It’s a model you’ve probably heard of: healthcare providers are paid based on patient outcomes. The main benefit of value-based care is clear: When a health system, hospital, or physician helps improve a patient’s health, the provider gets rewarded, too. However, if the care is administered poorly, the practitioner is paid less. In other words, health outcomes are measured against the cost of delivering those outcomes. In contrast, the traditional approach to healthcare billing has been fee-for-service where providers are paid for the amount of services they deliver, irrespective of patient outcomes.
There are a number of positives that come from value-based care and not just for the patient. For CFOs at healthcare organizations, however, evolving reimbursement systems can be difficult to manage. In fact, according to a survey by Kaufman Hall, only 13% of finance executives at healthcare organizations feel prepared to handle value-based payment models.
Here’s what you need to know about value-based care, and how to navigate the evolution of healthcare payment models.
The Benefits of Value-Based Care
It’s arguable that value-based care models benefit not just patients and providers but society as a whole. Some of the benefits of value-based care include:
- Lower patient costs, better health. The idea behind value-based care models is that patients recover more quickly from illness or injury and – ideally – are able to prevent chronic disease. This means fewer doctor’s visits and medications in the long run and money saved.
- Greater patient satisfaction. Spending less time on chronic disease management helps providers refocus energy on quality which ultimately improves patient engagement and satisfaction.
- Less risk for providers. Under a value-based payment model, providers aren’t under the risk that comes with capitated contracts with insurance providers. Higher value per care episode can be financially rewarding – even for for-profit providers.
- Healthier society, lower healthcare spend. Healthcare expenditures currently account for 18% of U.S.’s Gross Domestic Product. Keeping the population healthy, out of the emergency room, and free from chronic disease reduces healthcare spending and increases overall health.
What Providers Need to Do
Value-based care is the next big thing in healthcare payment models, whether providers feel prepared for the transition or not. With all the benefits of value-based care, it is worth it for healthcare organizations to shift their focus in order to succeed in this emerging system.
- Focus on improving patient outcomes. CFOs and financial executives still need to monitor operational efficiency and strategic growth, but attention must also be paid to patient outcomes. Factors such as care quality and the patient experience will play into reimbursement in a value-based system, so it’s “all hands on deck” for patient outcomes.
- Data analytics is the key. Prioritize the adoption of data analytics tools. The ability to collect clean, trusted data on both patient and financial outcomes will be key to success in a value-based payment system.
At PAG, we’re intimitately familiar with models of value-based payment. Our clients don’t pay for our services unless cost savings or refunds are realized. Since 2002, we’ve worked with healthcare organizations to help them make smarter technology decisions and save significantly on costs.