Population Health Management Accounting: Financial Analysis for Improving Health
Outcomes at Scale
Introduction
Healthcare organizations increasingly recognize a responsibility for overall health of the
populations they serve rather than fee-for-service transactions alone. Proactively managing
health outcomes across large patient groups through medical, social and policy interventions
shows promise for reducing costs while enhancing well-being. Yet traditional accounting
models emphasize clinical volumes and revenues without accounting for community health
impacts or risk exposures. New frameworks capturing preventive benefits alongside
treatment costs can help align scarce resources optimally across whole populations. This
paper explores specialized accounting approaches tailored for large-scale population health
management initiatives aiming to systematically strengthen communities' wellness in
measurable ways.
Defining Population Health Management
Population health management entails:
- Prospectively identifying high-risk patients likely to generate high medical expenditures
through risk-stratification analytics.
- Coordinating multidisciplinary care teams spanning medical, behavioral, public health to
address both clinical and social needs.
- Implementing evidence-based prevention programs targeting modifiable health risks like
obesity, smoking, physical inactivity.
- Monitoring quality metrics and health outcomes across large patient panels longitudinally
rather than individual transactions.
- Employing data analytics to continually evaluate impact of interventions on health status,
medical expenditures of defined populations over time.
Rather than focus on profit per visit or procedure, population health management (PHM)
aims to measurably improve value through lower total costs and better outcomes at
community scale by addressing clinical and non-clinical root causes collectively.
Financial Challenges in Population Health Management
While promise exists, transitioning payment models and mindsets pose difficulties including:
- Attribution methodologies to assign populations and shared financial accountability remain
opaque.
- Limited data and expertise in many regions to perform advanced risk-stratification,
predictive modeling.
- Upfront investments in coordination infrastructure consume resources before savings
realized.
- Preventive programs face short-term costs despite long-term return on investment.
- Attribution windows and savings calculation methodologies create compliance
complexities.
- Incentives misaligned if organizations can drop high-risk individuals or measures outcomes
in silos.
Specialized accounting frameworks are needed to overcome prevailing fee-for-service
paradigm, track multisector impacts across populations and guide strategic decision-making
supporting health at scale.
Accounting Frameworks for Population Health
New accounting models adapted for population health management may incorporate:
Shared Savings Accounting
Retrospectively allocate dollars saved against risk-adjusted spending targets across partners
investing in prevention/care coordination programs:
- Risk-adjust expenditure baselines factoring social determinants, clinical risk-profiles.
- Continuously reconcile actual costs versus expected amounts across attributed
populations.
- Savings bonuses fund reinvestment in community-based services through gainsharing
arrangements.
Risk-adjusted Budgeting
Prospectively stratify populations and forecast total costs considering unavoidable economic
burden of chronic conditions and social issues at community level:
- Budget contingencies addressing unpredictable concentration of high-cost cases.
- Resources allocated proportional to budget impact rather than short-term revenues alone.
Return on Community Investment
Assign financial values to tangible outcomes beyond costs like quality-adjusted life years,
productive years gained, societal participation from prevention program enrollment:
- Modelling incorporates monetized impacts far beyond traditional balance sheets.
- Population health investments competively assessed based on risk-adjusted savings plus
value of added life/well-being years produced.
Deploying these accounting frameworks tailored for managing and measuring health at scale
can guide optimal long-term strategic partnerships, policies and investments across
providers, insurers and community sectors leveraging collective capabilities.
Additional Financial Considerations
Other accounting factors pertinent for population health management embrace:
Partnership Arrangements
Clearly define terms for multidisciplinary collaborations delineating expectations, risk-
corridors and sharing proportion of costs and value generated.
Capital Planning
Incorporate facilities, technology and community infrastructure reinvestments based on
projected expenditures by geography over decades.
Grants/Philanthropy Accounting
Ensure philanthropic and public funding supports needs-based population services
complying with intended multisector partnership models and outcomes metrics. Resources
Deployment
Right-size staffing needs by location, optimizing clinical, community health workers and
others’ skills deployment aligned with predictive modeling identifying high-impact initiatives.
These supplemental pillars help optimize financial sustainability of comprehensive
prevention strategies by tracking impacts far beyond clinical transactions alone.
Implementation Challenges
While holding promise, meaningful implementation of population health management
accounting also encounters difficulties:
Attribution Complexities
Challenges exist in fairly assigning populations and expenditures, avoiding risk selection
while incentivizing health gains across sectors.
Data Integration Barriers
Incorporating social/economic determinants requires overcoming siloes between clinical,
public health and other sectoral databases.
Workforce Transformation Needs
Successfully embedding non-traditional community services demands extensive workforce
training, changed care coordination models.
Short-term Orientation
Proving population health strategies’ value through accounting demands multi-year
timeframes but pressure exists for immediate cost-control.
Adjusting Payment Incentives
Transitioning from fee-for-service requires coordinated policy reforms from insurers aligning
reimbursement with long-term prevention goals.
Addressing Social Drivers
Non-medical factors heavily influence health yet fall outside direct control of healthcare
institutions.
While not insurmountable, thoughtfully overcoming these kinds of cultural, data-related and
policy obstacles will be key to unlocking population health management’s promise through
financially-driven organizational commitments and reforms.
Case Study: Group Health’s Advanced Primary Care
A standout model embedding specialized PHM accounting is Group Health Cooperative’s
Advanced Primary Care initiative in Washington State. Key aspects include:
- Attributed patient panels receive proactive chronic illness management; care managers
address social needs.
- Multi-year budgeting looks beyond episodes to populations’ total cost trajectory with aging.
- Risk-stratification identifies high-risk/high-cost individuals for intensive interventions.
- Shared-savings retrospectively rewards reduced total cost of care growth versus controls
each year.
- Quality tied to incentives through standardized outcome metrics spanning prevention,
chronic disease, self-management.
Early results show improved quality scores, cost trends “bending the cost curve” for the
sickest, highest-risk participants - evidence PHM’s value when aligned incentives support
population-scale work. Ongoing evaluation tracks longer-term impacts.
Recommendations
To strengthen health system capabilities managing and accounting for health outcomes
across communities through evidence-based multisector initiatives, a few recommendations
emerge:
- Standardize population segmentation, total cost attribution/reconciliation methods
facilitating collaboration, resource sharing.
- Pilot multi-year propective budgeting/financial planning frameworks for large patient
populations and partnerships.
- Incorporate social determinants indicators and cost-benefit modeling of community
interventions into core accounting practices longitudinally.
- Develop common metrics/dashboards continuously evaluating quality, health status, cost
impacts of multidisciplinary programs at large scale.
- Reform payment away from volume to value through bonuses, shared-savings for meeting
multi-year prevention targets across attributed populations.
- Build analytics/data sharing infrastructure between clinical, public health, social services
and others to integrate social/medical data for strategic decision-making.
- Promote policy reforms, research incentivizing partnerships addressing high-impact drivers
of expenditures upstream through coalitions spanning healthcare institutions and wider
community.
Progressively implementing specialized population health management accounting
frameworks can strengthen organizational understanding and reporting of investments
aimed at long-term improvements in overall health system performance and community well-
being.
Conclusion
As entire communities’ wellness emerges as a key responsibility, new accounting models
are needed focusing not just on individual transactions but aggregated impacts over large
populations. Frameworks incorporating predictive modeling, multi-year budgeting, shared
savings and social determinants facilitate optimizing often limited resources across sectors
emphasizing cost-effective prevention. Overcoming data and paradigm shifts demands
cooperation addressing challenges at policy and cultural levels. Yet transitioning payment
away from volume and grounding strategic decisions in PHM accounting’s broader view of
value holds promise enabling healthcare and partners’ collective efforts to substantially
improve population health outcomes in measurable ways. With sustained commitment to
reform, health systems can gain the financial tools aligning multisector strategies and
partnerships most powerfully preventing suffering while reaping economic and human
returns for communities served.
Healthcare organizations increasingly recognize a responsibility for overall health of the
populations they serve rather than fee-for-service transactions alone. Proactively managing
health outcomes across large patient groups through medical, social and policy interventions
shows promise for reducing costs while enhancing well-being. Yet traditional accounting
models emphasize clinical volumes and revenues without accounting for community health
impacts or risk exposures. New frameworks capturing preventive benefits alongside
treatment costs can help align scarce resources optimally across whole populations. This
paper explores specialized accounting approaches tailored for large-scale population health
management initiatives aiming to systematically strengthen communities' wellness in
measurable ways.
Defining Population Health Management
Population health management entails:
- Prospectively identifying high-risk patients likely to generate high medical expenditures
through risk-stratification analytics.
- Coordinating multidisciplinary care teams spanning medical, behavioral, public health to
address both clinical and social needs.
- Implementing evidence-based prevention programs targeting modifiable health risks like
obesity, smoking, physical inactivity.
- Monitoring quality metrics and health outcomes across large patient panels longitudinally
rather than individual transactions.
- Employing data analytics to continually evaluate impact of interventions on health status,
medical expenditures of defined populations over time.
Rather than focus on profit per visit or procedure, population health management (PHM)
aims to measurably improve value through lower total costs and better outcomes at
community scale by addressing clinical and non-clinical root causes collectively.
Financial Challenges in Population Health Management
While promise exists, transitioning payment models and mindsets pose difficulties including:
- Attribution methodologies to assign populations and shared financial accountability remain
opaque.
- Limited data and expertise in many regions to perform advanced risk-stratification,
predictive modeling.
- Upfront investments in coordination infrastructure consume resources before savings
realized.
- Preventive programs face short-term costs despite long-term return on investment.
- Attribution windows and savings calculation methodologies create compliance
complexities.
- Incentives misaligned if organizations can drop high-risk individuals or measures outcomes
in silos.
Specialized accounting frameworks are needed to overcome prevailing fee-for-service
paradigm, track multisector impacts across populations and guide strategic decision-making
supporting health at scale.
Accounting Frameworks for Population Health
New accounting models adapted for population health management may incorporate:
Shared Savings Accounting
Retrospectively allocate dollars saved against risk-adjusted spending targets across partners
investing in prevention/care coordination programs:
- Risk-adjust expenditure baselines factoring social determinants, clinical risk-profiles.
- Continuously reconcile actual costs versus expected amounts across attributed
populations.
- Savings bonuses fund reinvestment in community-based services through gainsharing
arrangements.
Risk-adjusted Budgeting
Prospectively stratify populations and forecast total costs considering unavoidable economic
burden of chronic conditions and social issues at community level:
- Budget contingencies addressing unpredictable concentration of high-cost cases.
- Resources allocated proportional to budget impact rather than short-term revenues alone.
