What’s Hindering the Broad Adoption of Value-Based Care?

Posted by | Fuld & Company

The public conversation about health care in this country may be driven by politics — something we were reminded of last week when the Trump administration appeared to waffle on its latest attempt to undo the ACA. Beyond the political conversation, however, we find that professionals in payer and provider organizations are more focused on deeper layers of policy, technology, access to care and reimbursement. Those on the business end of the discussion are addressing key trends that are likely to continue regardless of the political discourse, whatever the current political climate. A trend that is going to be a key driver of long-term change in health care in the U.S. is the adoption of value-based care, in which providers are paid based on the quality of treatment outcomes rather than on the volume of services provided.

There is near universal consensus that the traditional fee for service model of healthcare reimbursement is unsustainable, and there is movement towards a value- or quality of outcomes-based model, but this movement is glacial.

Why is the adoption of value-based care happening so slowly – what are the obstacles? To find out, we recently spoke with numerous health care industry executives, experts from payer, provider, and other organizations:

• Value-based care requires that providers take financial risk in the form of capitation, so the provider is financially on the hook for any tests and/or procedures used to diagnose and treat their patients. Many providers argue that low capitation rates create a disincentive to treatment.
• There is no precision on the level of cost savings value-based care will generate over the long term. The analytics behind this are not simple. For one thing, the payers and providers are using different denominators — health plans look at membership, providers look at people who come in for treatment. That’s not an apples-to-apples comparative basis for any cost/benefit analysis.
• Closely related: where are the cost savings captured? Is it just a reduction in the long-term costs of treatment, or do large employer groups realize increased productivity with a healthier workforce? Even in the age of analytics the return-on-investment question is far from settled.
• For employers, health care coverage is the second largest employee-related expense after payroll. While payments bundled around outcomes may save money, some self-insured groups prefer the fee for services model because it gives them the ability to see where their money is going.

The above list of challenges does not include societal trends that may prove resistant to the broad adoption of value-based care in the U.S., and just barely scratches the surface regarding payer/provider alignment. We will discuss these topics in upcoming posts. The one certainty around value-based care is that its evolution and pace of adoption are worthy of close, ongoing attention.

Learn more about the latest trends in Healthcare

Fuld & Company consultants examined the findings that have arisen during our Health + Life science consulting engagements, exhibits, and presentations at HIMSS, and commentary from comprehensive interviews with health industry executives. The analysis by our industry experts has highlighted the ten most impactful healthcare technology trends influencing value-based care and other topics.

Tags: Competitive Intelligence, Health & Life Science, Payer, Pricing Strategy, Provider