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Updated: May 9, 2026
05:37
An R-Based Landscape Validation of a Competing Risk Model
Published on: September 16, 2022
Navigating performance-based risk.
James J Pizzo1, Carlos Bohorquez, Andrew Cohen
1Kaufman, Hall & Associates, Inc., Skokie, IL, USA. jpizzo@kaufmanhall.com
Summary
Organizational factors like size and financial strength influence risk tolerance in performance-based arrangements. Value-based contracting involves financial, actuarial, and strategic risks.
Area of Science:
- Health economics
- Healthcare management
- Risk management
Background:
- Performance-based risk arrangements are increasingly common in healthcare.
- Understanding an organization's risk tolerance is crucial for successful value-based contracting.
- Factors influencing risk tolerance include organizational size, patient population characteristics, and financial stability.
Purpose of the Study:
- To identify key factors influencing an organization's risk tolerance.
- To outline the inherent risks within value-based contracting models.
Main Methods:
- This study is a conceptual analysis based on existing literature and industry knowledge.
- It synthesizes factors contributing to risk tolerance and categorizes inherent risks.
Main Results:
- Organizational size, patient population demographics, and financial position significantly impact risk tolerance.
- Three primary categories of risk in value-based contracting are identified: financial, actuarial, and strategic.
Conclusions:
- Healthcare organizations must assess multiple internal factors to determine their capacity for risk.
- Recognizing and preparing for financial, actuarial, and strategic risks is essential for effective value-based contracting.
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