Return on Community Investment
Assign financial values to tangible outcomes beyond costs like quality-adjusted life years,
productive years gained, societal participation from prevention program enrollment:
- Modelling incorporates monetized impacts far beyond traditional balance sheets.
- Population health investments competively assessed based on risk-adjusted savings plus
value of added life/well-being years produced.
Deploying these accounting frameworks tailored for managing and measuring health at scale
can guide optimal long-term strategic partnerships, policies and investments across
providers, insurers and community sectors leveraging collective capabilities.
Additional Financial Considerations
Other accounting factors pertinent for population health management embrace:
Partnership Arrangements
Clearly define terms for multidisciplinary collaborations delineating expectations, risk-
corridors and sharing proportion of costs and value generated.
Capital Planning
Incorporate facilities, technology and community infrastructure reinvestments based on
projected expenditures by geography over decades.
Grants/Philanthropy Accounting
Ensure philanthropic and public funding supports needs-based population services
complying with intended multisector partnership models and outcomes metrics. Resources
Deployment
Right-size staffing needs by location, optimizing clinical, community health workers and
others’ skills deployment aligned with predictive modeling identifying high-impact initiatives.
These supplemental pillars help optimize financial sustainability of comprehensive
prevention strategies by tracking impacts far beyond clinical transactions alone.
Implementation Challenges
While holding promise, meaningful implementation of population health management
accounting also encounters difficulties:
Attribution Complexities
Challenges exist in fairly assigning populations and expenditures, avoiding risk selection
while incentivizing health gains across sectors.
Data Integration Barriers
Incorporating social/economic determinants requires overcoming siloes between clinical,
public health and other sectoral databases.
Workforce Transformation Needs
Successfully embedding non-traditional community services demands extensive workforce
training, changed care coordination models.
Short-term Orientation
Proving population health strategies’ value through accounting demands multi-year
timeframes but pressure exists for immediate cost-control.
Adjusting Payment Incentives
Transitioning from fee-for-service requires coordinated policy reforms from insurers aligning
reimbursement with long-term prevention goals.
Addressing Social Drivers
Non-medical factors heavily influence health yet fall outside direct control of healthcare
institutions.
While not insurmountable, thoughtfully overcoming these kinds of cultural, data-related and
policy obstacles will be key to unlocking population health management’s promise through
financially-driven organizational commitments and reforms.
Case Study: Group Health’s Advanced Primary Care
A standout model embedding specialized PHM accounting is Group Health Cooperative’s
Advanced Primary Care initiative in Washington State. Key aspects include:
- Attributed patient panels receive proactive chronic illness management; care managers
address social needs.
- Multi-year budgeting looks beyond episodes to populations’ total cost trajectory with aging.
- Risk-stratification identifies high-risk/high-cost individuals for intensive interventions.
- Shared-savings retrospectively rewards reduced total cost of care growth versus controls
each year.
- Quality tied to incentives through standardized outcome metrics spanning prevention,
chronic disease, self-management.
Early results show improved quality scores, cost trends “bending the cost curve” for the
sickest, highest-risk participants - evidence PHM’s value when aligned incentives support
population-scale work. Ongoing evaluation tracks longer-term impacts.
Recommendations
To strengthen health system capabilities managing and accounting for health outcomes
across communities through evidence-based multisector initiatives, a few recommendations
emerge:
- Standardize population segmentation, total cost attribution/reconciliation methods
facilitating collaboration, resource sharing.
- Pilot multi-year propective budgeting/financial planning frameworks for large patient
populations and partnerships.
- Incorporate social determinants indicators and cost-benefit modeling of community
interventions into core accounting practices longitudinally.
- Develop common metrics/dashboards continuously evaluating quality, health status, cost
impacts of multidisciplinary programs at large scale.
- Reform payment away from volume to value through bonuses, shared-savings for meeting
multi-year prevention targets across attributed populations.
- Build analytics/data sharing infrastructure between clinical, public health, social services
and others to integrate social/medical data for strategic decision-making.
- Promote policy reforms, research incentivizing partnerships addressing high-impact drivers
of expenditures upstream through coalitions spanning healthcare institutions and wider
community.
Progressively implementing specialized population health management accounting
frameworks can strengthen organizational understanding and reporting of investments
aimed at long-term improvements in overall health system performance and community well-
being.
Conclusion
As entire communities’ wellness emerges as a key responsibility, new accounting models
are needed focusing not just on individual transactions but aggregated impacts over large
populations. Frameworks incorporating predictive modeling, multi-year budgeting, shared
savings and social determinants facilitate optimizing often limited resources across sectors
emphasizing cost-effective prevention. Overcoming data and paradigm shifts demands
cooperation addressing challenges at policy and cultural levels. Yet transitioning payment
away from volume and grounding strategic decisions in PHM accounting’s broader view of
value holds promise enabling healthcare and partners’ collective efforts to substantially
improve population health outcomes in measurable ways. With sustained commitment to
reform, health systems can gain the financial tools aligning multisector strategies and
partnerships most powerfully preventing suffering while reaping economic and human
returns for communities served.
Healthcare organizations increasingly recognize a responsibility for overall health of the
populations they serve rather than fee-for-service transactions alone. Proactively managing
health outcomes across large patient groups through medical, social and policy interventions
shows promise for reducing costs while enhancing well-being. Yet traditional accounting
models emphasize clinical volumes and revenues without accounting for community health
impacts or risk exposures. New frameworks capturing preventive benefits alongside
treatment costs can help align scarce resources optimally across whole populations. This
paper explores specialized accounting approaches tailored for large-scale population health
management initiatives aiming to systematically strengthen communities' wellness in
measurable ways.
Defining Population Health Management
Population health management entails:
- Prospectively identifying high-risk patients likely to generate high medical expenditures
through risk-stratification analytics.
- Coordinating multidisciplinary care teams spanning medical, behavioral, public health to
address both clinical and social needs.
- Implementing evidence-based prevention programs targeting modifiable health risks like
obesity, smoking, physical inactivity.
- Monitoring quality metrics and health outcomes across large patient panels longitudinally
rather than individual transactions.
- Employing data analytics to continually evaluate impact of interventions on health status,
medical expenditures of defined populations over time.
Rather than focus on profit per visit or procedure, population health management (PHM)
aims to measurably improve value through lower total costs and better outcomes at
community scale by addressing clinical and non-clinical root causes collectively.
Financial Challenges in Population Health Management
While promise exists, transitioning payment models and mindsets pose difficulties including:
- Attribution methodologies to assign populations and shared financial accountability remain
opaque.
- Limited data and expertise in many regions to perform advanced risk-stratification,
predictive modeling.
- Upfront investments in coordination infrastructure consume resources before savings
realized.
- Preventive programs face short-term costs despite long-term return on investment.
- Attribution windows and savings calculation methodologies create compliance
complexities.
- Incentives misaligned if organizations can drop high-risk individuals or measures outcomes
in silos.
Specialized accounting frameworks are needed to overcome prevailing fee-for-service
paradigm, track multisector impacts across populations and guide strategic decision-making
supporting health at scale.
Accounting Frameworks for Population Health
New accounting models adapted for population health management may incorporate:
Shared Savings Accounting
Retrospectively allocate dollars saved against risk-adjusted spending targets across partners
investing in prevention/care coordination programs:
- Risk-adjust expenditure baselines factoring social determinants, clinical risk-profiles.
- Continuously reconcile actual costs versus expected amounts across attributed
populations.
- Savings bonuses fund reinvestment in community-based services through gainsharing
arrangements.
Risk-adjusted Budgeting
Prospectively stratify populations and forecast total costs considering unavoidable economic
burden of chronic conditions and social issues at community level:
- Budget contingencies addressing unpredictable concentration of high-cost cases.
- Resources allocated proportional to budget impact rather than short-term revenues alone.
Return on Community Investment
Assign financial values to tangible outcomes beyond costs like quality-adjusted life years,
productive years gained, societal participation from prevention program enrollment:
- Modelling incorporates monetized impacts far beyond traditional balance sheets.
- Population health investments competively assessed based on risk-adjusted savings plus
value of added life/well-being years produced.
Deploying these accounting frameworks tailored for managing and measuring health at scale
can guide optimal long-term strategic partnerships, policies and investments across
providers, insurers and community sectors leveraging collective capabilities.
Additional Financial Considerations
Other accounting factors pertinent for population health management embrace:
Partnership Arrangements
Clearly define terms for multidisciplinary collaborations delineating expectations, risk-
corridors and sharing proportion of costs and value generated.
Capital Planning
Incorporate facilities, technology and community infrastructure reinvestments based on
projected expenditures by geography over decades.
Grants/Philanthropy Accounting
Ensure philanthropic and public funding supports needs-based population services
complying with intended multisector partnership models and outcomes metrics. Resources
Deployment
Right-size staffing needs by location, optimizing clinical, community health workers and
others’ skills deployment aligned with predictive modeling identifying high-impact initiatives.
These supplemental pillars help optimize financial sustainability of comprehensive
prevention strategies by tracking impacts far beyond clinical transactions alone.
Implementation Challenges
While holding promise, meaningful implementation of population health management
accounting also encounters difficulties:
Attribution Complexities
Challenges exist in fairly assigning populations and expenditures, avoiding risk selection
while incentivizing health gains across sectors.
Data Integration Barriers
Incorporating social/economic determinants requires overcoming siloes between clinical,
public health and other sectoral databases.
Workforce Transformation Needs
Successfully embedding non-traditional community services demands extensive workforce
training, changed care coordination models.
Short-term Orientation
Proving population health strategies’ value through accounting demands multi-year
timeframes but pressure exists for immediate cost-control.
Adjusting Payment Incentives
Transitioning from fee-for-service requires coordinated policy reforms from insurers aligning
reimbursement with long-term prevention goals.
Addressing Social Drivers
Non-medical factors heavily influence health yet fall outside direct control of healthcare
institutions.
While not insurmountable, thoughtfully overcoming these kinds of cultural, data-related and
policy obstacles will be key to unlocking population health management’s promise through
financially-driven organizational commitments and reforms.
Case Study: Group Health’s Advanced Primary Care
A standout model embedding specialized PHM accounting is Group Health Cooperative’s
Advanced Primary Care initiative in Washington State. Key aspects include:
- Attributed patient panels receive proactive chronic illness management; care managers
address social needs.
- Multi-year budgeting looks beyond episodes to populations’ total cost trajectory with aging.
- Risk-stratification identifies high-risk/high-cost individuals for intensive interventions.
- Shared-savings retrospectively rewards reduced total cost of care growth versus controls
each year.
- Quality tied to incentives through standardized outcome metrics spanning prevention,
chronic disease, self-management.
