Spring 2018 Generations

Fundamentals of Community-Based Managed Care: A Field Guide

Making the Business Case for CBO Services By Victor Tabbush

The return on investment to any CBO’s health partner will have to weigh factors that vary across populations served and payer context.

C ommunity-based organizations (CBO) that provide support services such as care transi- tions, chronic disease management, medication management, nutrition, transportation, home and family assessments, health benefts counseling, and caregiver support are now well-positioned to exploit the fnancial opportunities created by healthcare reform by providing these services in partnerships with the healthcare sector. The potential of these partnerships ema- nates from two forces: the evolution to new pay- ment models stressing value, which has placed the medical sector at increased risk for the over- all costs of medical care (new payment models include capitation, global and bundled payments, shared-savings arrangements, and penalties for hospital readmissions); and the growing evi- dence that CBO services can reduce the costs of such care by decreasing unnecessary medical care. This article explains the method, steps, and key success factors for CBOs to create and make a business case to potential healthcare partners.

Defining the Business Case A business case for CBO services exists when CBOs create value for potential clients and partners (hospitals, post–acute care providers, provider networks, and insurers) that is larger than what the clients will be asked to pay for these services. In short, the CBO must present an attractive return on investment (ROI) to the healthcare partner. Most often, the business case starts with the recognition that a patient popula- tion, e.g., a cohort of complex care individuals having high needs, creates a fnancial burden that can be reduced with home- and community- based services compared to usual care. The case is then built around the CBO’s capacity to mitigate that burden by averting costly medical events through the services it provides. Services that are effective in generat- ing benefts seldom do so without expense. So in making the business case, any payment the CBO demands must be subtracted from the gross ben- efts it confers on its partner. The case will not be

abstract Due to recent policy and payment reforms, community-based organizations (CBO) that provide support services increasingly can capitalize on new business opportunities with partners in the healthcare sector. But they must demonstrate that they are creating significant economic benefits for their business partners. This article explains the method, steps, and key success factors for CBOs to cre- ate and make a business case to potential partners in the healthcare sector | key words : community- based organizations, healthcare partners, support services, payment models, return on investment

Volume 42  . Number 1 | 27

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