| Definition | Pricing models where the cost is determined based on the overall health of a population, aiming for holistic management | A model where providers share in the savings generated from reducing healthcare costs below a predefined target |
| Revenue Model | Revenue is based on managing the total cost of care for a population, often incorporating risk adjustments based on demographics and health status | Revenue is tied to the savings achieved compared to a benchmark, with shared savings distributed based on performance |
| Financial Performance Impact | Can stabilize revenue by spreading financial risk across a large population, but may be impacted by population health changes | Financial performance varies with the ability to achieve savings; potential for higher revenue with successful cost reductions |
| Risk Management | Focuses on managing overall population health to control costs and improve outcomes; involves significant risk management and care coordination | Financial risk is shared between payers and providers, incentivizing providers to reduce costs while maintaining quality |
| Cost Control | Aims for cost control through preventative care and population health management, often involving comprehensive care strategies | Cost control is achieved by reducing spending below the benchmark; providers must manage care efficiently to capture savings |
| Client Attraction and Retention | Attracts organizations looking for comprehensive population management and improved overall health outcomes | Attracts organizations seeking financial incentives tied to cost savings, often focusing on efficiency and quality improvements |
| Administrative Complexity | High complexity due to extensive data requirements for risk adjustment, care management, and population health analysis | Moderate complexity involving the tracking of savings, benchmarking, and the distribution of shared savings |
| Pricing Transparency | Less transparent as pricing is based on population health management outcomes and risk adjustments | More transparent as savings are shared based on predefined targets and benchmarks, making cost outcomes clearer |
| Service Delivery Model | Focuses on holistic care management for an entire population, including preventive and chronic care services | Focuses on achieving cost reductions within the framework of existing care delivery, often emphasizing efficiency improvements |
| Provider Incentives | Incentivizes providers to manage population health proactively and coordinate care to improve outcomes and reduce costs | Incentivizes providers to reduce costs and improve efficiency to capture a share of the savings below the target benchmark |
| Client Budgeting | Can complicate budgeting due to variability in costs based on population health and risk management outcomes | Simplifies budgeting by providing a clear savings target and potential for shared savings, but depends on achieving cost reductions |
| Financial Risk Distribution | Distributes financial risk based on overall population health, with adjustments for high-risk individuals or groups | Distributes financial risk based on the ability to achieve savings; risk is shared between payers and providers |
| Market Competitiveness | Competitive in markets focused on comprehensive health management and long-term cost control, differentiates on population health outcomes | Competitive in markets where cost savings and efficiency are prioritized, differentiates on the ability to achieve and share savings |
| Implementation Complexity | High complexity involving risk adjustment algorithms, population health management systems, and data analysis | Moderate complexity involving the setup of savings targets, benchmarking, and performance tracking |
| Examples of Usage | Accountable care organizations (ACOs), health maintenance organizations (HMOs), population health management programs | Value-based care programs, Medicare Shared Savings Program (MSSP), bundled payment initiatives |
| Client Perception | Viewed as a comprehensive approach to managing overall health and costs, with a focus on preventive care and population management | Viewed as an incentive-driven model for reducing costs, with a clear focus on efficiency and shared savings opportunities |
| Data Requirements | Extensive data collection on population health, risk profiles, and care utilization is required for effective management | Data collection focuses on cost benchmarks, savings tracking, and performance metrics to determine shared savings |
| Cost Efficiency | Potential for high cost efficiency through proactive health management and preventive care, but depends on population health and risk management success | Achieves cost efficiency by reducing spending below the benchmark, but may face challenges if targets are not met or if costs rise unexpectedly |
| Regulatory Considerations | Requires compliance with regulations related to population health management and risk adjustment, with potential for regulatory oversight on outcomes | Requires compliance with regulations related to shared savings and cost benchmarks, with potential for adjustments based on performance |
| Examples of Organizations Using Model | Health systems managing large patient populations, integrated care models, public health organizations | Provider organizations participating in shared savings programs, bundled payment models, value-based care initiatives |
| Overall Financial Impact | Can provide financial stability through effective population management, but depends on successful risk adjustment and care coordination | Offers potential for significant financial rewards through cost savings, but requires careful management to achieve benchmarks and share savings |