Early results show improved quality scores, cost trends “bending the cost curve” for the
sickest, highest-risk participants - evidence PHM’s value when aligned incentives support
population-scale work. Ongoing evaluation tracks longer-term impacts.
Recommendations
To strengthen health system capabilities managing and accounting for health outcomes
across communities through evidence-based multisector initiatives, a few recommendations
emerge:
- Standardize population segmentation, total cost attribution/reconciliation methods
facilitating collaboration, resource sharing.
- Pilot multi-year propective budgeting/financial planning frameworks for large patient
populations and partnerships.
- Incorporate social determinants indicators and cost-benefit modeling of community
interventions into core accounting practices longitudinally.
- Develop common metrics/dashboards continuously evaluating quality, health status, cost
impacts of multidisciplinary programs at large scale.
- Reform payment away from volume to value through bonuses, shared-savings for meeting
multi-year prevention targets across attributed populations.
- Build analytics/data sharing infrastructure between clinical, public health, social services
and others to integrate social/medical data for strategic decision-making.
- Promote policy reforms, research incentivizing partnerships addressing high-impact drivers
of expenditures upstream through coalitions spanning healthcare institutions and wider
community.
Progressively implementing specialized population health management accounting
frameworks can strengthen organizational understanding and reporting of investments
aimed at long-term improvements in overall health system performance and community well-
being.
Conclusion
As entire communities’ wellness emerges as a key responsibility, new accounting models
are needed focusing not just on individual transactions but aggregated impacts over large
populations. Frameworks incorporating predictive modeling, multi-year budgeting, shared
savings and social determinants facilitate optimizing often limited resources across sectors
emphasizing cost-effective prevention. Overcoming data and paradigm shifts demands
cooperation addressing challenges at policy and cultural levels. Yet transitioning payment
away from volume and grounding strategic decisions in PHM accounting’s broader view of
value holds promise enabling healthcare and partners’ collective efforts to substantially
improve population health outcomes in measurable ways. With sustained commitment to
reform, health systems can gain the financial tools aligning multisector strategies and
partnerships most powerfully preventing suffering while reaping economic and human
returns for communities served.
Healthcare organizations increasingly recognize a responsibility for overall health of the
populations they serve rather than fee-for-service transactions alone. Proactively managing
health outcomes across large patient groups through medical, social and policy interventions
shows promise for reducing costs while enhancing well-being. Yet traditional accounting
models emphasize clinical volumes and revenues without accounting for community health
impacts or risk exposures. New frameworks capturing preventive benefits alongside
treatment costs can help align scarce resources optimally across whole populations. This
paper explores specialized accounting approaches tailored for large-scale population health
management initiatives aiming to systematically strengthen communities' wellness in
measurable ways.
Defining Population Health Management
Population health management entails:
- Prospectively identifying high-risk patients likely to generate high medical expenditures
through risk-stratification analytics.
- Coordinating multidisciplinary care teams spanning medical, behavioral, public health to
address both clinical and social needs.
- Implementing evidence-based prevention programs targeting modifiable health risks like
obesity, smoking, physical inactivity.
- Monitoring quality metrics and health outcomes across large patient panels longitudinally
rather than individual transactions.
- Employing data analytics to continually evaluate impact of interventions on health status,
medical expenditures of defined populations over time.
Rather than focus on profit per visit or procedure, population health management (PHM)
aims to measurably improve value through lower total costs and better outcomes at
community scale by addressing clinical and non-clinical root causes collectively.
Financial Challenges in Population Health Management
While promise exists, transitioning payment models and mindsets pose difficulties including:
- Attribution methodologies to assign populations and shared financial accountability remain
opaque.
- Limited data and expertise in many regions to perform advanced risk-stratification,
predictive modeling.
- Upfront investments in coordination infrastructure consume resources before savings
realized.
- Preventive programs face short-term costs despite long-term return on investment.
- Attribution windows and savings calculation methodologies create compliance
complexities.
- Incentives misaligned if organizations can drop high-risk individuals or measures outcomes
in silos.
Specialized accounting frameworks are needed to overcome prevailing fee-for-service
paradigm, track multisector impacts across populations and guide strategic decision-making
supporting health at scale.
Accounting Frameworks for Population Health
New accounting models adapted for population health management may incorporate:
Shared Savings Accounting
Retrospectively allocate dollars saved against risk-adjusted spending targets across partners
investing in prevention/care coordination programs:
- Risk-adjust expenditure baselines factoring social determinants, clinical risk-profiles.
- Continuously reconcile actual costs versus expected amounts across attributed
populations.
- Savings bonuses fund reinvestment in community-based services through gainsharing
arrangements.
Risk-adjusted Budgeting
Prospectively stratify populations and forecast total costs considering unavoidable economic
burden of chronic conditions and social issues at community level:
- Budget contingencies addressing unpredictable concentration of high-cost cases.
- Resources allocated proportional to budget impact rather than short-term revenues alone.
Return on Community Investment
Assign financial values to tangible outcomes beyond costs like quality-adjusted life years,
productive years gained, societal participation from prevention program enrollment:
- Modelling incorporates monetized impacts far beyond traditional balance sheets.
- Population health investments competively assessed based on risk-adjusted savings plus
value of added life/well-being years produced.
Deploying these accounting frameworks tailored for managing and measuring health at scale
can guide optimal long-term strategic partnerships, policies and investments across
providers, insurers and community sectors leveraging collective capabilities.
Additional Financial Considerations
Other accounting factors pertinent for population health management embrace:
Partnership Arrangements
Clearly define terms for multidisciplinary collaborations delineating expectations, risk-
corridors and sharing proportion of costs and value generated.
Capital Planning
Incorporate facilities, technology and community infrastructure reinvestments based on
projected expenditures by geography over decades.
Grants/Philanthropy Accounting
Ensure philanthropic and public funding supports needs-based population services
complying with intended multisector partnership models and outcomes metrics. Resources
Deployment
Right-size staffing needs by location, optimizing clinical, community health workers and
others’ skills deployment aligned with predictive modeling identifying high-impact initiatives.
These supplemental pillars help optimize financial sustainability of comprehensive
prevention strategies by tracking impacts far beyond clinical transactions alone.
Implementation Challenges
While holding promise, meaningful implementation of population health management
accounting also encounters difficulties:
Attribution Complexities
Challenges exist in fairly assigning populations and expenditures, avoiding risk selection
while incentivizing health gains across sectors.
Data Integration Barriers
Incorporating social/economic determinants requires overcoming siloes between clinical,
public health and other sectoral databases.
Workforce Transformation Needs
Successfully embedding non-traditional community services demands extensive workforce
training, changed care coordination models.
Short-term Orientation
Proving population health strategies’ value through accounting demands multi-year
timeframes but pressure exists for immediate cost-control.
Adjusting Payment Incentives
Transitioning from fee-for-service requires coordinated policy reforms from insurers aligning
reimbursement with long-term prevention goals.
Addressing Social Drivers
Non-medical factors heavily influence health yet fall outside direct control of healthcare
institutions.
While not insurmountable, thoughtfully overcoming these kinds of cultural, data-related and
policy obstacles will be key to unlocking population health management’s promise through
financially-driven organizational commitments and reforms.
Case Study: Group Health’s Advanced Primary Care
A standout model embedding specialized PHM accounting is Group Health Cooperative’s
Advanced Primary Care initiative in Washington State. Key aspects include:
- Attributed patient panels receive proactive chronic illness management; care managers
address social needs.
- Multi-year budgeting looks beyond episodes to populations’ total cost trajectory with aging.
- Risk-stratification identifies high-risk/high-cost individuals for intensive interventions.
- Shared-savings retrospectively rewards reduced total cost of care growth versus controls
each year.
- Quality tied to incentives through standardized outcome metrics spanning prevention,
chronic disease, self-management.
Early results show improved quality scores, cost trends “bending the cost curve” for the
sickest, highest-risk participants - evidence PHM’s value when aligned incentives support
population-scale work. Ongoing evaluation tracks longer-term impacts.
Recommendations
To strengthen health system capabilities managing and accounting for health outcomes
across communities through evidence-based multisector initiatives, a few recommendations
emerge:
- Standardize population segmentation, total cost attribution/reconciliation methods
facilitating collaboration, resource sharing.
- Pilot multi-year propective budgeting/financial planning frameworks for large patient
populations and partnerships.
- Incorporate social determinants indicators and cost-benefit modeling of community
interventions into core accounting practices longitudinally.
- Develop common metrics/dashboards continuously evaluating quality, health status, cost
impacts of multidisciplinary programs at large scale.
- Reform payment away from volume to value through bonuses, shared-savings for meeting
multi-year prevention targets across attributed populations.
- Build analytics/data sharing infrastructure between clinical, public health, social services
and others to integrate social/medical data for strategic decision-making.
- Promote policy reforms, research incentivizing partnerships addressing high-impact drivers
of expenditures upstream through coalitions spanning healthcare institutions and wider
community.
Progressively implementing specialized population health management accounting
frameworks can strengthen organizational understanding and reporting of investments
aimed at long-term improvements in overall health system performance and community well-
being.
Conclusion
As entire communities’ wellness emerges as a key responsibility, new accounting models
are needed focusing not just on individual transactions but aggregated impacts over large
populations. Frameworks incorporating predictive modeling, multi-year budgeting, shared
savings and social determinants facilitate optimizing often limited resources across sectors
emphasizing cost-effective prevention. Overcoming data and paradigm shifts demands
cooperation addressing challenges at policy and cultural levels. Yet transitioning payment
away from volume and grounding strategic decisions in PHM accounting’s broader view of
value holds promise enabling healthcare and partners’ collective efforts to substantially
improve population health outcomes in measurable ways. With sustained commitment to
reform, health systems can gain the financial tools aligning multisector strategies and
partnerships most powerfully preventing suffering while reaping economic and human
returns for communities served.
Healthcare organizations increasingly recognize a responsibility for overall health of the
populations they serve rather than fee-for-service transactions alone. Proactively managing
health outcomes across large patient groups through medical, social and policy interventions
shows promise for reducing costs while enhancing well-being. Yet traditional accounting
models emphasize clinical volumes and revenues without accounting for community health
impacts or risk exposures. New frameworks capturing preventive benefits alongside
treatment costs can help align scarce resources optimally across whole populations. This
paper explores specialized accounting approaches tailored for large-scale population health
management initiatives aiming to systematically strengthen communities' wellness in
measurable ways.
Defining Population Health Management
Population health management entails:
- Prospectively identifying high-risk patients likely to generate high medical expenditures
through risk-stratification analytics.
- Coordinating multidisciplinary care teams spanning medical, behavioral, public health to
address both clinical and social needs.
- Implementing evidence-based prevention programs targeting modifiable health risks like
obesity, smoking, physical inactivity.
