For years, value-based programs have managed to reduce the cost of healthcare for patients and payers while simultaneously improving the overall quality of care. As effective as these initiatives have been, however, costly fee-for-service models still dominate the market. In order to inspire the sense of urgency required to make value-based care more the rule than the exception, payers like you will have to rise to the occasion.
What makes value-based care different?
As its name suggests, the fee-for-service, or FFS, model that has taken root in the healthcare industry stipulates that physicians and their organizations get paid based on the volume of services they provide. While this approach makes logical sense on paper, it has translated into a culture that has incentivized running more tests and seeing more patients than is necessarily appropriate.
In a value-based environment, on the other hand, healthcare providers are paid in accordance with the effectiveness of each procedure or test they order, with the goals of reducing unnecessary spending (which ultimately falls on you, the payer) and markers of ineffective medicine, such as readmissions. While a shift to the latter model would undoubtedly benefit you and you employees, healthcare providers have thus far had little reason to make that change.
In an FFS system, physicians are compensated based on the volume of services they perform, regardless of their effectiveness.
What difference can payers make?
However, in a study that analyzed the value-based systems around the country over the course of several years, a research team at the University of Washington determined that payers themselves hold the power to bring about this change.
"Rather than continue to wait for the smoldering coals to ignite, public and private purchasers must make a commitment to actively illuminate the path from FFS to value-based payment," writes Douglas Conrad, an author of the report, on HealthAffairs.com. "The 'buck' really does stop with the employers and public purchasers, and their employees and beneficiaries. If the health literacy and cost consciousness of employees and taxpayers are advanced by their sponsors and purchasers, a sense of urgency will emerge."
In order to make this change a reality, you must be willing to tackle the upfront costs and complications that can come from such a transition. For example, this type of payment reform requires payers to collect and analyze the data it takes to identify opportunities to improve performance, then design, implement and evaluate such programs. Plus, payers should consider adjusting traditional financial incentive programs to reflect new, value-driven benchmarks. Only once this infrastructure is in place can you expect healthcare providers to change lanes and adopt the new standard.
As intimidating as these tasks may be at the outset, they can best be accomplished when payers coordinate their efforts. As Conrad's summary of his report so aptly concludes, "Only then will there truly be no turning back, and players in the healthcare system will be forced to make the leap to the new world." As a result of your diligence, that new world will better reflect the constraints on your company's budget and the quality your employees deserve.
Posted by Julio Iturriaga
Julio Iturriaga is the manager of Sales and Business Development for Kelsey-Seybold Clinic.
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