Value-based care in its simplest definition rests on the assurance of value for every healthcare dollar spent. The term “value” though, is open to interpretation. Which means that it is subject to each beholder’s working definition of what “value” means, and therefore the resultant expectation of a standard around it.
Over the last decade, value-based care (or VBC as we lovingly call it) has evolved and grown, but the concept continues to be haunted by generalized skepticism and age-old thinking. Here are a select few of those skeptical stances followed by alternate perspectives.
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Sahana Sharan For over 12 years, Dr. Sahana Sharan has held various leadership roles at Fortune 5 health plan, Fortune 200 hospital corporation and a large academic medical center. She has built and scaled new strategies, broken the performance plateau to achieve excellence and positioned companies to operate from a place of strength in the […]
- We tried this back in the 90s – it was called HMOs then. Now it is called value-based care. We tried capitation and it did not work. How is value-based care different?
3 reasons why HMOs fell short –
a) HMOs were implemented when providers and payers operated with limited data analytic capabilities (and the mention of Artificial Intelligence could only mean one thing – that you watch sci-fi movies) which limited their ability to analyze trends and opportunities with their population
b) Absence of EMRs meant each practice and provider to their own, with no interoperability capability or data exchange about members
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c) Capitated payments were not tied to quality outcomes for members, which is a perverse incentive to withhold care.
We are much better positioned today to succeed in VBC today than we ever did in the past. The context in which we operate has shifted considerably with –
a) Availability of data analytic capabilities and use of technology (ex: predictive analytics, EMR, AI and ML, HIE, interoperability) which positions providers in a far better situation to predict, analyze, coordinate care and exchange data for their members; and
b) Heightened focus on measuring and tracking quality, outcomes and experience for members. Consider the over 500 quality measures we have today, patient reported outcomes and patient experience measures that constitute 40% of a health plan’s STAR rating.
- A hospital system in a VBC arrangement does not have its incentives aligned to deliver VBC. A hospital system that relies on their revenue from inpatient stays would rather preserve the volume and the associated revenue that is guaranteed, than prevent unnecessary admissions at the potential to earn shared savings down the road. So are the hospital players truly meeting the intent of VBC?
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- Yes, the hospital revenue model is volume driven. But hospitals that previously did not look beyond its four walls of care once the patients were discharged, are now coordinating for care 30 days post-discharge, collaborating with post-acute care facilities to ensure good quality outcomes and partnering with community organizations to address unmet social needs and health inequities in ways never seen before. Both penalties and incentives baked into value-based care have enabled a holistic and across-the-continuum care for members.
- Hospitals have invested significant amounts of dollars into developing their clinically integrated networks, value-based care and population health programs.
- While the revenue model of fee-for-service for hospitals may not flip overnight, there have been definite milestones accomplished and progress made.
- Additionally, the decline in post-pandemic inpatient volumes has resulted in significant operating margin losses for many hospitals around the country. This could further catalyze the movement away from fee-for-service model to innovative payment models that tie the cost and outcomes of care to payments.
- Pay-for-Performance (P4P) is not really value-based care. A Pay-for-Performance model is when a practice receives incentive dollars for hitting certain targets on quality measures. The pushback for this model is based on the notion that providers should already be practicing and following evidence-based guidelines for their patients regardless of whether they get paid incentive dollars or not.
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- There are over 500 quality measures that are validated and available to track quality. How does a physician’s practice, track, monitor and implement all those measures? It would amount to craziness not only for the physician, but for the patient.
- And not all quality measures are weighted equally – meaning some measures deliver better value in patient’s care. Cancer screenings for instance, save lives if detected and treated early. Selecting a subset of quality measures is like placing a red ‘x’ mark on them enabling providers to focus (while still maintaining sanity and perhaps their hairlines too).
- Lastly, incentives drive behavior change. That is true in healthcare, as it is anywhere else. If tying incentives to a focused set of quality measures results in more cancers detected and treated early, then isn’t that the behavior you would want to tie incentives to, to ensure that it gets done?
- Upside-only shared savings arrangement does not lead to intentional value creation. The upside-only model is when a provider/practice demonstrates a total cost of care that is less than the benchmark for a given population, then they split the shared savings with the health plan. But if they exceed that threshold, then there is no payment owed back to the health plan. The downside they point out is that “if there is no skin in the game for providers, are they truly motivated to create value in the system?”
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- If you want to motivate a horse to move forward, you are better off using a carrot to initiate the first steps, before pulling out a stick. Likewise, we don’t want to penalize a practice for trying something new for the first time.
- Upside-only shared savings models provide the training wheels and the motivation for practices to make the leap.
- It also gives the providers the ramp-up time needed to build their infrastructure and capabilities to deliver on VBC, before they can participate in advanced VBC models.
- For many providers, it is actually a stepping stone towards more advanced payment models.
Okay, where does that leave us?
Regardless of individual interpretations, at the heart of value-based care is the intentional focus to move away from a volume-driven healthcare system that does not account for quality or outcomes (and zero regard to sky-rocketing costs) to a payment system that is tied to outcomes and quality.
Value-based care has provided a platform and a mechanism, where for the first time, health plans, providers and employer groups are sitting around the table with their sleeves rolled up, ready to collaborate and partner as opposed to sitting across the table with their arms crossed and their heels dug in.
It is not perfect, but it is an alternative to the status quo with each of the health care players sitting on fragmented islands with no incentive to change. It is a journey – a ‘present-continuous’ tense of a concept that is evolving, adapting and being shaped.
Photo: atibodyphoto, Getty Images
For over 12 years, Dr. Sahana Sharan has held various leadership roles at Fortune 5 health plan, Fortune 200 hospital corporation and a large academic medical center. She has built and scaled new strategies, broken the performance plateau to achieve excellence and positioned companies to operate from a place of strength in the value-based care realm.
She started Elate Health Partners, a consulting and advisory firm, to help healthcare organizations tap into the tremendous potential where value-based care and traditional healthcare delivery intersect and grow, innovate and achieve superior results.
She is a physician by training and graduated with a master’s degree in healthcare finance from New York University.