- Monitoring quality metrics and health outcomes across large patient panels longitudinally
rather than individual transactions.
- Employing data analytics to continually evaluate impact of interventions on health status,
medical expenditures of defined populations over time.
Rather than focus on profit per visit or procedure, population health management (PHM)
aims to measurably improve value through lower total costs and better outcomes at
community scale by addressing clinical and non-clinical root causes collectively.
Financial Challenges in Population Health Management
While promise exists, transitioning payment models and mindsets pose difficulties including:
- Attribution methodologies to assign populations and shared financial accountability remain
opaque.
- Limited data and expertise in many regions to perform advanced risk-stratification,
predictive modeling.
- Upfront investments in coordination infrastructure consume resources before savings
realized.
- Preventive programs face short-term costs despite long-term return on investment.
- Attribution windows and savings calculation methodologies create compliance
complexities.
- Incentives misaligned if organizations can drop high-risk individuals or measures outcomes
in silos.
Specialized accounting frameworks are needed to overcome prevailing fee-for-service
paradigm, track multisector impacts across populations and guide strategic decision-making
supporting health at scale.
Accounting Frameworks for Population Health
New accounting models adapted for population health management may incorporate:
Shared Savings Accounting
Retrospectively allocate dollars saved against risk-adjusted spending targets across partners
investing in prevention/care coordination programs:
- Risk-adjust expenditure baselines factoring social determinants, clinical risk-profiles.
- Continuously reconcile actual costs versus expected amounts across attributed
populations.
- Savings bonuses fund reinvestment in community-based services through gainsharing
arrangements.
Risk-adjusted Budgeting
Prospectively stratify populations and forecast total costs considering unavoidable economic
burden of chronic conditions and social issues at community level:
- Budget contingencies addressing unpredictable concentration of high-cost cases.
- Resources allocated proportional to budget impact rather than short-term revenues alone.
Return on Community Investment
Assign financial values to tangible outcomes beyond costs like quality-adjusted life years,
productive years gained, societal participation from prevention program enrollment:
- Modelling incorporates monetized impacts far beyond traditional balance sheets.
- Population health investments competively assessed based on risk-adjusted savings plus
value of added life/well-being years produced.
Deploying these accounting frameworks tailored for managing and measuring health at scale
can guide optimal long-term strategic partnerships, policies and investments across
providers, insurers and community sectors leveraging collective capabilities.
Additional Financial Considerations
Other accounting factors pertinent for population health management embrace:
Partnership Arrangements
Clearly define terms for multidisciplinary collaborations delineating expectations, risk-
corridors and sharing proportion of costs and value generated.
Capital Planning
Incorporate facilities, technology and community infrastructure reinvestments based on
projected expenditures by geography over decades.
Grants/Philanthropy Accounting
Ensure philanthropic and public funding supports needs-based population services
complying with intended multisector partnership models and outcomes metrics. Resources
Deployment
Right-size staffing needs by location, optimizing clinical, community health workers and
others’ skills deployment aligned with predictive modeling identifying high-impact initiatives.
These supplemental pillars help optimize financial sustainability of comprehensive
prevention strategies by tracking impacts far beyond clinical transactions alone.
Implementation Challenges
While holding promise, meaningful implementation of population health management
accounting also encounters difficulties:
Attribution Complexities
Challenges exist in fairly assigning populations and expenditures, avoiding risk selection
while incentivizing health gains across sectors.
Data Integration Barriers
Incorporating social/economic determinants requires overcoming siloes between clinical,
public health and other sectoral databases.
Workforce Transformation Needs
Successfully embedding non-traditional community services demands extensive workforce
training, changed care coordination models.
Short-term Orientation
Proving population health strategies’ value through accounting demands multi-year
timeframes but pressure exists for immediate cost-control.
Adjusting Payment Incentives
Transitioning from fee-for-service requires coordinated policy reforms from insurers aligning
reimbursement with long-term prevention goals.
Addressing Social Drivers
Non-medical factors heavily influence health yet fall outside direct control of healthcare
institutions.
While not insurmountable, thoughtfully overcoming these kinds of cultural, data-related and
policy obstacles will be key to unlocking population health management’s promise through
financially-driven organizational commitments and reforms.
Case Study: Group Health’s Advanced Primary Care
A standout model embedding specialized PHM accounting is Group Health Cooperative’s
Advanced Primary Care initiative in Washington State. Key aspects include:
- Attributed patient panels receive proactive chronic illness management; care managers
address social needs.
- Multi-year budgeting looks beyond episodes to populations’ total cost trajectory with aging.
- Risk-stratification identifies high-risk/high-cost individuals for intensive interventions.
- Shared-savings retrospectively rewards reduced total cost of care growth versus controls
each year.
- Quality tied to incentives through standardized outcome metrics spanning prevention,
chronic disease, self-management.
Early results show improved quality scores, cost trends “bending the cost curve” for the
sickest, highest-risk participants - evidence PHM’s value when aligned incentives support
population-scale work. Ongoing evaluation tracks longer-term impacts.
Recommendations
To strengthen health system capabilities managing and accounting for health outcomes
across communities through evidence-based multisector initiatives, a few recommendations
emerge:
- Standardize population segmentation, total cost attribution/reconciliation methods
facilitating collaboration, resource sharing.
- Pilot multi-year propective budgeting/financial planning frameworks for large patient
populations and partnerships.
- Incorporate social determinants indicators and cost-benefit modeling of community
interventions into core accounting practices longitudinally.
- Develop common metrics/dashboards continuously evaluating quality, health status, cost
impacts of multidisciplinary programs at large scale.
- Reform payment away from volume to value through bonuses, shared-savings for meeting
multi-year prevention targets across attributed populations.
- Build analytics/data sharing infrastructure between clinical, public health, social services
and others to integrate social/medical data for strategic decision-making.
- Promote policy reforms, research incentivizing partnerships addressing high-impact drivers
of expenditures upstream through coalitions spanning healthcare institutions and wider
community.
Progressively implementing specialized population health management accounting
frameworks can strengthen organizational understanding and reporting of investments
aimed at long-term improvements in overall health system performance and community well-
being.
Conclusion
As entire communities’ wellness emerges as a key responsibility, new accounting models
are needed focusing not just on individual transactions but aggregated impacts over large
populations. Frameworks incorporating predictive modeling, multi-year budgeting, shared
savings and social determinants facilitate optimizing often limited resources across sectors
emphasizing cost-effective prevention. Overcoming data and paradigm shifts demands
cooperation addressing challenges at policy and cultural levels. Yet transitioning payment
away from volume and grounding strategic decisions in PHM accounting’s broader view of
value holds promise enabling healthcare and partners’ collective efforts to substantially
improve population health outcomes in measurable ways. With sustained commitment to
reform, health systems can gain the financial tools aligning multisector strategies and
partnerships most powerfully preventing suffering while reaping economic and human
returns for communities served.
Healthcare organizations increasingly recognize a responsibility for overall health of the
populations they serve rather than fee-for-service transactions alone. Proactively managing
health outcomes across large patient groups through medical, social and policy interventions
shows promise for reducing costs while enhancing well-being. Yet traditional accounting
models emphasize clinical volumes and revenues without accounting for community health
impacts or risk exposures. New frameworks capturing preventive benefits alongside
treatment costs can help align scarce resources optimally across whole populations. This
paper explores specialized accounting approaches tailored for large-scale population health
management initiatives aiming to systematically strengthen communities' wellness in
measurable ways.
Defining Population Health Management
Population health management entails:
- Prospectively identifying high-risk patients likely to generate high medical expenditures
through risk-stratification analytics.
- Coordinating multidisciplinary care teams spanning medical, behavioral, public health to
address both clinical and social needs.
- Implementing evidence-based prevention programs targeting modifiable health risks like
obesity, smoking, physical inactivity.
- Monitoring quality metrics and health outcomes across large patient panels longitudinally
rather than individual transactions.
- Employing data analytics to continually evaluate impact of interventions on health status,
medical expenditures of defined populations over time.
Rather than focus on profit per visit or procedure, population health management (PHM)
aims to measurably improve value through lower total costs and better outcomes at
community scale by addressing clinical and non-clinical root causes collectively.
Financial Challenges in Population Health Management
While promise exists, transitioning payment models and mindsets pose difficulties including:
- Attribution methodologies to assign populations and shared financial accountability remain
opaque.
- Limited data and expertise in many regions to perform advanced risk-stratification,
predictive modeling.
- Upfront investments in coordination infrastructure consume resources before savings
realized.
- Preventive programs face short-term costs despite long-term return on investment.
- Attribution windows and savings calculation methodologies create compliance
complexities.
- Incentives misaligned if organizations can drop high-risk individuals or measures outcomes
in silos.
Specialized accounting frameworks are needed to overcome prevailing fee-for-service
paradigm, track multisector impacts across populations and guide strategic decision-making
supporting health at scale.
Accounting Frameworks for Population Health
New accounting models adapted for population health management may incorporate:
Shared Savings Accounting
Retrospectively allocate dollars saved against risk-adjusted spending targets across partners
investing in prevention/care coordination programs:
- Risk-adjust expenditure baselines factoring social determinants, clinical risk-profiles.
- Continuously reconcile actual costs versus expected amounts across attributed
populations.
- Savings bonuses fund reinvestment in community-based services through gainsharing
arrangements.
Risk-adjusted Budgeting
Prospectively stratify populations and forecast total costs considering unavoidable economic
burden of chronic conditions and social issues at community level:
- Budget contingencies addressing unpredictable concentration of high-cost cases.
- Resources allocated proportional to budget impact rather than short-term revenues alone.
Return on Community Investment
Assign financial values to tangible outcomes beyond costs like quality-adjusted life years,
productive years gained, societal participation from prevention program enrollment:
- Modelling incorporates monetized impacts far beyond traditional balance sheets.
- Population health investments competively assessed based on risk-adjusted savings plus
value of added life/well-being years produced.
Deploying these accounting frameworks tailored for managing and measuring health at scale
can guide optimal long-term strategic partnerships, policies and investments across
providers, insurers and community sectors leveraging collective capabilities.
Additional Financial Considerations
Other accounting factors pertinent for population health management embrace:
Partnership Arrangements
Clearly define terms for multidisciplinary collaborations delineating expectations, risk-
corridors and sharing proportion of costs and value generated.
Capital Planning
Incorporate facilities, technology and community infrastructure reinvestments based on
projected expenditures by geography over decades.
Grants/Philanthropy Accounting
Ensure philanthropic and public funding supports needs-based population services
complying with intended multisector partnership models and outcomes metrics. Resources
Deployment
Right-size staffing needs by location, optimizing clinical, community health workers and
others’ skills deployment aligned with predictive modeling identifying high-impact initiatives.
