen