Volume 12

Complexity selling gaining momentum

Making sound buying decisions in complex times

By Curtis Verstraete

Change creates opportunity for the informed. But, it also creates opportunity for the misuse of information. In a growing number of cases, sellers are using complexity to cause uncertainty and to bully buyers into making less than perfect decisions.

Read the Article 

Read the Article 

Complexity selling gaining momentum 

Making sound buying decisions in complex times 

By Curtis Verstraete

The Greek philosopher Heraclitus (c. 535 BC – 475 BC) said, “everything flows, nothing stands still”; a more compact, modern version of which is “change is constant.” With healthcare reform occupying a large portion of our collective attention (not to mention energy and resources), it is more useful to say, “the pace of change is accelerating.”

Following in the wake of accelerating change is an increasingly massive amount of complexity. Labyrinthine legislation, rapacious regulatory zeal combined with a host of new (and sometimes opportunistic) insurance solutions, is creating a toxic environment in which making sound buying decisions with confidence may seem almost impossible.

So what do you do?  Later in this newsletter, Brant Couch writes about HealthSure’s method for simplifying buying decisions, 10 Points of Differentiation. It is effective because it assesses only what is relevant to your organization and leaves out irrelevant and potentially complexity-creating elements. It is one way to crush complexity.

However, when it comes to making buying sound decisions, sometimes the first question we need to ask is what not to do.

Trust us… it’s complex!

Change creates opportunity for the informed. But, it also creates opportunity for the misuse of information. Considering this fact pattern we modeled after several new educational marketing tools currently in circulation.

We are seeing many unknown risks emerge each day as new regulations are passed to ensure healthcare providers deliver quality care at the best possible price.

These emerging risks are being driven by an increasingly complex set of trends including:

◦ACOS, CBOS, PACE and CO-OPS
◦Medicare’s “Never events” readmission penalties and other consequences
◦Hospitals folding acquired physician practices into their systems and executive compensation structures
◦Integrating care coordination and delivery based on best practices
◦RAC audits, MMSEA reporting and demonstrable regulatory compliance
◦Using capitation contracting to address both quality and financial metrics 
◦Clinical integration, bundled payments, and Medicare’s BPCI
◦Data breach notification requirements (HITECH), HIE and EHR initiatives
◦ICD-10 and defining “meaningful use.”
◦False claims, the Stark Law and anti-kickback cases

In each case, an extensive menu of products and solutions follows the complex list of trends, but in too many instances, there is no product or solution associated with an individual trend.

Embracing change to crush complexity

In these instances, sellers are using complexity as a scare tactic to bully buyers into making less than perfect decisions. Complexity is being used to cause uncertainty. Uncertainty that can lead to poor decision making in an attempt to fill the gap with products/solutions that are only tangential to the risks. In the worst cases, these products and solutions are inappropriate, a waste of resources (cost benefit doesn’t pan out), and leave your organization exposed to risk.

Knowing there is always a lot of noise around an insurance product (especially cutting edge stuff) is the first step towards crushing complexity. By accepting the existence of hype and – in worst cases – fear mongering, you disarm it. You also clear the path for making decisions based on what matters most: your organization’s unique situation, growth strategies and specific goals.

Heraclitus also said, “You cannot twice step into the same river.” Allowing a tide of complexity to drown your confidence works in the seller’s favor. You can crush complexity by accepting change, especially accelerating change, and managing change on your own terms.

As a growing number of Accountable Care Organizations (ACOs) are created, managing risk and insurance is becoming increasingly complex. One cutting-edge and often misunderstood area is capitation stop-loss coverage.

On the surface capitation is a relatively simple concept. First, a group of healthcare providers agree to form an ACO. Then, they agree to a per patient payment capitation. If the amount of money spent by the ACO delivering the required quality of patient care is less than the payment capitation, the ACO gets to keep the extra amount. If the ACO spends more than the payment capitation, it is out of luck… unless it has capitation stop-loss coverage.

Below the surface, there are several highly complex factors behind choosing the right amount of capitation stop-loss coverage.

For instance, the level of insurance risk healthcare providers expose themselves to in a capitated ACO model will depend on the amount of payment threshold. Making a sound decision about a viable capitation and the related amount of stop-loss insurance requires a sufficient actuarial understanding of the population under the ACO’s care.

Choosing the right amounts isn’t enough. There must also exist contractually aligned economic incentives for all parties involved in care delivery to reduce moral hazards. (Moral hazards are instances in which a party does not enter into a contract in good faith or has an incentive to take unusual risks to earn a profit).

For these and other reasons, capitation stop-loss coverage is considerably different from other insurance products. If your organization is considering participation in an ACO, crush complexity and protect your financial future by getting expert advice.