These supplemental pillars help optimize financial sustainability of comprehensive
prevention strategies by tracking impacts far beyond clinical transactions alone.
Implementation Challenges
While holding promise, meaningful implementation of population health management
accounting also encounters difficulties:
Attribution Complexities
Challenges exist in fairly assigning populations and expenditures, avoiding risk selection
while incentivizing health gains across sectors.
Data Integration Barriers
Incorporating social/economic determinants requires overcoming siloes between clinical,
public health and other sectoral databases.
Workforce Transformation Needs
Successfully embedding non-traditional community services demands extensive workforce
training, changed care coordination models.
Short-term Orientation
Proving population health strategies’ value through accounting demands multi-year
timeframes but pressure exists for immediate cost-control.
Adjusting Payment Incentives
Transitioning from fee-for-service requires coordinated policy reforms from insurers aligning
reimbursement with long-term prevention goals.
Addressing Social Drivers
Non-medical factors heavily influence health yet fall outside direct control of healthcare
institutions.
While not insurmountable, thoughtfully overcoming these kinds of cultural, data-related and
policy obstacles will be key to unlocking population health management’s promise through
financially-driven organizational commitments and reforms.
Case Study: Group Health’s Advanced Primary Care
A standout model embedding specialized PHM accounting is Group Health Cooperative’s
Advanced Primary Care initiative in Washington State. Key aspects include:
- Attributed patient panels receive proactive chronic illness management; care managers
address social needs.
- Multi-year budgeting looks beyond episodes to populations’ total cost trajectory with aging.
- Risk-stratification identifies high-risk/high-cost individuals for intensive interventions.
- Shared-savings retrospectively rewards reduced total cost of care growth versus controls
each year.
- Quality tied to incentives through standardized outcome metrics spanning prevention,
chronic disease, self-management.
Early results show improved quality scores, cost trends “bending the cost curve” for the
sickest, highest-risk participants - evidence PHM’s value when aligned incentives support
population-scale work. Ongoing evaluation tracks longer-term impacts.
Recommendations
To strengthen health system capabilities managing and accounting for health outcomes
across communities through evidence-based multisector initiatives, a few recommendations
emerge:
- Standardize population segmentation, total cost attribution/reconciliation methods
facilitating collaboration, resource sharing.
- Pilot multi-year propective budgeting/financial planning frameworks for large patient
populations and partnerships.
- Incorporate social determinants indicators and cost-benefit modeling of community
interventions into core accounting practices longitudinally.
- Develop common metrics/dashboards continuously evaluating quality, health status, cost
impacts of multidisciplinary programs at large scale.
- Reform payment away from volume to value through bonuses, shared-savings for meeting
multi-year prevention targets across attributed populations.
- Build analytics/data sharing infrastructure between clinical, public health, social services
and others to integrate social/medical data for strategic decision-making.
- Promote policy reforms, research incentivizing partnerships addressing high-impact drivers
of expenditures upstream through coalitions spanning healthcare institutions and wider
community.
Progressively implementing specialized population health management accounting
frameworks can strengthen organizational understanding and reporting of investments
aimed at long-term improvements in overall health system performance and community well-
being.
Conclusion
As entire communities’ wellness emerges as a key responsibility, new accounting models
are needed focusing not just on individual transactions but aggregated impacts over large
populations. Frameworks incorporating predictive modeling, multi-year budgeting, shared
savings and social determinants facilitate optimizing often limited resources across sectors
emphasizing cost-effective prevention. Overcoming data and paradigm shifts demands
cooperation addressing challenges at policy and cultural levels. Yet transitioning payment
away from volume and grounding strategic decisions in PHM accounting’s broader view of
value holds promise enabling healthcare and partners’ collective efforts to substantially
improve population health outcomes in measurable ways. With sustained commitment to
reform, health systems can gain the financial tools aligning multisector strategies and
partnerships most powerfully preventing suffering while reaping economic and human
returns for communities served.
Healthcare organizations increasingly recognize a responsibility for overall health of the
populations they serve rather than fee-for-service transactions alone. Proactively managing
health outcomes across large patient groups through medical, social and policy interventions
shows promise for reducing costs while enhancing well-being. Yet traditional accounting
models emphasize clinical volumes and revenues without accounting for community health
impacts or risk exposures. New frameworks capturing preventive benefits alongside
treatment costs can help align scarce resources optimally across whole populations. This
paper explores specialized accounting approaches tailored for large-scale population health
management initiatives aiming to systematically strengthen communities' wellness in
measurable ways.
Defining Population Health Management
Population health management entails:
- Prospectively identifying high-risk patients likely to generate high medical expenditures
through risk-stratification analytics.
- Coordinating multidisciplinary care teams spanning medical, behavioral, public health to
address both clinical and social needs.
- Implementing evidence-based prevention programs targeting modifiable health risks like
obesity, smoking, physical inactivity.
- Monitoring quality metrics and health outcomes across large patient panels longitudinally
rather than individual transactions.
- Employing data analytics to continually evaluate impact of interventions on health status,
medical expenditures of defined populations over time.
Rather than focus on profit per visit or procedure, population health management (PHM)
aims to measurably improve value through lower total costs and better outcomes at
community scale by addressing clinical and non-clinical root causes collectively.
Financial Challenges in Population Health Management
While promise exists, transitioning payment models and mindsets pose difficulties including:
- Attribution methodologies to assign populations and shared financial accountability remain
opaque.
- Limited data and expertise in many regions to perform advanced risk-stratification,
predictive modeling.
- Upfront investments in coordination infrastructure consume resources before savings
realized.
- Preventive programs face short-term costs despite long-term return on investment.
- Attribution windows and savings calculation methodologies create compliance
complexities.
- Incentives misaligned if organizations can drop high-risk individuals or measures outcomes
in silos.
Specialized accounting frameworks are needed to overcome prevailing fee-for-service
paradigm, track multisector impacts across populations and guide strategic decision-making
supporting health at scale.
Accounting Frameworks for Population Health
New accounting models adapted for population health management may incorporate:
Shared Savings Accounting
Retrospectively allocate dollars saved against risk-adjusted spending targets across partners
investing in prevention/care coordination programs:
- Risk-adjust expenditure baselines factoring social determinants, clinical risk-profiles.
- Continuously reconcile actual costs versus expected amounts across attributed
populations.
- Savings bonuses fund reinvestment in community-based services through gainsharing
arrangements.
Risk-adjusted Budgeting
Prospectively stratify populations and forecast total costs considering unavoidable economic
burden of chronic conditions and social issues at community level:
- Budget contingencies addressing unpredictable concentration of high-cost cases.
- Resources allocated proportional to budget impact rather than short-term revenues alone.
Return on Community Investment
Assign financial values to tangible outcomes beyond costs like quality-adjusted life years,
productive years gained, societal participation from prevention program enrollment:
- Modelling incorporates monetized impacts far beyond traditional balance sheets.
- Population health investments competively assessed based on risk-adjusted savings plus
value of added life/well-being years produced.
Deploying these accounting frameworks tailored for managing and measuring health at scale
can guide optimal long-term strategic partnerships, policies and investments across
providers, insurers and community sectors leveraging collective capabilities.
Additional Financial Considerations
Other accounting factors pertinent for population health management embrace:
Partnership Arrangements
Clearly define terms for multidisciplinary collaborations delineating expectations, risk-
corridors and sharing proportion of costs and value generated.
Capital Planning
Incorporate facilities, technology and community infrastructure reinvestments based on
projected expenditures by geography over decades.
Grants/Philanthropy Accounting
Ensure philanthropic and public funding supports needs-based population services
complying with intended multisector partnership models and outcomes metrics. Resources
Deployment
Right-size staffing needs by location, optimizing clinical, community health workers and
others’ skills deployment aligned with predictive modeling identifying high-impact initiatives.
These supplemental pillars help optimize financial sustainability of comprehensive
prevention strategies by tracking impacts far beyond clinical transactions alone.
Implementation Challenges
While holding promise, meaningful implementation of population health management
accounting also encounters difficulties:
Attribution Complexities
Challenges exist in fairly assigning populations and expenditures, avoiding risk selection
while incentivizing health gains across sectors.
Data Integration Barriers
Incorporating social/economic determinants requires overcoming siloes between clinical,
public health and other sectoral databases.
Workforce Transformation Needs
Successfully embedding non-traditional community services demands extensive workforce
training, changed care coordination models.
Short-term Orientation
Proving population health strategies’ value through accounting demands multi-year
timeframes but pressure exists for immediate cost-control.
Adjusting Payment Incentives
Transitioning from fee-for-service requires coordinated policy reforms from insurers aligning
reimbursement with long-term prevention goals.
Addressing Social Drivers
Non-medical factors heavily influence health yet fall outside direct control of healthcare
institutions.
While not insurmountable, thoughtfully overcoming these kinds of cultural, data-related and
policy obstacles will be key to unlocking population health management’s promise through
financially-driven organizational commitments and reforms.
Case Study: Group Health’s Advanced Primary Care
A standout model embedding specialized PHM accounting is Group Health Cooperative’s
Advanced Primary Care initiative in Washington State. Key aspects include:
- Attributed patient panels receive proactive chronic illness management; care managers
address social needs.
- Multi-year budgeting looks beyond episodes to populations’ total cost trajectory with aging.
- Risk-stratification identifies high-risk/high-cost individuals for intensive interventions.
- Shared-savings retrospectively rewards reduced total cost of care growth versus controls
each year.
- Quality tied to incentives through standardized outcome metrics spanning prevention,
chronic disease, self-management.
Early results show improved quality scores, cost trends “bending the cost curve” for the
sickest, highest-risk participants - evidence PHM’s value when aligned incentives support
population-scale work. Ongoing evaluation tracks longer-term impacts.
Recommendations
To strengthen health system capabilities managing and accounting for health outcomes
across communities through evidence-based multisector initiatives, a few recommendations
emerge:
- Standardize population segmentation, total cost attribution/reconciliation methods
facilitating collaboration, resource sharing.
- Pilot multi-year propective budgeting/financial planning frameworks for large patient
populations and partnerships.
- Incorporate social determinants indicators and cost-benefit modeling of community
interventions into core accounting practices longitudinally.
- Develop common metrics/dashboards continuously evaluating quality, health status, cost
impacts of multidisciplinary programs at large scale.
- Reform payment away from volume to value through bonuses, shared-savings for meeting
multi-year prevention targets across attributed populations.
- Build analytics/data sharing infrastructure between clinical, public health, social services
and others to integrate social/medical data for strategic decision-making.
