The healthcare industry is successfully transitioning to value-based care, even while the fate of the Affordable Care Act (ACA) remains unclear. This is according to a recent McKesson study that shows both payers and providers making profits from value-based care.
However, the study found that 61 percent of payers are seeing or forecasting profits from value-based reimbursement compared to only 41 percent of providers.
While payers are ahead of providers in seeing profits, both groups have seen significant gains regarding participation in value-based care. Fifty-eight percent of payers and 50 percent of providers are in value-based models. That's up from 2014, where 48 percent of payers and 46 percent of providers were participating in value-based care.
These findings show that value-based contracts, where payment models are based on patient outcomes, are a permanent part of the healthcare landscape, regardless of the fate of ACA. This is one of those rare cases where both Democrats and Republicans agree that the current fee-for-service model need to change. Value-based care focuses on the most efficient method of delivering care to improve patient outcomes. The goal is keeping patients healthy, which lowers the cost burden to everyone.
But, while policymakers may believe this change should occur, the fact remains that payers are ahead of providers in making value-based care succeed.
Payers have an advantage because they have been practicing some of the key elements of value-based care in their business operations for years, such as designing employer-wellness programs. Payers also have total visibility of a patient's cost of care across the entire healthcare continuum, so they can see and understand the complete picture easier.
Historically, providers have had more roadblocks to overcome than payers as they transition to value-based care.
Providers often lack the necessary data analytics to help them understand the clinical and non-clinical risk of their population cohorts so they can know which care-delivery programs to invest in and which ones are delivering a return on investment. Also, providers need to understand and commit, from the top of their corporate structure on down, to transitioning to the new care-delivery model systematically and make it an operating model. It can't be just some one-off projects.
There are three critical lessons that providers need to succeed in value-based contracts:
• Understand the structure of value-based contracts and how they work
• Have complete buy-in within the physician organization on the principles and performance metrics of value-based contracts
• Integrate and share provider-payer data to monitor a population's progress and performance with transparency
That last bullet may be the most important. We suggest payers assist providers looking to transition to value-based care in several key ways:
• Help develop a shared savings model focusing on outcomes that are most attractive to providers by understanding their population state-of-health risk
• Emphasize the focus on quality outcomes and pay for those outcomes to reinforce the commitment to value-based care
• Ongoing reporting and monitoring is key
• Exchange data (such as EMRs, claims, and socioeconomic data) and analytics to provide:
o High risk / care gap lists to physician groups
o Summary data on population risk, stratification trends, etc.
o Continuous improvement processes (Focus on the top two or three variances each month/ quarter. Once they are fixed, move to the next opportunity. Repeat this process continuously.)
• Help providers see how they compare to peers and how to make specific, detailed changes
One interesting fact the survey revealed is that the providers who have implemented value-based care are carrying those models over to their fee-for-service patients, as well.
This actually is not surprising. Once providers see the benefits of value-based care, they become best practices and execute these practices across all populations. Providers need to have standardized, best-in-class care protocols that apply to population cohorts, regardless of health plans and what type of contracts they sign. So, once providers successfully adopt value-based care, even if it's just in one area, it will likely spread to all areas.
Payers and providers are succeeding at value-based care, but they need a full understanding of their population in order to succeed.
About the author:
Jay Reddy co-founded VitreosHealth and serves as its CEO since 2009. Prior to Vitreos, Jay was the Chief Marketing Officer at CombineMed, a joint venture with the University of Pittsburgh Medical Center (UPMC), helping healthcare organizations drive savings through strategic sourcing technologies.
Before joining CombineMed, Jay was the CEO of MindFlow Technologies, a firm he founded with the vision of delivering operations productivity improvements for global 1000 enterprises through optimization-based decision support technologies. Under his leadership, MindFlow was ranked in the visionary quadrant by Gartner and ranked in the Top 100 emerging companies by ComputerWorld, prior to its acquisition in 2006.
Jay holds an undergraduate degree in chemical engineering from IIT, Delhi, and earned his MBA from the University of Michigan, Ann Arbor.
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