Episode Overview
Together, they explore the evolving dynamics between payers and providers, the growing role of advanced analytics and transparency data in negotiations, and how reimbursement models are shifting in response to mounting market pressures. The conversation dives into key trends in value-based care, physician compensation alignment, clinically integrated networks, and the strategic use of data to drive sustainable performance.
As healthcare organizations face increasing financial and operational strain, this episode highlights how deeper expertise, stronger analytics, and more collaborative payer-provider strategies can lead to smarter negotiations and stronger outcomes effectively.
LISTEN TO THE EPISODE:
Host:
Daniel J. Marino
Principal, ECG Management Consultants
Guest:
Terri Welter
Partner at ECG Management Consultants
Dan Marino:
Welcome to Value-Based Care Insights. I am your host, Daniel Marino. We have a really exciting episode today. I am beyond excited to announce that Lumina Health Partners, the sponsor of Value-Based Care Insights, is joining ECG Management Consultants. Really an exciting opportunity, not only for the folks that are within Lumina, but all of you, all of our listeners. You know, as you recall, as many of you know that listen throughout the years. Value-based Care Insights brings really strong topics insights, if you will, and it's great to hear from a lot of the national thought leaders across the country, and especially a lot of the providers. You know, we've received many inquiries, and have many of you all on our show, and talked a lot about the insights. Well, with now ECG and the alignment of Lumina with ECG, it just brings just a greater wealth of information, a greater knowledge base, and as we start to navigate all of the challenges that we have within healthcare, I'm just excited to bring even stronger solutions to the table. Well, here to talk to us a little bit more about this is now my new colleague, Terri Welter. Terry is a partner with ECG, She leads the Payer Strategy and Contracting Division Terri, welcome to the program.
Terri Welter:
Thanks, Dan, it's great to be here, and I echo the welcome of Lumina Health to ECG, and look forward to us working together for many, many years, so it's great to be here.
Dan Marino:
Well, thank you, and we are excited as well. You know, as I mentioned, ECG has worked with hundreds, if not thousands, of providers, hospitals, academic medical centers, medical groups. Across the country, and, you know, really strong in payer strategy, medical group operations, hospital performance strategy work, and so forth. I know you lead the payer strategy area. What are some of the things that you're seeing that ECG is really leading as they're starting to have these conversations, or really supporting a lot of the providers with, let's say, payer contracting, if you will?
Terri Welter:
Yeah, so Dan, we have been developing our payer services practice for many, many years. I started at ECG 20-plus years ago, and we've actually put together a team of 40-plus professionals that all they do is sit between provider and payer relationships. So, we're really at the table, we're doing strategy work, but we're also at the table doing the negotiations. We've done negotiations in all 50 states. So one of the things that we're leaning into is really bringing a lot of data to the discussion, you know, now more than ever. You know, both providers and payers have a lot of stress, right? Financial strain, operational strain, so we need to actually come to a solution that is going to work for both parties, so to do that we bring a lot of data to the table to understand, sort of, market position and what the parties need in order to make things work.
Dan Marino:
Well, and the data is key. You know, we've assisted a number of organizations with payer contracting as well, and the understanding the data, understanding the market positioning related to the data, and how you create sort of a win-win with both, you know, the hospital or the provider group and the payer is really key. One of the things that I've been particularly impressed with ECG is the level of transparency data. You've really gone out and built a whole model around the use of transparency data.
Terri Welter:
We have, that's right. We believe that the transparency data has been a game changer, right? So, think about it. For many, many years, you know, that information was sort of under lock, because contracts were confidential, you know, you could purchase some of the data.
Dan Marino:
Yeah.
Terri Welter:
Now, with the new transparency laws, well, it's not always perfect in every market, it's getting very, very good, so we have access to both the payer and provider data across the country, and we… what's different is that we have done negotiations in those markets, so we understand based on our experience, whether that data is valid or not, so we're able to take that data and actually put together a story, you know, in every strategy and every negotiation. So I believe that, ultimately, that transparency data is going to drive down costs. You know, right now, it's actually a bit chaotic because, you know, if you think about it, there's so much variability from market to market, but the data on the transparency side is really, really powerful.
Dan Marino:
Yeah, it really is, it really is. You know, one of the things that we've seen around a lot of the payer activities is shifts inside of service, there's different types of reimbursement structures that are coming, that payers are starting to work through with providers, whether it's, you know, hospital-based reimbursement or more ambulatory-focused reimbursement, even value-based care, is really kind of picking up in certain markets. So when you think about the payer strategy for hospitals or health systems, is there a particular approach that you've seen that has really been advantageous to a lot of the providers, or is it really just market-specific? Is it really more so provider-specific.
