Achieving a balance between risk and return.

Abstract

Because risk management is costly, many health plans and providers practice risk avoidance by transferring risk to other entities. Risk-bearing healthcare organizations can improve their return on assets, but to do so they need complete information about patients' health status and the availability of effective medical treatment. To improve their return on assets, providers can use risk-management strategies such as growth, designing incentives to encourage providers and health plans to reduce or eliminate unnecessary variations in resource use, and improving information about the reasons for variations in resource use and controlling those variations when possible. Providers need data to analyze why variations in resource use occur and to evaluate the efficiency of their resource use.