Risky Business: Why Contessa Takes on Risk to Treat Patients at Home
Healthcare is inherently associated with risk – which isn’t necessarily a bad thing. Risk requires us to consider all options carefully when making an important healthcare decision. Whether it is clinical, financial or regulatory, those of us working in healthcare must be calculative in order to make the risks we take as low as possible, or at the very least, as clear as possible.
Contessa feels that pressure. In developing financial risk-bearing infrastructure for our partnerships, we know our model must be as unique as the settings in which we provide care. We want to incentivize health systems to support patients receiving care at home, even when their facilities aren’t at capacity. For payers, we want to ensure that if patients must be readmitted or have unnecessary utilization of services, we shoulder that burden.
By managing patient care in the home more intensely than the industry standard, we have a greater level of confidence in the outcomes we can achieve and the costs we can contain. Ultimately, these results give Contessa the opportunity to control our care processes more closely and make the case for assuming greater financial risk.
How Our Risk Assumption Model Works
Contessa’s typical risk-based arrangement includes a 30-day or 60-day capitated payment. The cost of our care includes all related services provided throughout the episode of care rather than a charge for each service. The payment incorporates expenses the hospital generally incurs at admission (staffing, supplies, etc.), the logistics of transferring a patient home, and the costs of post-acute care like skilled nursing. We also factor in the cost of potential readmissions, in the unlikely event that someone must return to the hospital for care. Each of these elements is accounted for when we establish the historical baseline of costs that were incurred in a traditional care delivery system. We then prospectively discount that historical baseline to generate the agreed-upon episodic cap with the health plan (or at-risk entity).
If complications occur during a person’s episode of care and the cost of that care ends up being higher cost than the episodic cap, Contessa is financially responsible for the excess cost. We shoulder that risk because we believe in the impact of our care and, more often than not, because we can dictate the trajectory of effective, high-quality care.
As other services, like palliative care and skilled nursing, continue to shift toward convenient and safe settings like the home, the industry is seeing a rise in global capitation arrangements like the risk-based model Contessa uses. We see a need for even more aggressive shifts to value-based arrangements, creating uniquely designed healthcare reimbursement structures that suit all parties involved. It will be difficult for providers with a significant fixed-cost infrastructure to move to home-based care models without changing the way they are paid. If providers manage the patients appropriately, the results will be a more efficient financial outcome for the provider and payor with a higher-quality outcome.
Editor’s note: This post has been reposted to emphasize its timeliness and importance.