Terri Welter:
It's provider-specific, with some exceptions. So we're seeing… in the past, really, 5 to 10 years, I think there was a push to ambulatory, and there still is a push to the ambulatory side in terms of getting the patient to the right site of service to meet their needs. But if you look at… at what happened was, now we have that information available on rate for the outpatient side. So, we're telling our provider clients that you really need to be very competitive on rate for outpatient services, but what we're finding is that the inpatient side may be underpaid because we have an acuity issue in the inpatient, right? So, patients are sicker that are in the inpatient, so we're seeing a push towards moving, revenue to the inpatient side, believe it or not because the outpatient has been, you know sort of shoppable in terms of, you know, patients have options, but, you know, we need to move dollars to where patients are sicker, and it requires, you know, a higher level of care for those patients.
Dan Marino:
Well, and it probably, you know, when you talk about the data, then what really becomes important is to almost measure the acuity of the patients, right? So the higher risk patients are the ones that are really going to the hospital, and we're seeing that, you know, all across, particularly as you start to think about value-based care. I mean, risk stratification of the population becomes really important, but you bring up a really interesting point. As you're… we're starting to measure more of the acuity and seeing the acuity increase on the hospital side. I can see how hospitals now are really getting under-reimbursed based on that level of acuity, right? I mean, if you're really getting measured and building the pay structure, the reimbursement structure around an acuity level that was, say, I don't know, modeled 3 or 4 years ago, the acuity is much higher now.
Terri Welter:
That's exactly right, and we're seeing, then the need to put dollars to those high-cost cases. We're also seeing, on the contrary, actually, we're seeing pressure to move dollars away from the drugs, because as you know, you know. Drug reimbursement is you know, a high-cost area, right? And we're trying to figure out a way to make more available to, you know, the community, but in doing so, you know, we're moving dollars to inpatient. So it definitely is sort of a math problem, the high acuity, but then we also have issues with drugs, outpatient imaging, you know, those areas that perhaps we are overpaid on that we need to move to inpatient. So… Solving that problem.
Dan Marino:
Right. So I know one area that ECG focuses a lot of work on is, provider compensation. And, you know, physician compensation over the years has continued to evolve. We've had the good fortune of working with numerous organizations, employed medical groups, independent medical groups, on what their compensation structure is. And many of them have shifted to straight salary, to RVU-based, and now are starting to pick up a little bit more of a quality component in there. What are you seeing, or what are your colleagues seeing, in terms of the trends of compensation? And maybe in particular, how is that aligning with some of the payer strategies and the work that you're doing within your own division?
Terri Welter:
I mean, we're… my colleagues, we have a division called, you know, the MGO divisions, Medical Group Optimization Division. They actually say that they're getting quite a number of requests to consider, sort of, fixed-based compensation. The Mayo Clinic, the Cleveland Clinic model, and in doing so, you have to have really sort of sophisticated, performance-based organizations. So, setting that aside, when we're looking at value, we are seeing an uptick And the level of incentive-based revenue put in physician compensation and provider compensation, compared to what we did before. You know, it's still highly productivity-based, we have some fixed-based comp, but we are seeing an increase in sort of tying value-based measures to, you know, that tie to the contracts to, you know, provider compensation, and uptick. You know, it's hard to connect all those because, you know, they're differentYou know, streams of revenue, but we are seeing that happen, and particularly when you're working with, you know, a clinically integrated network or an organization that has a lot of primary care, you know, within their network.
Dan Marino:
If you're just tuning in, I'm Daniel Marino, and you're listening to Value-Based Care Insights. I am here today talking with Terry Welter, partner with ECG Management Consultants, and we're talking about the advanced topics, the advanced resourcing from the newly announced Lumina Health Partners joining ECG. Very excited about this, this opportunity. So, Terry, building on that. In some markets, we're seeing value-based care picking up steam. In other markets, it's not. And in particular, with some of the payer contracting, some of it has really created a lot of momentum. Are you seeing a big divergence in the amount of, let's say, increase in the percentage of value-based care revenue related to these compensation models? Is there… is there a variance there, or are you seeing maybe the compensation models, again, starting to evolve as hospitals, health systems are starting to take on more and more value-based contracts, and have a greater percentage of their revenue tied to value-based care.
Terri Welter:
We are seeing, Dan, the compensation arrangements evolve as the value-based arrangements evolve within the health systems, but it depends on the organization. I'd say the biggest thing we're seeing is we are seeing a sort of resurgence of value in the arrangements with payers and providers, but we're not seeing an increased level of risk assumption being taken by providers, especially by our health systems.
