Transition to Value-Based Healthcare

Transition to Value-Based Healthcare

Transition to Value-Based Healthcare

Transition to Value-Based Healthcare

Why choose Value-Based Healthcare?

Why should your healthcare system transition from fee-based to value-based healthcare? Currently the US spends almost 20% of the GDP on healthcare and related services. Our per capita spend is almost twice as high as the next closest country.

Our clinical outcomes as a population don’t support this level of national expenditure. The imperative is the value-based healthcare proposition.

Policy makers and economists understand that the incentives should be more on value, not volume. Identifying the metrics for this and the transition to value-based care is a work in progress. Most decision makers though, agree that the incentives in the current system are perfectly designed to give us the results we are now getting, and those incentives are in the process of changing.

This journey to value and away from volume will take some time, and it will necessarily be clumsy at first. There will be (and are) many fits and starts in the purchasing strategies of governmental and commercial payors. Still the broad outlines of the strategy have been underway for a decade or more.

There are a great many examples of value-based healthcare. Accountable Care Organizations were designed by CMS to provide high-quality medical care to Medicare patients. In an ACO clinicians, hospitals and other healthcare providers work as a networked team to deliver the best possible coordinated care at the lowest possible cost. Depending on the risk arrangement the incentives improve access to care, quality of care and patient health outcomes while reducing costs. There have been other large national purchasing strategies including Patient Centered Medical Homes or PCMH, Comprehensive Primary Care initiative or CPC then later CPC+. These value-based care strategies have met with varying degrees of success and cost containment. There are many other Medicare purchasing strategies coming soon with varying degrees of risks and metrics.

Transition from Fee-Based to Value-Based Healthcare

Transitioning from fee-based to value-based healthcare is complicated for a number of reasons and is simpler in concept than in execution.

  • The goals can be unrealistic, especially if a provider organization isn’t ready, or has no experience in the Value arena.
  • The metrics can be complicated. Definitions, especially as they relate to finance performance require a clear understanding, and resolution plan.
  • Communicating the “play” to the providers is labor intensive. Clinicians get more than 100 messages a day. Add to that, sometimes multiple messages about healthcare contract objectives. Your organization should have a communication strategy to make the metrics coherent.
  • Risk can be terrifying, especially if the organization has no history or confidence in this new arena.
  • Compliance can stop the participating clinicians from participating financially in the shared savings. Fair Market Value tests have to be performed and all the stakeholders will need to have an understanding of the mechanics and tests of the distribution of excess funds. This is a good problem to have.
  • The IT and analytic requirements can be expensive, and hard to implement. It is possible to reconfigure what you already have (and most Hospital systems have a lot) into something you can use. That’s what we did.

For all of these reasons, a Clinically Integrated Network, designed to lower your costs in your own population of employees is the way to start down the road to transition to value-based healthcare. They are cheaper to set up and the metrics are simple and easy to communicate to your providers. All the stakeholders, including finance and compliance, understand the desired outcome. Your healthcare costs get lower, your providers share in the bounty, your associates enjoy a high touch benefit plan which lowers turnover. There is minimal risk, and worst case scenario isn’t catastrophic. Almost certainly and in short order, a Clinically Integrated Network has set the organization up for success in the new arena of Value-Based Healthcare. The Clinicians believe it can work, the Senior Leadership Team too, and the Board of Directors is confident that the team can execute.  And the organization has saved millions of dollars, usually tens of millions, in the process.