- Promote policy reforms, research incentivizing partnerships addressing high-impact drivers
of expenditures upstream through coalitions spanning healthcare institutions and wider
community.
Progressively implementing specialized population health management accounting
frameworks can strengthen organizational understanding and reporting of investments
aimed at long-term improvements in overall health system performance and community well-
being.
Conclusion
As entire communities’ wellness emerges as a key responsibility, new accounting models
are needed focusing not just on individual transactions but aggregated impacts over large
populations. Frameworks incorporating predictive modeling, multi-year budgeting, shared
savings and social determinants facilitate optimizing often limited resources across sectors
emphasizing cost-effective prevention. Overcoming data and paradigm shifts demands
cooperation addressing challenges at policy and cultural levels. Yet transitioning payment
away from volume and grounding strategic decisions in PHM accounting’s broader view of
value holds promise enabling healthcare and partners’ collective efforts to substantially
improve population health outcomes in measurable ways. With sustained commitment to
reform, health systems can gain the financial tools aligning multisector strategies and
partnerships most powerfully preventing suffering while reaping economic and human
returns for communities served.
Healthcare organizations increasingly recognize a responsibility for overall health of the
populations they serve rather than fee-for-service transactions alone. Proactively managing
health outcomes across large patient groups through medical, social and policy interventions
shows promise for reducing costs while enhancing well-being. Yet traditional accounting
models emphasize clinical volumes and revenues without accounting for community health
impacts or risk exposures. New frameworks capturing preventive benefits alongside
treatment costs can help align scarce resources optimally across whole populations. This
paper explores specialized accounting approaches tailored for large-scale population health
management initiatives aiming to systematically strengthen communities' wellness in
measurable ways.
Defining Population Health Management
Population health management entails:
- Prospectively identifying high-risk patients likely to generate high medical expenditures
through risk-stratification analytics.
- Coordinating multidisciplinary care teams spanning medical, behavioral, public health to
address both clinical and social needs.
- Implementing evidence-based prevention programs targeting modifiable health risks like
obesity, smoking, physical inactivity.
- Monitoring quality metrics and health outcomes across large patient panels longitudinally
rather than individual transactions.
- Employing data analytics to continually evaluate impact of interventions on health status,
medical expenditures of defined populations over time.
Rather than focus on profit per visit or procedure, population health management (PHM)
aims to measurably improve value through lower total costs and better outcomes at
community scale by addressing clinical and non-clinical root causes collectively.
Financial Challenges in Population Health Management
While promise exists, transitioning payment models and mindsets pose difficulties including:
- Attribution methodologies to assign populations and shared financial accountability remain
opaque.
- Limited data and expertise in many regions to perform advanced risk-stratification,
predictive modeling.
- Upfront investments in coordination infrastructure consume resources before savings
realized.
- Preventive programs face short-term costs despite long-term return on investment.
- Attribution windows and savings calculation methodologies create compliance
complexities.
- Incentives misaligned if organizations can drop high-risk individuals or measures outcomes
in silos.
Specialized accounting frameworks are needed to overcome prevailing fee-for-service
paradigm, track multisector impacts across populations and guide strategic decision-making
supporting health at scale.
Accounting Frameworks for Population Health
New accounting models adapted for population health management may incorporate:
Shared Savings Accounting
Retrospectively allocate dollars saved against risk-adjusted spending targets across partners
investing in prevention/care coordination programs:
- Risk-adjust expenditure baselines factoring social determinants, clinical risk-profiles.
- Continuously reconcile actual costs versus expected amounts across attributed
populations.
- Savings bonuses fund reinvestment in community-based services through gainsharing
arrangements.
Risk-adjusted Budgeting
Prospectively stratify populations and forecast total costs considering unavoidable economic
burden of chronic conditions and social issues at community level:
- Budget contingencies addressing unpredictable concentration of high-cost cases.
- Resources allocated proportional to budget impact rather than short-term revenues alone.
Return on Community Investment
Assign financial values to tangible outcomes beyond costs like quality-adjusted life years,
productive years gained, societal participation from prevention program enrollment:
- Modelling incorporates monetized impacts far beyond traditional balance sheets.
- Population health investments competively assessed based on risk-adjusted savings plus
value of added life/well-being years produced.
Deploying these accounting frameworks tailored for managing and measuring health at scale
can guide optimal long-term strategic partnerships, policies and investments across
providers, insurers and community sectors leveraging collective capabilities.
Additional Financial Considerations
Other accounting factors pertinent for population health management embrace:
Partnership Arrangements
Clearly define terms for multidisciplinary collaborations delineating expectations, risk-
corridors and sharing proportion of costs and value generated.
Capital Planning
Incorporate facilities, technology and community infrastructure reinvestments based on
projected expenditures by geography over decades.
Grants/Philanthropy Accounting
Ensure philanthropic and public funding supports needs-based population services
complying with intended multisector partnership models and outcomes metrics. Resources
Deployment
Right-size staffing needs by location, optimizing clinical, community health workers and
others’ skills deployment aligned with predictive modeling identifying high-impact initiatives.
These supplemental pillars help optimize financial sustainability of comprehensive
prevention strategies by tracking impacts far beyond clinical transactions alone.
Implementation Challenges
While holding promise, meaningful implementation of population health management
accounting also encounters difficulties:
Attribution Complexities
Challenges exist in fairly assigning populations and expenditures, avoiding risk selection
while incentivizing health gains across sectors.
Data Integration Barriers
Incorporating social/economic determinants requires overcoming siloes between clinical,
public health and other sectoral databases.
Workforce Transformation Needs
Successfully embedding non-traditional community services demands extensive workforce
training, changed care coordination models.
Short-term Orientation
Proving population health strategies’ value through accounting demands multi-year
timeframes but pressure exists for immediate cost-control.
Adjusting Payment Incentives
Transitioning from fee-for-service requires coordinated policy reforms from insurers aligning
reimbursement with long-term prevention goals.
Addressing Social Drivers
Non-medical factors heavily influence health yet fall outside direct control of healthcare
institutions.
While not insurmountable, thoughtfully overcoming these kinds of cultural, data-related and
policy obstacles will be key to unlocking population health management’s promise through
financially-driven organizational commitments and reforms.
Case Study: Group Health’s Advanced Primary Care
A standout model embedding specialized PHM accounting is Group Health Cooperative’s
Advanced Primary Care initiative in Washington State. Key aspects include:
- Attributed patient panels receive proactive chronic illness management; care managers
address social needs.
- Multi-year budgeting looks beyond episodes to populations’ total cost trajectory with aging.
- Risk-stratification identifies high-risk/high-cost individuals for intensive interventions.
- Shared-savings retrospectively rewards reduced total cost of care growth versus controls
each year.
- Quality tied to incentives through standardized outcome metrics spanning prevention,
chronic disease, self-management.
Early results show improved quality scores, cost trends “bending the cost curve” for the
sickest, highest-risk participants - evidence PHM’s value when aligned incentives support
population-scale work. Ongoing evaluation tracks longer-term impacts.
Recommendations
To strengthen health system capabilities managing and accounting for health outcomes
across communities through evidence-based multisector initiatives, a few recommendations
emerge:
- Standardize population segmentation, total cost attribution/reconciliation methods
facilitating collaboration, resource sharing.
- Pilot multi-year propective budgeting/financial planning frameworks for large patient
populations and partnerships.
- Incorporate social determinants indicators and cost-benefit modeling of community
interventions into core accounting practices longitudinally.
- Develop common metrics/dashboards continuously evaluating quality, health status, cost
impacts of multidisciplinary programs at large scale.
- Reform payment away from volume to value through bonuses, shared-savings for meeting
multi-year prevention targets across attributed populations.
- Build analytics/data sharing infrastructure between clinical, public health, social services
and others to integrate social/medical data for strategic decision-making.
- Promote policy reforms, research incentivizing partnerships addressing high-impact drivers
of expenditures upstream through coalitions spanning healthcare institutions and wider
community.
Progressively implementing specialized population health management accounting
frameworks can strengthen organizational understanding and reporting of investments
aimed at long-term improvements in overall health system performance and community well-
being.
Conclusion
As entire communities’ wellness emerges as a key responsibility, new accounting models
are needed focusing not just on individual transactions but aggregated impacts over large
populations. Frameworks incorporating predictive modeling, multi-year budgeting, shared
savings and social determinants facilitate optimizing often limited resources across sectors
emphasizing cost-effective prevention. Overcoming data and paradigm shifts demands
cooperation addressing challenges at policy and cultural levels. Yet transitioning payment
away from volume and grounding strategic decisions in PHM accounting’s broader view of
value holds promise enabling healthcare and partners’ collective efforts to substantially
improve population health outcomes in measurable ways. With sustained commitment to
reform, health systems can gain the financial tools aligning multisector strategies and
partnerships most powerfully preventing suffering while reaping economic and human
returns for communities served.
Healthcare organizations increasingly recognize a responsibility for overall health of the
populations they serve rather than fee-for-service transactions alone. Proactively managing
health outcomes across large patient groups through medical, social and policy interventions
shows promise for reducing costs while enhancing well-being. Yet traditional accounting
models emphasize clinical volumes and revenues without accounting for community health
impacts or risk exposures. New frameworks capturing preventive benefits alongside
treatment costs can help align scarce resources optimally across whole populations. This
paper explores specialized accounting approaches tailored for large-scale population health
management initiatives aiming to systematically strengthen communities' wellness in
measurable ways.
Defining Population Health Management
Population health management entails:
- Prospectively identifying high-risk patients likely to generate high medical expenditures
through risk-stratification analytics.
- Coordinating multidisciplinary care teams spanning medical, behavioral, public health to
address both clinical and social needs.
- Implementing evidence-based prevention programs targeting modifiable health risks like
obesity, smoking, physical inactivity.
- Monitoring quality metrics and health outcomes across large patient panels longitudinally
rather than individual transactions.
- Employing data analytics to continually evaluate impact of interventions on health status,
medical expenditures of defined populations over time.
Rather than focus on profit per visit or procedure, population health management (PHM)
aims to measurably improve value through lower total costs and better outcomes at
community scale by addressing clinical and non-clinical root causes collectively.
Financial Challenges in Population Health Management
While promise exists, transitioning payment models and mindsets pose difficulties including:
- Attribution methodologies to assign populations and shared financial accountability remain
opaque.
- Limited data and expertise in many regions to perform advanced risk-stratification,
predictive modeling.
- Upfront investments in coordination infrastructure consume resources before savings
realized.
- Preventive programs face short-term costs despite long-term return on investment.
- Attribution windows and savings calculation methodologies create compliance
complexities.
- Incentives misaligned if organizations can drop high-risk individuals or measures outcomes
in silos.
