Dave Griffin, 81, credits an integrated, value-based care system with helping him overcome several health hurdles over 50 years, including long-term diabetes and a recent intestinal blockage.
In contrast, he recalled a period 20 years ago when he briefly moved to a fee-for-service organization, where he received fragmented care. Surgery to remove a blood clot in his leg led to a persistent infection, multiple operations, two years of wound care, and ultimately, amputation below the right knee.
“I felt like a cash cow,” Dave recalled. “I finally said to the wife, ‘Let’s get back to what worked best.’ It’s the best decision I ever made. I pay one fee and don’t worry about future charges.”
In a fee for service model, everything becomes a transaction that is financially reimbursed regardless of the outcome, and care from the various specialties is siloed. In this system, the sicker the patient is, the more complications there are, and the more the model is financially rewarded.
In contrast, as CEOs of two of the largest medical groups practicing value-based care, we’ve seen how wellness becomes the asset. Healthier patients and high-quality care go hand in hand and drive down costs. Focusing on disease prevention and investing in every step to keep patients like Dave’s diabetes and infection under control, improves the health of the patient and the system, which financially benefits from optimal outcomes.
When incentives align good things happen. In an integrated value-based model, the most desirable outcome for the patient (less infection, fewer hospital days, and no amputation) is also the most beneficial outcome for the model of care. It’s a win-win.
It’s no accident therefore that Kaiser Permanente Medicare and commercial plans are rated highest, or tied for highest in quality, in all areas we serve, according to the 2024 National Committee for Quality Assurance. All our Medicare Advantage plans are also highly rated, earning either 4 or 4.5 stars out of a maximum 5.
Older patients like Dave with multiple health conditions underscore the challenge of delivering compassionate, scalable and affordable care to the aging U.S. population. Caring for these individuals requires a fundamental shift in how we practice medicine.
Despite a decades-long push for value-based care, most physicians still practice in a fee-for-service setting where health plans reimburse physicians for each service they provide to patients, with few incentives to improve quality or reduce costs. A recent study found that only 31% of U.S. physicians are moving toward value-based care models.
Shifting from volume to value
In our experience, a value-based model enables physicians and care teams to focus on maintaining patient health instead of benefiting from costly treatments for serious conditions. We believe this focus on prevention and a commitment to providing the right care at the right time in the right place truly sets value-based care apart.
In fact, it’s vital for both patient care and the U.S. health care system’s sustainability. Adults over 65 comprise about 17% of the U.S. population but account for over 40% of hospitalizations. By 2050, they will comprise 23% of the population, likely surpassing the system’s capacity.
A key reason for this mismatch between projected care needs and U.S. health system capacity is that fewer workers aged 18-64 are paying into the Medicare system. Back in the 1960s, when Medicare started, there were about 4.6 workers supporting each beneficiary. By 2015, that number dropped to 3.1 and it’s expected to fall even further to 2.3 by 2030.
Transitioning from volume to value is no longer a pipe dream; it’s a necessity. Medicare funding via payroll tax for hospital care is set to be depleted by 2036 and Medicaid, a critical source of funding for our most vulnerable seniors, is under threat. Value-based care, which has proven its value to patients for nearly 80 years, offers a lifeline that could save the American health system.
Delivering value means more than spending health care dollars more efficiently, it also empowers physicians to care for patients more effectively — with their heads and hearts. Maintaining the highest standards of care goes hand in hand with doing what’s right for the patient every step of the way.
This requires health care organizations to adopt three key strategies:
- emphasizing high-quality and coordinated care
- innovating to improve outcomes and manage resources
- deeply engaging with patients, their families, and the communities they serve
Emphasizing high-quality and coordinated care
Quality care and optimal patient outcomes are the twin goals of value-based care. This is why primary care physicians are the key to prevention and health maintenance. Acting as quarterbacks, these doctors lead care teams that coordinate preventive measures like vaccinations for shingles, regular screenings for colorectal cancer, and lifestyle counseling.
They also manage chronic diseases and when concerns arise, they can communicate directly with specialty care physicians, like dermatologists, in real time. For instance, in our system, if an older patient comes in for a checkup and has a suspicious mole, a primary care physician can swiftly send an image to a dermatologist for review. Timely specialist access and treatment exemplifies care coordination that improves patient satisfaction and can save lives.
Innovating to improve outcomes and manage system resources
Value-based care organizations drive innovations like same-day total hip and knee replacements to improve patient outcomes and optimize resources. Moreover, patients overwhelmingly prefer to recover where they live. Preparing older patients mentally and physically for surgery ensures a successful transition home, while freeing up hospital beds and minimizing costs by avoiding unnecessary extended stays.
Rethinking emergency medicine should be another fundamental focus of health care organizations serving older adults. The ER has long been the backstop of the American health system. Though legally obligated to treat everyone, it often remains the least patient-friendly and most expensive option for patients.
Creating care pathways, training physicians to manage common conditions faced by older adults, like respiratory ailments that often don’t require an ER visit, and providing advanced care at home programs can enable more appropriate and accessible care.
The question is no longer ‘if’ we should offer innovations like these but ‘when’ will the system evolve to meet older adults’ needs at scale.
Engaging patients, families and communities
Health care is a team sport. Physicians and clinicians practicing value-based care partner with patients and caregivers to manage chronic diseases and foster healthy habits for a better life.
Together, physicians, patients and their families can decide if a procedure that comes with inherent risks, like back surgery, is necessary or if keeping the patient comfortable at home is better.
Value-based care requires that we treat the whole patient and address social determinants like food, housing and transportation.
Connecting patients to these resources empowers older adults and caregivers, ensuring a seamless integration of often fragmented services. When a recovering knee surgery patient has prearranged transport from a local senior center to a home stocked by Meals-on-Wheels, it streamlines services and provides essential support.
Dave’s experience illuminates the path to a sustainable future for U.S. healthcare
In contrast to feeling like a “cash cow,” Dave said it was a relief to return to coordinated and integrated care. He also appreciates the convenience of visiting a single facility that houses his physician’s office, pharmacy, and lab.
Dave’s experience demonstrates why value-based care provides a blueprint for the health system our country needs to care for older adults and future generations.
Equally significant, Dave’s journey illustrates how value-based care can profoundly elevate an individual’s care experience, quality of life and overall sense of well-being.
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Maria Ansari, MD, FACC, is CEO and executive director of The Permanente Medical Group; president and CEO of Mid-Atlantic Permanente Medical Group; CEO of Northwest Permanente; and co-CEO of The Permanente Federation.
Ramin Davidoff, MD, is executive medical director and board chair of the Southern California Permanente Medical Group, board chair and CEO of The Southeast Permanente Medical Group; board chair and CEO of The Hawaii Permanente Medical Group; and co-CEO of The Permanente Federation.
