Managing risk is a critical component for ensuring patient safety and financial stability at a healthcare organization. Risk adjustment software solutions have emerged as powerful tools that can help provider organizations and payers accurately assess and manage the health risks of their patient populations. By leveraging advanced algorithms and comprehensive data analytics, these solutions enable more precise predictions of healthcare costs and outcomes, ultimately leading to better resource allocation and improved patient care.
Payers, provider-sponsored health plans, and healthcare organizations are looking for risk adjustment solutions with both retrospective and prospective capabilities. To understand where these organizations are investing, KLAS recently published a report that examines recent risk adjustment purchase decisions and what factors influenced these decisions. We also looked at how well risk adjustment vendors are performing for their customers.
Top Reasons for Selection & Replacement
Payers, provider-sponsored health plans, and healthcare organizations feel more financially stretched than ever in today’s market, and as a result, they want risk adjustment solutions that efficiently drive outcomes and quickly deliver a positive ROI.
The number-one reason a risk adjustment vendor is chosen is functionality. Organizations who mention this factor value up-to-date technology and having a product that supports their risk adjustment strategy. Potential customers also note that products with broad capabilities allow organizations to consolidate technology and vendor contracts. In contrast, solutions are often replaced due to cost, a lack of needed functionality, insufficient value, and poor user experience.
To view the full charts with all reasons for selection/replacement, view the report.
Four Types of Vendors
For the vendor performance data in this report, we looked at four different vendor types: broad retrospective vendors, mostly retrospective-focused vendors, analytics vendors, and mostly prospective-focused vendors. Next year, KLAS will split our Risk Adjustment market segment into these four segments to help organizations quickly understand what certain vendors offer and who could be a good fit for their needs.
- Broad retrospective vendors: Provide a suite of retrospective risk adjustment solutions (i.e., chart review/coding services, chart retrieval, RADV compliance and support, submissions, and analytics). Vendors have many KLAS-validated customers using three or more offerings simultaneously.
- Mostly retrospective-focused vendors: Provide retrospective offerings, which can include chart review/coding services, chart retrieval, RADV compliance and support, submissions, and some analytics. These vendors’ KLAS-validated customers typically use only one or two offerings at a time.
- Analytics vendors: Offer solutions focused on retrospective and/or prospective analytics and reporting. Solutions ingest, analyze, and display results using formats like dashboards or scorecards to help non-IT users understand data.
- Mostly prospective-focused vendors: Provide functionality for in-home assessments and prospective health assessments (latter has analytics that assess patients at point of care). These vendors may offer multiple risk adjustment offerings, but KLAS-validated customers typically use only one or two offerings at a time, and most use the health assessment capabilities.
Shifts in the Market
Since KLAS last published a report in this space, there have been a lot of mergers and acquisitions. Vendors are wanting to expand their risk adjustment offerings, and some have managed the transition better than others. The activity has affected not only their current customers but also potential customers; when vendors manage the changes well, they garner more market energy.
Additionally, KLAS has seen more organizations wanting to incorporate prospective capabilities (e.g., in-home and point-of-care health assessments) into their risk adjustment strategy. The need for retrospective capabilities (e.g., chart review/coding services, chat retrieval, RADV compliance and support, submissions, analytics) also remains high.
Organizations often prefer vendors that offer both types of capabilities since this approach allows them to have fewer vendor contracts. However, in the wake of the recent Change Healthcare cybersecurity breach, some organizations are reconsidering the approach of putting all their eggs in one basket and are instead focusing on diversifying their risk solutions.
Conclusion
Unsurprisingly, the risk adjustment market is complex. KLAS’ hope is that this report can break up this market into digestible pieces so that organizations can understand which vendors could best support their risk adjustment strategy.
To learn more, be sure to check out the report.
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