How Independent Practices Shift to Value-Based Care
In 2021, 11 high-income countries compared their health care system performance. The overall winners were Norway, the Netherlands, and Australia.
How did the United States rank?
"Despite spending far more of its gross domestic product on health care, the U.S. ranks last on access to care, administrative efficiency, equity, and health care outcomes."—Mirror, Mirror 2021: Reflecting Poorly: Health Care in the U.S. Compared to Other High-Income Countries
Considering this, the important question is: What's a potential solution?
Better health outcomes, better payment model
Annual healthcare spending in the US is now more than $3.5 trillion. As healthcare costs rise, the move toward value-based care might be a move in the right direction since it’s one way to reduce these costs and improve the healthcare landscape — value-based models streamline care pathways and improve overall health outcomes.
Improved health outcomes: preventative treatment plans
The traditional fee-for-service model contributes to low scores since providers are paid per service, regardless of the outcome. Compensating for volume—no matter the patient outcome—misses the mark. But care delivery that spreads medical costs over monthly or annual payments (value-based) gives patients access to their healthcare provider as needed. This model also lets patients take advantage of preventive care. Value-based arrangements mean that independent physicians are reimbursed for the quality of a patient's healthcare outcome, not for the number of patient visits.
It just makes sense.
Cost reduction and payments
The disaggregated nature of the U.S. healthcare system presents challenges that value-based care providers address via sustainability and efficiency. Care delivery is a critical component of value-based care models, focusing on patient results and cost reduction. But the transition to value-based care is challenging for health care providers, especially when it comes to using new payment models and care protocols.
Alternative payment models, including accountable care organizations (ACOs), help independent physicians transition to value-based care. Care coordination plays a crucial role in driving systemic changes that may improve performance scores.
During the COVID-19 pandemic, the number of patient visits was significantly reduced, leading to reduced income for many practices still on a fee-for-service model. The value-based care model reimburses independent physicians for the quality of their healthcare services and not just the volume.
Transition to value-based care for the independent physician could mean a premium for making thoughtful care decisions that result in improved care for the patient. It could also mean being able to treat patients with more conservative therapies as opposed to higher acuity procedures, where appropriate, resulting in more effective cost management.
Value-based care providers have the opportunity to provide input into future healthcare delivery models. Health maintenance organizations play a role in risk-based payment arrangements, allowing providers to take on financial risk while focusing on quality care.
Independent practices can move toward value-based care in a way that will improve their level of care as well as their financial stability—a win for both patients and providers (and the healthcare industry overall).
"In 2020, as in 2018, almost all physicians (97%) relied on FFS and/or salary for their compensation and 36% also drew compensation from value-based payments"—Deloitte
Integrating health systems
Integrating health care services with social services is essential to address factors like housing and food insecurity that impact patient satisfaction. Health equity is also a crucial goal, aiming to reduce disparities and improve care for all demographic groups.
Health systems are crucial in reorganizing care delivery to support value-based models. The COVID-19 pandemic accelerated the need for health systems to adopt value-based care, highlighting both challenges and opportunities. Patient engagement is vital in these models, as actively engaged patients tend to achieve better health outcomes. Population health management tools are necessary to align care teams and optimize treatment protocols.
Primary care providers are essential in value-based care models, driving patient alignment. Experimentation with various value based payment models will find the most effective approaches. However, barriers to widespread adoption, such as regulatory challenges and the complexity of transformation, still exist.
"Value-based care investment quadrupled during the pandemic"—McKinsey
How to shift to value-based care delivery
Independent practices can move toward value-based care by focusing on three areas:
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Incorporate a standard for enhancing data collection and reporting within the practice. Easy access to this data makes sorting, and analytics easier for the independent practice when tracking changes in outcomes based on adjustments in treatment approaches. Focusing on existing data is essential to a stronger bottom line for the practice.
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Define key performance indicators (KPIs) that would lead to improved patient outcomes and lower costs for the practice and for the patient.
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Assign a member of the practice’s staff to work with the data collection, incorporating a constant improvement process into the practice to lay out a plan for transitioning to value-based care.
Delaying the move toward value-based care can negatively impact the business side of the independent practice and possibly even the quality of care provided to patients. Fee-for-service contracts are beginning to decline, although many independent physicians are still hesitant to take on the risk associated with the value-based care model.
"Growth in valued-based care has accelerated from creating approximately $500 billion in enterprise value today and may be on track to reach $1 trillion as the landscape matures."—McKinsey
Value-based care statistics
Deloitte Survey of US Physicians from 2020, 2018, 2016, and 2014 reveals that:
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Physician compensation continues to emphasize volume more than value. Physician compensation comes mainly from traditional sources, and meaningful performance bonuses are the exception rather than the norm.
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In 2020, as in 2018, almost all physicians (97%) relied on FFS and/or salary for their compensation and 36% also drew compensation from value-based payments.
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The proportion of physicians (23%) who receive performance bonuses of more than 5% also hasn’t changed.
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Availability and use of data-driven tools to support physicians in practicing value-based care continue to lag
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Only one in two (51%) physicians are aware of the costs of treatments they select.
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Almost half (48%) are comfortable discussing costs with patients.
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Just under half (46%) say they follow clinical pathways adopted at their organization.
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Existing care models do not support value-based care and many untapped opportunities remain for improving the quality and efficiency of care.
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Physicians estimate significant portions of their work today can be performed by nonphysicians (30%) in nontraditional settings (30%) and/or can be automated (18%).
Reassessing risk models will help the independent physician avoid falling behind as the window for voluntarily switching to a value-based care model starts to close. Taking proactive steps to move toward value-based care enables the independent physician to benefit patients’ quality of healthcare outcomes and the practice’s bottom line.
FAQs
What is value-based care?
Value-based care is a healthcare delivery model in which providers, including hospitals and physicians, are paid based on patient health outcomes. This model stands in stark contrast to the more traditional fee-for-service approach, where providers are compensated for the number of healthcare services they deliver, regardless of the results.
Under value-based care, providers are incentivized to focus on the quality of care they offer, fostering a healthcare environment that prioritizes patient health and well-being above all else. This innovative approach hinges on the notion that exceptional care delivered can lead to improved patient health, reduced redundancy in care procedures, and attenuated healthcare costs for all parties—patients, providers, payers, and society in general.
Embracing value-based care is essentially about being principled; it's a commitment to superior standards and ethical practices that put the patient at the center of the healthcare experience.
Why are we shifting to value-based health care?
The United States is experiencing a significant shift towards value-based care as a strategic initiative to address the rising healthcare costs, which have escalated to represent a significant portion of the country's Gross Domestic Product (GDP). From 1960 to 2019, healthcare spending as a percentage of the U.S. GDP grew from 5% to 17.7%, reaching $3.8 trillion in 2019[1]. This exponential rise in healthcare costs has spurred the need for a more sustainable financial model in the healthcare system, leading to the emergence of value-based care as a solution. This change aims not only to control the growing expense of healthcare but also to realign how quality—as a return on investment of the healthcare dollar spent—is measured.
How does the shift to value-based health care impact delivery of care?
In value-based care arrangements, healthcare organizations are incentivized to meet various interrelated goals that typically aim to improve measures of quality, cost, and equity. Failure to meet these goals might result in the forfeiture of bonuses or a reduction in payments
One of the core implications of this shift is the fostering of a healthcare environment that encourages providers to concentrate on achieving better health outcomes for patients. This includes preventive care, timely interventions, and personalized treatment plans that cater to individual patient needs.
The implementation of VBHC is a global initiative, steering the healthcare system towards a more sustainable and patient-centric model.
