Experience the Definitive Advantage

Start a free trial today and get access to the most comprehensive source of healthcare provider data on the market.

Blog

How to Create Risk-Sharing Opportunities in Value-Based Care

November 20, 2019 BY Rachel Grande

How to Create Risk-Sharing Opportunities in Value-Based Care

Nearly 8 years after the Centers for Medicare and Medicaid Services (CMS) launched the Hospital Value-Based Purchasing Program, the shift towards a value-based care delivery model is well underway. Why is it, then, that so many—from healthcare providers to payers—still approach this reimbursement model with apprehension? Accountability.

Under a traditional fee-for-service model, physicians and other healthcare providers are reimbursed by the total number of services they provide. In a value-based payment program, however, providers are held accountable for care costs. Providers are offered a single payment per patient, and must provide effective care within that budget or risk losing money.

Value-based contracts, as they’re referred to, are a type of risk-sharing agreement in which two or more participants in an organization or other enterprise share the financial consequences of a given risk. In the healthcare industry, this risk can be shared in a few different ways:

  • Between payers and manufacturers
  • Between payers and providers
  • Between payers and patients
  • Between manufacturers and providers
  • Between providers and patients

With so many groups involved in splitting the risks of a value-based model, successful implementation of the value system is crucial for shared profit and savings across the industry. Despite the implied negative connotations, the practice of risk-sharing—in healthcare or otherwise—can be quite beneficial for the participating parties.

Risk-sharing agreements between providers and manufacturers, for instance, not only accelerate market access and help achieve competitive differentiation, but also require manufacturers to demonstrate product utilization and intended care outcomes—focusing their sales strategy on clinical quality rather than cost.

In the latest and final installment of Definitive Healthcare’s value-based care webinar series, our industry-expert panelists discussed the impact of value-based care adoption in high-cost physician specialties. The panelists included:

  • David Rosman, MD, Service Chief of Outpatient Imaging & Associate Director of Business Development at Massachusetts General Hospital, President-Elect of the Massachusetts Medical Society
  • Tom Davenport, MD, Partner at Long Island Plastic Surgical Group, PC & Chief of Division of Plastic Surgery at Winthrop University Hospitals
  • Deepak Sahu, MBA, Manager at Alira Health and Resident Expert on Value-Based Care

Through this discussion, the panelists outlined their individual experiences with value-based care from different sides of a transitioning industry. Their conversation not only highlighted the role of high-cost specialties within the value-based model, but also touched upon progress measurements, program benefits, negative impacts, and potential ways of sharing risk during this shift.

Collaborative Care

Communication and collaborative care delivery are essential components of the value-based model. If the ultimate goal of this system is to reduce total medical expense while improving care quality, then coordination between all members of the care team is one of the principal ways to achieve that end. Not only does this mean that all members of a team are equally engaged in the treatment of their patient, but are also equally invested in the risk if they should fail to meet certain performance benchmarks or maintain low care costs.

Care direction—as in, leadership in care delivery—is one way to promote success within this system. Radiologists’ role in directing care, for instance, not only determines how care will be administered, but can also reduce overall utilization.

Before the CT scan became widely accessible, physicians had little to no way of distinguishing a normal, healthy appendix from one inflamed by appendicitis without surgical involvement. As a result, nearly 15 percent of patients who ended up on the operating room table had a normal, healthy appendix. Now with advanced imaging technologies, care providers can detect and diagnose those issues before surgery. Though answering this question may come at the price of a $500 scan, it also means that up to 15 percent of patients might have avoided a costly surgical procedure because of it.

Care Outcomes

In a fee-for-service payment model, provider budgets and reimbursements have traditionally depended on total units of care—the number of patients seen, scans delivered, and procedures performed in order to meet a set requirement. This model is disrupted, however, in the shift to a value-based system where it isn’t always the case that more is better. How, then, is performance rewarded within this model?

One of the greatest challenges in a value-based system is identifying measurable outcomes against which to track success. Disagreement surrounding these measures has, in fact, been one of the biggest obstacles slowing value-based contract adoption across the country. Metrics like patient satisfaction, care value, or improved quality of life are objectively more difficult to gauge than volume performance.

Electronic-medical record (EMR) systems are now able to marry costs with care outcomes, and provide physicians and other healthcare professionals with a more in-depth look at the whole care process, including metrics such as:  

  • How long patients are staying in the hospital
  • What sorts of complications they’re experiencing
  • What happens after they’ve left the hospital

We now also have the ability to implement EMR systems that span an entire health network—allowing physicians to access care and treatment information from all parts of a patient’s journey. This sort of care continuum facilitates provider coordination and communication, while reducing costs by creating greater efficiencies throughout the care process.

Augmented Intelligence

To most, AI is thought of as artificial intelligence—where computer technologies are designed to replace roles traditionally filled by humans. Many people in the healthcare industry are beginning to think about these technologies as “augmented intelligence” instead.

Computers are, in many ways, better-suited to completing certain high-precision or high-efficiency tasks than their human counterparts. While this may be the case, there are a number of roles that will always rely upon some level of human intervention. More than that, we realize that the teamwork between human and computer algorithms works better than either one on their own.

For instance, AI has the ability to create greater efficiencies and improve diagnostic accuracies throughout the healthcare industry. Radiologists, in particular, will benefit from these technologies. An AI-enhanced triaging process will not only help radiologists review more scans in a given time period, but will also help direct their attention to those exams that require the most attention.

These increased efficiencies are going to play a major part in decreasing the need for total number of doctors—further reducing care costs and promoting success in a value-based system.

Learn More

Looking to learn more about how the shift to value-based care impacts various aspects of healthcare delivery and cost-reduction strategies? Check out our latest value-based care webinar panel here:

Watch the webinar replay

Request A Demo