Dan Marino:
That's interesting.
Terri Welter:
And I think the reason is, is that, you know, there's a… there's a focus on… well, actually, the reason is in part because of the acuity level of the patient that's gone up, right? So there's a focus on, let's figure out what you're already working on from a quality standpoint, from a value standpoint, and let's sort of build measures around that. So we're seeing an uptick in the amount tied to value. Both in the comp arrangements and in the arrangements between payers, but we're not seeing an uptick in the level of risk-taking in terms of, sort of, full global cap risk, but we're seeing, you know flexibility between payers and providers, and tying, you know, tying dollars to things that actually, you know, make a difference that that provider's working on. Like, an academic health system, for example, is going to do really well on clinical pathways, readmission rates, you know, measures around safety and quality, so we're seeing the programs being built around, you know, those focus areas.
Dan Marino:
Right, right, right. Well, I'll tell you, it's really… it's a journey for organizations to move into risk. It really is. And I've said, and in conversations I've had with, you know, numerous leaders across the country, you don't just wake up tomorrow and decide you're going to enter into a risk-based contract, right? I mean, you really do need to build your infrastructure. You know, culture alignment around risk is critically important, but you also have to have the capabilities in place in order to ensure your success as an organization as you enter into these global risk or full risk contracts. One of the areas that ECG… that I'm particularly excited about with ECG is hospital strategy and the strategic growth and development that your colleagues bring to the table in working with both academic medical centers, but these large health systems. And you touched on it a little bit earlier, that, you know, you're seeing these clinically integrated networks becoming an important component of the hospital strategy. Is that a… do you see that as a strong growth trend, or where are the CINs, the integrated networks, coming into play, maybe as you're thinking about that payer strategy?
Terri Welter:
Yeah, the clinical integrated networks, they're still a component of the strategy, but I think that's starting to evolve, so we're seeing a continued push towards clinical integration, right? Let's make sure that the care delivery system is connected, right? Primary care to specialty, to hospital, to ambulatory sites. At the same time, some of those clinical integrated networks, were successful and some were not, right? So what we're seeing is that they need to have strong rela… whatever it is, if it's a CIN, it's an ACO, you need to have a strong relationship with a payer partner if you're not a payer yourself, right? So we can't do this in isolation without connecting it to sort of the full data that payers have, and the payment systems that payers have. So what we're seeing it evolve towards is sort of product, joint product development with payers.
Dan Marino:
Yeah.
Terri Welter:
Developing your own health plan, we have… we do see that happening around Medicare Advantage in particular, but I would say more, you know, finding good payer partners that are willing to work with you on, sort of, that… the evolution of the clinically integrated network.
Dan Marino:
But, you know, I would think is, and I've seen this, as hospitals start to really build their networks, and their networks become pretty strong, It changes the whole mode of the conversation with the payers, right? Because when you're fee-for-service negotiating a contract, you know, you're, you know, you're going back and forth, it's hardcore hardcore negotiations, you know, sitting each side of the table. When you're negotiating around a value-based care, particularly for clinical integration, I mean, it's more collaborative, right? I mean, and that, like you said, that ability to create that combined product and integrate the goals and the objectives towards reducing cost of care, all of that, I mean, that's a different type of discussion.
Terri Welter:
That's right, and what… that's a key element to, you know, have at the table in those discussions, is what's our value story, right? And that means you know, our physician network, our provider network, you know, not the hospital only. So what we're finding is that, you know, the old school discussions between hospitals and payers, it's very different now. You know, many, many of our hospital systems now have sort of major employed, you know, provider networks. And those discussions at the table are critically important to you know, to the payers. Like, they want to know what they're doing around sort of that network and, you know, how you're integrating care, how you're keeping patients out of the hospital, right, and getting them to the right set. The conversation got switched, that's for sure.
Dan Marino:
So your value prop is really different, right? So when you present a value proposition to the payers around a fee-for-service contract, or your negotiation, it's very different for how you do it around a value-based care.
Terri Welter:
Absolutely, and it's what's happening in the, you know, do you have ASCs? You know, do you have, you know, freestanding imaging? What's happening around primary care? What are you doing around care management and really chronic disease management? So, much of that is, you know, old school, we used to call it population health, but now it's really care management and what's getting the patients to the right setting, so it's not… we want the system really wants to have the sickest folks in the hospital, right? There's other settings for those that don't need hospital care, right? And that's sort of the discussion that's happening at the table.
