Globally, the healthcare industry is at a turning point. The rising costs of healthcare, aging demographics and the need to address disparities in access and outcomes challenge healthcare systems worldwide. In the future, how healthcare is managed, delivered, funded and spent will profoundly depend on what direction the sector takes today.
Value-based care (VBC) is an opportunity to reshape global healthcare management, delivery, and funding while changing lives for the better as a way to address all of these challenges.
What is value-based care, and why do healthcare organizations need to invest in the infrastructure that makes it successful?
By its very nature, VBC represents a paradigm shift from volume-based models that compensate providers for services provided to outcomes-based models. In this system, the focus shifts away from the quantity of services delivered – office visits, diagnostic tests, procedures – to the quality of the results. Prioritizing wellness, prevention and person-centered care over profit-driven volume is at the heart of the program.
Incentives at VBC are aligned with wellness, prevention and effective management of chronic illnesses to maximize the impact of every dollar spent. In other words, it rewards healthcare providers for doing more rather than more well.
A ‘Value-Based’ Promise
VBC is more than a theoretical concept, it is a practical approach based on measurable results. The goal is to enhance the delivery of healthcare by ensuring that the right care is delivered at the right time by the right provider in the right setting.
To take meaningful steps toward managing long-term health outcomes rather than merely responding to acute episodes, healthcare organizations should transition from reactive to proactive care. A proactive approach, timely interventions, and seamless transitions of care can reduce emergency room visits, hospital readmissions and financial costs.
While VBC has great potential, uptake has been very slow. Often, healthcare organizations encounter obstacles like misaligned incentives, fragmented care delivery systems, and reluctance to change when transitioning from fee-for-service/volume-based payment models.
Efficacious implementation of VBC requires more than just a conceptual concept; it requires rethinking longstanding structures and processes, including fundamental changes in healthcare delivery, management, and financing.
As a result, we believe that VBC requires fundamental changes across three domains: clinical and service delivery, operational processes, and performance management and compliance.
VBC and clinical delivery
A better coordination of services is the first step toward realizing the potential of VBC. As part of this effort, seamless pathways should be created between hospitals, clinics, and social services to address not only medical requirements, but also broader social factors affecting health, such as housing, transportation, and access to nutrition.
Risk stratification is a crucial element of managing chronic diseases – a core aspect of VBC – so that high-need patients can be identified and treated effectively.
Despite the importance of provider engagement, only 23 percent of Care Allies-Modern Healthcare Survey participants said their VBC strategy is well-understood by physicians.
For value-based care to be adopted by physicians and other stakeholders, compensation structures must be redesigned. Rather than rewarding larger service volumes, alternative payment models (APMs) reward efficiency and better outcomes. Financial incentives can be aligned with improvements in care quality through APMs, which include shared savings initiatives and population-based payment plans.
A key component of service coordination is communication. VBC requires physicians to understand why it exists, but also their roles, responsibilities and rewards.
The role of operational excellence
Information technology is a key enabler of VBC.
Interoperable electronic health records, patient portals, and remote monitoring tools enable healthcare providers to track patient data in real time, making personalized care possible. Artificial intelligence and machine learning amplify this capability by uncovering patterns and insights that would otherwise be overlooked.
Through advanced analytics – enhanced by artificial intelligence applications – high-risk patients can be identified early, so proactive interventions can be made before costly health crises occur. Likewise, real-time data analysis enables care teams to monitor treatment outcomes.
The importance of patient engagement cannot be overstated.
To achieve VBC, patients must change their perception of their roles in their own care – from passive recipients to active participants.
Telehealth systems, mobile apps and remote monitoring devices are essential tools for promoting lifestyle changes, improving compliance with treatment, and reducing unnecessary hospital admissions.
Monitoring and managing compliance and performance
As a result of VBC adoption, providers are also faced with new financial challenges. Financial risk management and incentivizing outcomes must be balanced by organizations.
Instead of seeing this as a disadvantage, it should be viewed as an opportunity. Taking greater responsibility for healthcare costs can help providers make more effective decisions for their patients.
However, to effectively manage risk within a VBC framework, planning and preparation are crucial. Using data-driven modeling, actuaries can assist organizations in developing sustainable pricing models, allocating reserves, and projecting long-term financial performance.
Compliance with regulatory requirements is also crucial.
The complexity of VBC payment systems must be managed with strong compliance frameworks while maintaining transparency and trust.
A road map for the future
It might be challenging to achieve broad VBC adoption, but the benefits outweigh the challenges. Rather than merely seeing it as another passing trend, healthcare organizations should view it as necessary evolution. In a changing landscape, in which efficiency, outcomes, and patient experience are paramount, those who hesitate risk falling behind.
A clear call to action for healthcare leaders is to embrace value in order to embrace the future. To provide better care to everyone, healthcare organizations should focus on outcomes rather than volume and sustainable business practices rather than short-term profits.
Investment in technology, promoting integration and aligning incentives with outcomes may be complex steps toward establishing the appropriate infrastructure.
Life is improved and costs are reduced, so the rewards are more than worth the effort.
Opinion provided by: FTI Consulting
Authors:
- Annie Mayol, Senior Managing Director, FTI Consulting
- Juan Montañez, Senior Managing Director, FTI Consulting
- Georges Assy, Senior Managing Director, FTI Consulting