Specialized accounting frameworks are needed to overcome prevailing fee-for-service
paradigm, track multisector impacts across populations and guide strategic decision-making
supporting health at scale.
Accounting Frameworks for Population Health
New accounting models adapted for population health management may incorporate:
Shared Savings Accounting
Retrospectively allocate dollars saved against risk-adjusted spending targets across partners
investing in prevention/care coordination programs:
- Risk-adjust expenditure baselines factoring social determinants, clinical risk-profiles.
- Continuously reconcile actual costs versus expected amounts across attributed
populations.
- Savings bonuses fund reinvestment in community-based services through gainsharing
arrangements.
Risk-adjusted Budgeting
Prospectively stratify populations and forecast total costs considering unavoidable economic
burden of chronic conditions and social issues at community level:
- Budget contingencies addressing unpredictable concentration of high-cost cases.
- Resources allocated proportional to budget impact rather than short-term revenues alone.
Return on Community Investment
Assign financial values to tangible outcomes beyond costs like quality-adjusted life years,
productive years gained, societal participation from prevention program enrollment:
- Modelling incorporates monetized impacts far beyond traditional balance sheets.
- Population health investments competively assessed based on risk-adjusted savings plus
value of added life/well-being years produced.
Deploying these accounting frameworks tailored for managing and measuring health at scale
can guide optimal long-term strategic partnerships, policies and investments across
providers, insurers and community sectors leveraging collective capabilities.
Additional Financial Considerations
Other accounting factors pertinent for population health management embrace:
Partnership Arrangements
Clearly define terms for multidisciplinary collaborations delineating expectations, risk-
corridors and sharing proportion of costs and value generated.
Capital Planning
Incorporate facilities, technology and community infrastructure reinvestments based on
projected expenditures by geography over decades.
Grants/Philanthropy Accounting
Ensure philanthropic and public funding supports needs-based population services
complying with intended multisector partnership models and outcomes metrics. Resources
Deployment
Right-size staffing needs by location, optimizing clinical, community health workers and
others’ skills deployment aligned with predictive modeling identifying high-impact initiatives.
These supplemental pillars help optimize financial sustainability of comprehensive
prevention strategies by tracking impacts far beyond clinical transactions alone.
Implementation Challenges
While holding promise, meaningful implementation of population health management
accounting also encounters difficulties:
Attribution Complexities
Challenges exist in fairly assigning populations and expenditures, avoiding risk selection
while incentivizing health gains across sectors.
Data Integration Barriers
Incorporating social/economic determinants requires overcoming siloes between clinical,
public health and other sectoral databases.
Workforce Transformation Needs
Successfully embedding non-traditional community services demands extensive workforce
training, changed care coordination models.
Short-term Orientation
Proving population health strategies’ value through accounting demands multi-year
timeframes but pressure exists for immediate cost-control.
Adjusting Payment Incentives
Transitioning from fee-for-service requires coordinated policy reforms from insurers aligning
reimbursement with long-term prevention goals.
Addressing Social Drivers
Non-medical factors heavily influence health yet fall outside direct control of healthcare
institutions.
While not insurmountable, thoughtfully overcoming these kinds of cultural, data-related and
policy obstacles will be key to unlocking population health management’s promise through
financially-driven organizational commitments and reforms.
Case Study: Group Health’s Advanced Primary Care
A standout model embedding specialized PHM accounting is Group Health Cooperative’s
Advanced Primary Care initiative in Washington State. Key aspects include:
- Attributed patient panels receive proactive chronic illness management; care managers
address social needs.
- Multi-year budgeting looks beyond episodes to populations’ total cost trajectory with aging.
- Risk-stratification identifies high-risk/high-cost individuals for intensive interventions.
- Shared-savings retrospectively rewards reduced total cost of care growth versus controls
each year.
- Quality tied to incentives through standardized outcome metrics spanning prevention,
chronic disease, self-management.
Early results show improved quality scores, cost trends “bending the cost curve” for the
sickest, highest-risk participants - evidence PHM’s value when aligned incentives support
population-scale work. Ongoing evaluation tracks longer-term impacts.
Recommendations
To strengthen health system capabilities managing and accounting for health outcomes
across communities through evidence-based multisector initiatives, a few recommendations
emerge:
- Standardize population segmentation, total cost attribution/reconciliation methods
facilitating collaboration, resource sharing.
- Pilot multi-year propective budgeting/financial planning frameworks for large patient
populations and partnerships.
- Incorporate social determinants indicators and cost-benefit modeling of community
interventions into core accounting practices longitudinally.
- Develop common metrics/dashboards continuously evaluating quality, health status, cost
impacts of multidisciplinary programs at large scale.
- Reform payment away from volume to value through bonuses, shared-savings for meeting
multi-year prevention targets across attributed populations.
- Build analytics/data sharing infrastructure between clinical, public health, social services
and others to integrate social/medical data for strategic decision-making.
- Promote policy reforms, research incentivizing partnerships addressing high-impact drivers
of expenditures upstream through coalitions spanning healthcare institutions and wider
community.
Progressively implementing specialized population health management accounting
frameworks can strengthen organizational understanding and reporting of investments
aimed at long-term improvements in overall health system performance and community well-
being.
Conclusion
As entire communities’ wellness emerges as a key responsibility, new accounting models
are needed focusing not just on individual transactions but aggregated impacts over large
populations. Frameworks incorporating predictive modeling, multi-year budgeting, shared
savings and social determinants facilitate optimizing often limited resources across sectors
emphasizing cost-effective prevention. Overcoming data and paradigm shifts demands
cooperation addressing challenges at policy and cultural levels. Yet transitioning payment
away from volume and grounding strategic decisions in PHM accounting’s broader view of
value holds promise enabling healthcare and partners’ collective efforts to substantially
improve population health outcomes in measurable ways. With sustained commitment to
reform, health systems can gain the financial tools aligning multisector strategies and
partnerships most powerfully preventing suffering while reaping economic and human
returns for communities served.
Healthcare organizations increasingly recognize a responsibility for overall health of the
populations they serve rather than fee-for-service transactions alone. Proactively managing
health outcomes across large patient groups through medical, social and policy interventions
shows promise for reducing costs while enhancing well-being. Yet traditional accounting
models emphasize clinical volumes and revenues without accounting for community health
impacts or risk exposures. New frameworks capturing preventive benefits alongside
treatment costs can help align scarce resources optimally across whole populations. This
paper explores specialized accounting approaches tailored for large-scale population health
management initiatives aiming to systematically strengthen communities' wellness in
measurable ways.
Defining Population Health Management
Population health management entails:
- Prospectively identifying high-risk patients likely to generate high medical expenditures
through risk-stratification analytics.
- Coordinating multidisciplinary care teams spanning medical, behavioral, public health to
address both clinical and social needs.
- Implementing evidence-based prevention programs targeting modifiable health risks like
obesity, smoking, physical inactivity.
- Monitoring quality metrics and health outcomes across large patient panels longitudinally
rather than individual transactions.
- Employing data analytics to continually evaluate impact of interventions on health status,
medical expenditures of defined populations over time.
Rather than focus on profit per visit or procedure, population health management (PHM)
aims to measurably improve value through lower total costs and better outcomes at
community scale by addressing clinical and non-clinical root causes collectively.
Financial Challenges in Population Health Management
While promise exists, transitioning payment models and mindsets pose difficulties including:
- Attribution methodologies to assign populations and shared financial accountability remain
opaque.
- Limited data and expertise in many regions to perform advanced risk-stratification,
predictive modeling.
- Upfront investments in coordination infrastructure consume resources before savings
realized.
- Preventive programs face short-term costs despite long-term return on investment.
- Attribution windows and savings calculation methodologies create compliance
complexities.
- Incentives misaligned if organizations can drop high-risk individuals or measures outcomes
in silos.
Specialized accounting frameworks are needed to overcome prevailing fee-for-service
paradigm, track multisector impacts across populations and guide strategic decision-making
supporting health at scale.
Accounting Frameworks for Population Health
New accounting models adapted for population health management may incorporate:
Shared Savings Accounting
Retrospectively allocate dollars saved against risk-adjusted spending targets across partners
investing in prevention/care coordination programs:
- Risk-adjust expenditure baselines factoring social determinants, clinical risk-profiles.
- Continuously reconcile actual costs versus expected amounts across attributed
populations.
- Savings bonuses fund reinvestment in community-based services through gainsharing
arrangements.
Risk-adjusted Budgeting
Prospectively stratify populations and forecast total costs considering unavoidable economic
burden of chronic conditions and social issues at community level:
- Budget contingencies addressing unpredictable concentration of high-cost cases.
- Resources allocated proportional to budget impact rather than short-term revenues alone.
Return on Community Investment
Assign financial values to tangible outcomes beyond costs like quality-adjusted life years,
productive years gained, societal participation from prevention program enrollment:
- Modelling incorporates monetized impacts far beyond traditional balance sheets.
- Population health investments competively assessed based on risk-adjusted savings plus
value of added life/well-being years produced.
Deploying these accounting frameworks tailored for managing and measuring health at scale
can guide optimal long-term strategic partnerships, policies and investments across
providers, insurers and community sectors leveraging collective capabilities.
Additional Financial Considerations
Other accounting factors pertinent for population health management embrace:
Partnership Arrangements
Clearly define terms for multidisciplinary collaborations delineating expectations, risk-
corridors and sharing proportion of costs and value generated.
Capital Planning
Incorporate facilities, technology and community infrastructure reinvestments based on
projected expenditures by geography over decades.
Grants/Philanthropy Accounting
Ensure philanthropic and public funding supports needs-based population services
complying with intended multisector partnership models and outcomes metrics. Resources
Deployment
Right-size staffing needs by location, optimizing clinical, community health workers and
others’ skills deployment aligned with predictive modeling identifying high-impact initiatives.
These supplemental pillars help optimize financial sustainability of comprehensive
prevention strategies by tracking impacts far beyond clinical transactions alone.
Implementation Challenges
While holding promise, meaningful implementation of population health management
accounting also encounters difficulties:
Attribution Complexities
Challenges exist in fairly assigning populations and expenditures, avoiding risk selection
while incentivizing health gains across sectors.
Data Integration Barriers
Incorporating social/economic determinants requires overcoming siloes between clinical,
public health and other sectoral databases.
Workforce Transformation Needs
Successfully embedding non-traditional community services demands extensive workforce
training, changed care coordination models.
Short-term Orientation
Proving population health strategies’ value through accounting demands multi-year
timeframes but pressure exists for immediate cost-control.
Adjusting Payment Incentives
Transitioning from fee-for-service requires coordinated policy reforms from insurers aligning
reimbursement with long-term prevention goals.
Addressing Social Drivers
Non-medical factors heavily influence health yet fall outside direct control of healthcare
institutions.
