Over and over again, studies reveal that the United States healthcare system suffers from suboptimal outcomes, even though Americans spend more on healthcare than similar industrialized nations. As a recent article in Time Magazine notes, “average life expectancy is lower in the U.S. than in other wealthy nations, and about 60% of U.S. adults have a chronic disease.”
Part of the problem is that the majority of the healthcare system in the US still uses a fee-for-service (FFS) payment model, despite its well-documented drawbacks. “In FFS, healthcare providers are reimbursed for performing services,” says Dr. Christine Meyer, a Pennsylvania-based physician and expert healthcare consultant. “This encourages them to do more tests and conduct more procedures, yet all this activity doesn’t necessarily lead to better health outcomes.”
As both a physician and healthcare consultant, Dr. Meyer not only participates in several value-based care (VBC) programs, but also advises other practices and networks of physicians on what it takes to succeed in VBC payment models.
What is value-based care?
“In value-based care, healthcare providers are compensated based on the quality of care they provide,” Dr. Meyer explains. “They get paid for getting good results, meaning patient outcomes are paramount — the primary objective is to give the best care possible.”
Common performance metrics in FFS programs are the number of patients served and procedures performed over a given time period. Conversely, VBC looks at rates of patients’ readmission to hospitals, their satisfaction scores, doctors’ success rate at avoiding preventable conditions, and mortality rates.
“Focusing on these metrics incentivizes providing quality healthcare,” Dr. Meyer says, “which leads to more preventative care, for instance. In my experience, the value-based care model reduces hospital readmissions, and patients enjoy better outcomes overall.” Indeed, the health policy journal Health Affairs has found that VBC results in consistent savings and can reduce spending by as much as six percent per patient.
The benefits of value-based care
Another one of the major benefits of VBC is that it helps manage the expenses associated with healthcare. “Tests and procedures are only done if they’re actually necessary,” Dr. Meyer explains, “which reduces wasteful spending. As a result, the whole system benefits financially.”
VBC also promotes collaboration between different healthcare providers. “Patients often have an entire medical team,” Dr. Meyer explains, “including their primary care physician, as well as specialists and social care providers. Since VBC prioritizes the patients’ outcomes, this approach encourages different team members to work together. Providers take responsibility for the health of patients as a collective.”
Providers who follow the tenets of VBC can be found at Accountable Care Organizations (ACOs), which bring patients, providers, and payers together with the unified objective of improving health while reducing unnecessary spending. By eliminating unnecessary expenses and delivering better care in this way, hospitals and other medical facilities can build strong track records that burnish their reputations.
Transitioning to VBC
Given all the advantages of VBC over FFS, why don’t more organizations go this route? According to Dr. Meyer, many healthcare providers still face major obstacles.
“Transitioning to a VBC model requires significant changes,” Dr. Meyer explains. “In addition to changing how you provide care, your organization also has to transform. FFS is entrenched in the culture of many medical facilities.”
Furthermore, Dr. Meyer says some providers resist this shift because they fear it could have a negative impact on their income or bring more administrative work. Some providers may also have to develop new skills.
Finally, Dr. Meyer points to a technology component — the common IT infrastructure of a FFS system isn’t appropriate for VBC. Yet, these challenges can be overcome.
“The first step is for providers and organizations to get training about VBC,” Dr. Meyer advises. She also recommends that organizations collaborate with payers to develop fair and transparent policies and procedures for compensation, as well as implement advanced health IT systems that can provide better data tracking and analytics. “Most importantly, however, they should start engaging patients as active partners in their care,” she adds.
The future of healthcare is value-based
VBC enables healthcare providers to spend their time doing what they got into medicine to do: support the health and well-being of their patients. VBC also enables patients to achieve their goal of living the best life possible. For these reasons, VBC clearly seems superior to FFS.
“I envision a healthcare landscape where VBC becomes a dominant model,” Dr. Meyer says. “The more of us providers take this approach, the more we will push the system towards higher-quality care that centers around the patients, not the money.”
VBC promises a paradigm shift in healthcare compensation and delivery, improving patient outcomes and efficiency, while decreasing expenses. The entire US healthcare system would benefit as a result. For this reason, patients should prefer medical facilities that offer VBC, and providers should shift their own practices away from FFS.
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