Population health past and present: Five reasons why the future is about segmentation

By David Goldbaum

Population health in health systems is not new, but like the concept of “continuity-of-care” it is evolving.  Health care providers have always attempted to identify patient sub-groups (populations) that are costly to treat and difficult to manage.  The environment is different today for five main reasons:

1. In the past, insurers paid providers largely based on how much they spent to treat patients.  Today they are increasingly paid on how much they should spend.  That spending is based on data reflecting what the cost of care should be based on best practices.  Providers that fall in the lower quartile on performance (cost and quality) are increasingly finding themselves punished financially.  Providers and insurers must effectively identify and manage spending incurred to treat their most expensive patients within narrow sub-populations.

2. In the past, insurers were held primarily accountable for the cost and quality of care.  Today, that accountability, driven by regulations under the Affordable Care Act, is quickly being shifted to the direct providers of care.  In the past, if the cost of care grew, insurers passed those higher costs onto employers or governments that were paying the bills.  Led by Medicare, the shift in accountability means there are fewer channels through which providers can pass along the cost of care delivery. More than ever they must identify and manage care delivered to pockets of high cost beneficiaries.

3. In the past, there was little data readily accessible to providers of care to manage the day-to-day care of patients at the point-of-service.   Today, so much data is available that analyzing and understanding that data has become a key tool in identifying and managing the care and quality of high cost patients, including vulnerable populations.  Medicaid and Medicare administrative claims data nationwide are being made available to research and provider organizational collaboratives to identify the utilization patterns of population segments, develop population specific benchmarks and track the progress of their populations.  Most large health systems and physician group practices have electronic medical records and point-of-service data available virtually in real time.

4. In the past, analytical technologies used to understand health care data were cumbersome to deploy and use.   New analytical technologies, developed by commercial companies like Google and Yahoo, now exist for use by any organization.  These technologies are being used by the most advanced health systems to quickly analyze huge volumes of current data.  Unlike past technologies, these methods and tools combine the skills of traditional hospital information technology staff, statisticians, health services researchers and hospital quality management staff. They automate the process of distinguishing the characterteristics of patients that incur high healthcare costs from those that have lower costs; those that are that are likely to follow a prescription drug regimen and those that are not likely to; those that can most effectively be discharged to a nursing facility from those that should be discharged to another setting; and those that are most likely to get post-surgical infection from those that are not.

5. In the past, providers were responsible for services rendered to their patients within their institutions.   Today, providers are increasingly being held accountable for the cost of their assigned patients regardless of the institutions in which they are treated.    Performance is increasingly being measured in terms of the cost and quality of care delivered.  Hospital inpatient systems are not working well when patients are re-admitted within 30 days of discharge. Patients that inappropriately seek services from a hospital emergency department for primary care suggests that outpatient systems are not being effective in reaching those patients. The total cost/patient/month of care across provider settings is the actual cost of care that counts – more than the cost to a particular provider.

In the past, process improvement initiatives based on 6-Sigma, Lean, and Toyota have made big contributions to improving performance across all populations.  Today, the right people, labor force and technology seem to offer the greatest potential for managing the health of populations.

David Goldbaum is a health economist and Executive in Residence at Detroit Wayne County Health Authority.