While not insurmountable, thoughtfully overcoming these kinds of cultural, data-related and
policy obstacles will be key to unlocking population health management’s promise through
financially-driven organizational commitments and reforms.
Case Study: Group Health’s Advanced Primary Care
A standout model embedding specialized PHM accounting is Group Health Cooperative’s
Advanced Primary Care initiative in Washington State. Key aspects include:
- Attributed patient panels receive proactive chronic illness management; care managers
address social needs.
- Multi-year budgeting looks beyond episodes to populations’ total cost trajectory with aging.
- Risk-stratification identifies high-risk/high-cost individuals for intensive interventions.
- Shared-savings retrospectively rewards reduced total cost of care growth versus controls
each year.
- Quality tied to incentives through standardized outcome metrics spanning prevention,
chronic disease, self-management.
Early results show improved quality scores, cost trends “bending the cost curve” for the
sickest, highest-risk participants - evidence PHM’s value when aligned incentives support
population-scale work. Ongoing evaluation tracks longer-term impacts.
Recommendations
To strengthen health system capabilities managing and accounting for health outcomes
across communities through evidence-based multisector initiatives, a few recommendations
emerge:
- Standardize population segmentation, total cost attribution/reconciliation methods
facilitating collaboration, resource sharing.
- Pilot multi-year propective budgeting/financial planning frameworks for large patient
populations and partnerships.
- Incorporate social determinants indicators and cost-benefit modeling of community
interventions into core accounting practices longitudinally.
- Develop common metrics/dashboards continuously evaluating quality, health status, cost
impacts of multidisciplinary programs at large scale.
- Reform payment away from volume to value through bonuses, shared-savings for meeting
multi-year prevention targets across attributed populations.
- Build analytics/data sharing infrastructure between clinical, public health, social services
and others to integrate social/medical data for strategic decision-making.
- Promote policy reforms, research incentivizing partnerships addressing high-impact drivers
of expenditures upstream through coalitions spanning healthcare institutions and wider
community.
Progressively implementing specialized population health management accounting
frameworks can strengthen organizational understanding and reporting of investments
aimed at long-term improvements in overall health system performance and community well-
being.
Conclusion
As entire communities’ wellness emerges as a key responsibility, new accounting models
are needed focusing not just on individual transactions but aggregated impacts over large
populations. Frameworks incorporating predictive modeling, multi-year budgeting, shared
savings and social determinants facilitate optimizing often limited resources across sectors
emphasizing cost-effective prevention. Overcoming data and paradigm shifts demands
cooperation addressing challenges at policy and cultural levels. Yet transitioning payment
away from volume and grounding strategic decisions in PHM accounting’s broader view of
value holds promise enabling healthcare and partners’ collective efforts to substantially
improve population health outcomes in measurable ways. With sustained commitment to
reform, health systems can gain the financial tools aligning multisector strategies and
partnerships most powerfully preventing suffering while reaping economic and human
returns for communities served.
Healthcare organizations increasingly recognize a responsibility for overall health of the
populations they serve rather than fee-for-service transactions alone. Proactively managing
health outcomes across large patient groups through medical, social and policy interventions
shows promise for reducing costs while enhancing well-being. Yet traditional accounting
models emphasize clinical volumes and revenues without accounting for community health
impacts or risk exposures. New frameworks capturing preventive benefits alongside
treatment costs can help align scarce resources optimally across whole populations. This
paper explores specialized accounting approaches tailored for large-scale population health
management initiatives aiming to systematically strengthen communities' wellness in
measurable ways.
Defining Population Health Management
Population health management entails:
- Prospectively identifying high-risk patients likely to generate high medical expenditures
through risk-stratification analytics.
- Coordinating multidisciplinary care teams spanning medical, behavioral, public health to
address both clinical and social needs.
- Implementing evidence-based prevention programs targeting modifiable health risks like
obesity, smoking, physical inactivity.
- Monitoring quality metrics and health outcomes across large patient panels longitudinally
rather than individual transactions.
- Employing data analytics to continually evaluate impact of interventions on health status,
medical expenditures of defined populations over time.
Rather than focus on profit per visit or procedure, population health management (PHM)
aims to measurably improve value through lower total costs and better outcomes at
community scale by addressing clinical and non-clinical root causes collectively.
Financial Challenges in Population Health Management
While promise exists, transitioning payment models and mindsets pose difficulties including:
- Attribution methodologies to assign populations and shared financial accountability remain
opaque.
- Limited data and expertise in many regions to perform advanced risk-stratification,
predictive modeling.
- Upfront investments in coordination infrastructure consume resources before savings
realized.
- Preventive programs face short-term costs despite long-term return on investment.
- Attribution windows and savings calculation methodologies create compliance
complexities.
- Incentives misaligned if organizations can drop high-risk individuals or measures outcomes
in silos.
Specialized accounting frameworks are needed to overcome prevailing fee-for-service
paradigm, track multisector impacts across populations and guide strategic decision-making
supporting health at scale.
Accounting Frameworks for Population Health
New accounting models adapted for population health management may incorporate:
Shared Savings Accounting
Retrospectively allocate dollars saved against risk-adjusted spending targets across partners
investing in prevention/care coordination programs:
- Risk-adjust expenditure baselines factoring social determinants, clinical risk-profiles.
- Continuously reconcile actual costs versus expected amounts across attributed
populations.
- Savings bonuses fund reinvestment in community-based services through gainsharing
arrangements.
Risk-adjusted Budgeting
Prospectively stratify populations and forecast total costs considering unavoidable economic
burden of chronic conditions and social issues at community level:
- Budget contingencies addressing unpredictable concentration of high-cost cases.
- Resources allocated proportional to budget impact rather than short-term revenues alone.
Return on Community Investment
Assign financial values to tangible outcomes beyond costs like quality-adjusted life years,
productive years gained, societal participation from prevention program enrollment:
- Modelling incorporates monetized impacts far beyond traditional balance sheets.
- Population health investments competively assessed based on risk-adjusted savings plus
value of added life/well-being years produced.
Deploying these accounting frameworks tailored for managing and measuring health at scale
can guide optimal long-term strategic partnerships, policies and investments across
providers, insurers and community sectors leveraging collective capabilities.
Additional Financial Considerations
Other accounting factors pertinent for population health management embrace:
Partnership Arrangements
Clearly define terms for multidisciplinary collaborations delineating expectations, risk-
corridors and sharing proportion of costs and value generated.
Capital Planning
Incorporate facilities, technology and community infrastructure reinvestments based on
projected expenditures by geography over decades.
Grants/Philanthropy Accounting
Ensure philanthropic and public funding supports needs-based population services
complying with intended multisector partnership models and outcomes metrics. Resources
Deployment
Right-size staffing needs by location, optimizing clinical, community health workers and
others’ skills deployment aligned with predictive modeling identifying high-impact initiatives.
These supplemental pillars help optimize financial sustainability of comprehensive
prevention strategies by tracking impacts far beyond clinical transactions alone.
Implementation Challenges
While holding promise, meaningful implementation of population health management
accounting also encounters difficulties:
Attribution Complexities
Challenges exist in fairly assigning populations and expenditures, avoiding risk selection
while incentivizing health gains across sectors.
Data Integration Barriers
Incorporating social/economic determinants requires overcoming siloes between clinical,
public health and other sectoral databases.
Workforce Transformation Needs
Successfully embedding non-traditional community services demands extensive workforce
training, changed care coordination models.
Short-term Orientation
Proving population health strategies’ value through accounting demands multi-year
timeframes but pressure exists for immediate cost-control.
Adjusting Payment Incentives
Transitioning from fee-for-service requires coordinated policy reforms from insurers aligning
reimbursement with long-term prevention goals.
Addressing Social Drivers
Non-medical factors heavily influence health yet fall outside direct control of healthcare
institutions.
While not insurmountable, thoughtfully overcoming these kinds of cultural, data-related and
policy obstacles will be key to unlocking population health management’s promise through
financially-driven organizational commitments and reforms.
Case Study: Group Health’s Advanced Primary Care
A standout model embedding specialized PHM accounting is Group Health Cooperative’s
Advanced Primary Care initiative in Washington State. Key aspects include:
- Attributed patient panels receive proactive chronic illness management; care managers
address social needs.
- Multi-year budgeting looks beyond episodes to populations’ total cost trajectory with aging.
- Risk-stratification identifies high-risk/high-cost individuals for intensive interventions.
- Shared-savings retrospectively rewards reduced total cost of care growth versus controls
each year.
- Quality tied to incentives through standardized outcome metrics spanning prevention,
chronic disease, self-management.
Early results show improved quality scores, cost trends “bending the cost curve” for the
sickest, highest-risk participants - evidence PHM’s value when aligned incentives support
population-scale work. Ongoing evaluation tracks longer-term impacts.
Recommendations
To strengthen health system capabilities managing and accounting for health outcomes
across communities through evidence-based multisector initiatives, a few recommendations
emerge:
- Standardize population segmentation, total cost attribution/reconciliation methods
facilitating collaboration, resource sharing.
- Pilot multi-year propective budgeting/financial planning frameworks for large patient
populations and partnerships.
- Incorporate social determinants indicators and cost-benefit modeling of community
interventions into core accounting practices longitudinally.
- Develop common metrics/dashboards continuously evaluating quality, health status, cost
impacts of multidisciplinary programs at large scale.
- Reform payment away from volume to value through bonuses, shared-savings for meeting
multi-year prevention targets across attributed populations.
- Build analytics/data sharing infrastructure between clinical, public health, social services
and others to integrate social/medical data for strategic decision-making.
- Promote policy reforms, research incentivizing partnerships addressing high-impact drivers
of expenditures upstream through coalitions spanning healthcare institutions and wider
community.
Progressively implementing specialized population health management accounting
frameworks can strengthen organizational understanding and reporting of investments
aimed at long-term improvements in overall health system performance and community well-
being.
Conclusion
As entire communities’ wellness emerges as a key responsibility, new accounting models
are needed focusing not just on individual transactions but aggregated impacts over large
populations. Frameworks incorporating predictive modeling, multi-year budgeting, shared
savings and social determinants facilitate optimizing often limited resources across sectors
emphasizing cost-effective prevention. Overcoming data and paradigm shifts demands
cooperation addressing challenges at policy and cultural levels. Yet transitioning payment
away from volume and grounding strategic decisions in PHM accounting’s broader view of
value holds promise enabling healthcare and partners’ collective efforts to substantially
improve population health outcomes in measurable ways. With sustained commitment to
reform, health systems can gain the financial tools aligning multisector strategies and
partnerships most powerfully preventing suffering while reaping economic and human
returns for communities served.