Dan Marino:
Yeah, that's great. When we think about ECG's presence in healthcare, you know, one of the things that really has impressed me about ECG is it's strictly focused in the healthcare industry. I mean, you all have been around 52 years. I mean, it's a phenomenal history there. Are there particular trends that you're seeing that we're working through now that, you know, whether it's AI, and you mentioned data, you know, is there a particular focus that the firm is really, I guess, focused on with their clients to really drive a lot of the change, or at least kind of help them through some of the challenges and, you know, the tough times that they may be having right now.
Terri Welter:
We're really focused right now on, we believe that advanced analytics are sort of table stakes that are necessary in order to be strategic, in order to drive the strategic decision making, so what we're working on, and having, you know, highly evolved programs around, is bringing data to the table, in every client relationship, every client situation, so that we can help them sort of operate at the top of their license, make good decisions around strategic, initiatives. Rather than, you know, having to analyze all that data themselves. So we bring the data, but we actually use it in a way that it's necessary so that we can make very strategic decisions. That does include considering AI, but again. That's… that's an evolving market that we're continuing to follow. I believe that in one year from now, it's… it's gonna… we're gonna have a lot more clarity on, okay, these are the things that are working around AI and where our clients should focus. But advanced analytics is something that helps us drive strategic decision making, so that's really something that we're very focused on.
Dan Marino:
Well, I'm really excited to hear that. I think that's just such a value add for a lot of hospitals and health systems, because I'll tell you, just about everyone in the country struggles with getting the right information that is actionable. A lot of these systems have a lot of data. But they don't know how to aggregate the data in such a way that it's really valuable information that helps them make that level of decisions. And I think the ability to bring that advanced analytics as an additional tool, as an additional resource to the table, whatever engagement or however we're helping our clients. Boy, that's just such a big value add.
Terri Welter:
Yeah, Dan, and I'll give you an example of that. So, many of our clients have the ability to, you know, model their payer contracts, or to get the transparency data, but it's not connected, right? So, or to get market data, but it's not connected, so we have the ability to do the contract modeling and dashboard it with the transparency data so that you understand where you are in terms of, you know, current state for yourself, but also how you compare to the market. So bringing it together and aggregating it is key. I think you hit on that exactly right. It's… the data's out there, but how do we bring it into a…
Dan Marino:
Yeah, and deliver it in such a way where it really becomes a strong tool and even leverage point, right, in being able to really improve your operations and financial performance.
Terri Welter:
Exactly.
Dan Marino:
Well Terri, this has been… this has been great. I'll tell you, I'm really excited. I know our listeners will be excited in the upcoming episodes as we add some of the national thought leaders that are within ECG, and even some of the clients that's even talked to tell some of these stories, I think it is just going to be fantastic. As we wrap up, can you… would you mind sharing your contact information and maybe just a little bit of information on ECG, if any of our listeners are interested in visiting their website or anything of that nature?
Terri Welter:
Sure, I'd be happy to. So, if you want to visit ECG's website, we're at https://www.ecgmc.com/ and we have a whole lot of articles and background information on the type of work that we do. If you want to contact me directly, my email address is twelter@ecgmc.com and would love to hear from you anytime.
Dan Marino:
Well, Terri, thank you very much. I can't wait to get in and hear a few more of the stories and some of the successes that we've seen around the country, and be able to share even that more with some of our listeners. I think it's going to be great going forward.
Terri Welter:
Thank you so much, Dan.
Dan Marino:
And for our listeners, again, we're really excited about our partnership and what we plan to bring to you all. Some of the future topics that we plan to discuss are specifics around medical group operations, and in particular, how we could improve or augment some of the compensation models, what we're seeing in terms of supply chain and workforce. All great things that we know are top-of-mind challenges with our healthcare leaders. As always, if you're interested in learning a little bit more about today's topic, or any of the topics that we've had on Value Based Care Insights. Please feel free to visit luminaHP.com/insights. You'll find all of the topics and all the episodes there, as on-demand downloads, through our podcast portal, as well as https://www.ecgmc.com/ As Terri said, there's a wealth of information. I want to thank you, the listeners, for tuning in. And until our next insight, I am Daniel Marino, bringing you 30 minutes of value to your day. Take care.
About Value-Based Care Insights Podcast
Value-Based Care Insights is a podcast that explores how to optimize the performance of programs to meet the demands of an increasingly value-based care payment environment. Hosted by Daniel J. Marino, the VBCI podcast highlights recognized experts in the field and within Lumina Health Partners
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