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Value-Based Care: Going Beyond the Buzz

July 9, 2019 BY Tory Waldron

Value-Based Care: Going Beyond the Buzz

U.S. healthcare, while overall excellent, is often too pricey, inefficient, and varies in quality from hospital to hospital. These days, value-based care (VBC) reimbursement models are gaining momentum in the healthcare industry because they help facilitate a shift toward less expensive, and higher quality care for patients.

As a result, many hospitals are starting to move away from traditional fee-for-service, or pay-for-performance, models and toward VBC care models. In fact, over the past eight years, the number of U.S. states and territories that implement VBC programs has spiked – rising from 3 states in 2011 to 48 as of 2018.

What is value-based care?

Traditional fee-for-service (FFS) models pay providers retrospectively for the quantity of services delivered. Over the past 10 years, there has been a shift in healthcare to focus on care quality and patient outcomes: quicker recoveries, fewer re-admissions, lower infection rates, and fewer medical errors. Enter value-based care: a reimbursement model that rewards healthcare providers with incentives based on the quality of care they provide to patients. In this way, healthcare providers that are high-performing and effective are rewarded with improved reputations and enhanced reimbursement payments.

Types of value-based care

There are a wide variety of ways that providers can implement value-based care in their organizations, but here are two of the more popular types:

  • Accountable care organizations (ACOs): ACOs are groups or networks of doctors, hospitals, and other healthcare providers, who come together voluntarily to provide coordinated, high-quality care to their patients. In an ACO, a provider becomes eligible for financial bonuses when they meet quality targets and reduce unnecessary spending. Types of ACOs include Commercial ACOs, Medicaid ACOs, ESRD Care Models, Medicare Next Generation ACOs, Medicare Pioneer ACOs, and Medicare Shared Savings ACOs. According to data from Definitive Healthcare, the Blue Cross Blue Shield of Texas Commercial ACO program currently covers the largest patient population of any ACO in the U.S., with about five million patients in its network.
  • Bundled payment programs: Bundled payments, also known as episode payments, reimburse providers for an entire treatment program based on expected costs as pre-decided by a physician. This model requires participating providers to assume risk, as they must cover costs that go above the estimated price for an episode of care including those that arise from complications and hospital readmissions. On the upside, providers profit if they keep costs below the target price while maintaining quality standards. 

Three states in particular—New York, Pennsylvania, and Vermont—are noteworthy for the broad scope of their value-based care initiatives and willingness to embrace payment models that involve shared risk.

How will value-based care affect my organization?

There is still a bit of hesitation or delay in implementing value-based care models, partly because it means physicians must adapt to new methods of care delivery and reporting. Whether providers like it or not, this industry-wide movement toward value-based care is picking up traction, so it is critical for providers to embrace the upcoming change. Here are a few ways your organization might shift, with a new reimbursement process in place:

  • New technologies: Value-based care requires an unprecedented amount of healthcare data exchange and analytics, so adopting technology solutions like interoperable EHR systems, patient and provider engagement technologies (like telehealth technologies), and core operational and financial applications will be critical.
  • Increase in provider/payor communication: If value-based care is about aligning what works best for the patient to a hospital's financial incentives, then your practice must work with insurers more frequently to create the best outcomes.
  • Greater emphasis on the "business of healthcare": In order to reduce inefficiencies, and perform better with VBC evaluations, it's important to be more business-minded, or seek help by hiring a person that can manage the business component of your practice. That person needs to ask and solve key business and patient care questions, like what are some of the practice's operational challenges? Are there roadblocks to access to care? Are appointment templates working? Are doctors closing their charts in a timely manner for reimbursement from payers? 
  • Consolidating industry: Small, independent physician practices are becoming less prevalent as healthcare's transition toward VBC care gains traction. In fact, the past few years have seen the highest level of healthcare provider consolidation in U.S. history. Last year, the number of accountable care organizations increased from 923 in 2017 to 1,011 by the start of 2018, and it is likely this number will only continue to grow. 

How can I benchmark my organization's ability to deliver value-based care?

It can be hard to benchmark your organization's ability to deliver value-based care. Key performance indicators like supply chain spending, wait times, and readmission rates can give your practice quantifiable achievement goals, but if you want to see where you stack up against your competitors, it might make sense to invest in a software platform that allows you to compare your hospital's scores to that of your competitors, your region, or even the national average. Software platforms like Definitive Healthcare can help you access actionable intelligence on the healthcare ecosystem to help you grow your network, retain patients, and understand where you rank compared to the competition.


Learn More

Want to understand how many members a given accountable care organization has, or how large the ACO's patient population is? Hoping to understand which hospitals and physician groups are currently participating in BPCI programs (Model 2, 3, 4, Advanced, or CJR bundled payment)? Definitive Healthcare can enable you search for, and fully understand, which hospitals and providers are participating in value-based care programs across the U.S., and benchmark your progress against competitors with:

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