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The Governance Institute releases strategy toolbook to support hospital leaders in managing two-sided risk contracts

New resource offers health system executives and boards tips on how to prepare for and succeed in two-sided risk arrangements

The Governance Institute, a service of NRC Health, today released its brand-new resource, Strategy Toolbook: Accelerating Value with Two-Sided Risk, designed to help executives and boards of health systems prepare for and successfully manage second-generation Accountable Care Organizations (ACOs) and other “two-sided” risk contracts. As new risk models for value-based care are implemented in hospitals across the country, and may soon be mandatory, The Governance Institute’s Toolbook gives healthcare organizations tips on how to operate two-sided risk arrangements and better position themselves for more opportunities to attain meaningful cost control.

The number of Medicare ACOs has grown more than 1,400 percent over the past several years, increasing from 61 in 2011 to 923 in 2017. Despite the incredible growth in coordinated and value-based care contracts, these alternative payment models have not yet resulted in compelling savings. To overhaul and simplify the ACO system, the Centers for Medicare & Medicaid Services (CMS) proposed a new rule in August 2018 that will require accountable care organizations, the majority of which are in one-sided risk or shared savings programs, to enter into two-sided risk contracts after only two years in the program. As a result of the new rule, these traditionally upside-only arrangements would be replaced with those that include some form of downside risk. Evidence shows that such arrangements provide more opportunity to cut expenses and help bend the cost curve over time.

“The healthcare industry has seen a lot of growth in two-sided risk arrangements in recent years, and that will likely continue, especially considering the new CMS rule,” said Jona Raasch, CEO of The Governance Institute. “For many boards and CEOs, the prospect of managing new risk models is a huge and often daunting undertaking, but a necessary step in decreasing overall costs. Our goal with this new resource is to ensure that our members are armed with the right background and foundational information they need to make careful and strategic decisions about entering into two-sided risk contracts, now and into the future.”

The Toolbook and its accompanying discussion guide explore the implications of two-sided risk and provide healthcare executives and boards with an achievable checklist of next steps and capabilities they need to implement to successfully enter into risk-based contracts. The Toolbook also includes case examples of what leading organizations, like Hackensack Meridian Health, are doing to ensure the right infrastructure is in place to support these new contracts.

“Two-sided risk contracts are still challenging structures for provider organizations,” said Debra Ryan of Kaufman, Hall & Associates, LLC, a contributor to the publication. “But as the industry gradually shifts to assuming greater risk over time, it’s mission critical that healthcare leaders not only understand why this trend is significant to the industry, but also that they have the necessary tools and information to move forward in this new era of healthcare. The Governance Institute’s Toolbook will be a significant resource for organizations looking to take such steps and build out risk-based capabilities.”

To access the Strategy Toolbook: Accelerating Value with Two-Sided Risk and discussion guide, visit here.