Many countries are already nearing their budget for what they can spend on healthcare; however, with an increasing number of treatments coming in the market and the number of aged patients increasing the demands.
As digital transformation continues rolling through the healthcare industry, value based healthcare is gaining momentum as an increasingly popular alternative to more traditional care models.
But how can a healthcare organization improve patient care by reducing the overall costs? Well, the healthcare industry is continuously adopting digital transformation, a result of which value-based healthcare (VBHC) is becoming a popular alternative to traditional healthcare models.
As a consequence, the focus of healthcare providers is now shifting on obtaining better value for the total money spent on healthcare facilities and the concept of value-based healthcare. But how do hospitals get reimbursed under this model? What are the advantages and disadvantages to pay for performance care? We dive into all these questions below.
What is Value Based Healthcare?
Value based heathcare is a form of healthcare delivery framework that that incentivizes healthcare providers to focus on the quality of services rendered, as opposed to the quantity. Under a value-based healthcare model, healthcare providers (including hospitals and physicians) are compensated based upon patient health outcomes.
Healthcare professionals participating in the value based healthcare framework are rewarded with compensation for promoting healthy patient outcomes, using evidence-based medicine for an increased quality of life, and lowering the impact of the burden of chronic ailments.
Value based care incorporates the following values:
- To shape the health results against the price of providing outcomes
- To support innovations that focus on efficiency
- To provide better integration of healthcare facilities
- A high-quality healthcare
- Positive patient experience
Focusing on wellness and prevention can also come under value based care. For example, preventing dangerous health conditions by promoting smoking cessation and dietary and lifestyle changes reduces the need for costly diagnostic methods and treatments.
Value Based Healthcare Model: How Does It Work?
Several healthcare organizations are beginning to redesign their infrastructure to support patient engagement in value based healthcare. Here are some variations of value based care that you can apply in your organization:
- Accountable Care Organizations (ACO)
ACOs are patient-centered organizations that encourage coordination between providers and patients to provide the best possible coordinated healthcare at the lowest possible cost.
ACO shares the clinical and claims data with the payers to illustrate improvements in outcomes such as adverse events and patient engagement.
- Medicare Quality Incentive Program (MQIP)
MQIP rewards the healthcare providers who ensure that the gaps in medical care for patients, such as diagnosis or management, are addressed before the end of the calendar year.
- Bundled Payments
The bundled payments model works by collectively reimbursing the healthcare providers rather than an individual payment.
- Medical Homes
PCMH focuses on patient care via a single healthcare professional and team. This approach relies on sharing of electronic records amongst the professional and team, which, in turn, reduces redundant care and associated costs.
- Population-based Payments (PBP)
PBPs focus on rewarding the providers based on the population covered to provide patient-centric care for that specific population.
Benefits of Value Based Healthcare
A patient’s healthcare experience can turn into a negative one by getting lost in paperwork, running at different places, and having limited time to meet their provider. However, value based care model can benefit them and your organization in the following ways:
- Your patients will need to spend less time to attain the best results. Value based healthcare benefits patients by providing quicker recoveries from their health condition and also avoiding chronic ailments in the first place.
- Patients can achieve better outcomes not only in an isolated area of illness but also for the comorbidities and adverse effects that accompany their condition.
- Healthcare providers can spend more time on patient-engagement services, less time managing chronic diseases, and add value to healthcare.
- Team-based approach decreases the administrative burden on the providers, thereby reducing burnouts.
- Value based care allows you to control the costs and reduce the risk. By focusing on attaining a healthier population, you can increase efficiency by bundling payments and decreasing the drain of your premium pools and investments.
- Suppliers can also benefit from value based healthcare transformation to align their products and services with positive patient outcomes and reduced costs.
- The population becomes much healthier and spends less money managing chronic ailments, hospitalizations, and medical emergencies.
Value-Based Payments Model v/s Fee-for-Service Moel
The traditional Fee-for-Service (FFS) model encourages medical professionals to perform numerous high-tech procedures and fill as many beds as possible. This method compensates the healthcare team for the quantity rather than the quality of healthcare.
In the FFS model, the healthcare providers do not spend time on each patient; instead, they spend more time on unnecessary tests, surgeries, or treatments. This approach manages to increase healthcare costs but not patient outcomes.
Value based healthcare, on the other hand, always prioritizes quicker recoveries, higher patient satisfaction, fewer medical errors, and lower readmission rates. Value based care compensates the healthcare team depending on the effectiveness of managing patient care.
How to Implement Value Driven Healthcare
To begin implementing value based care in your organization, you can follow the five steps recommended by the American Medical Association (AMA).
- Know your target patients for value driven healthcare
The foundation of value based healthcare for patient engagement lies in knowing your patients. Patients with a high hospitalization risk or utilization in your emergency department (ED) often are associated with fragmented care and higher care costs.
Patients arriving at your ED often have more than one chronic condition or associated comorbidities, such as high blood pressure, high cholesterol, renal or heart problems, high blood sugar, cancer, etc.
It is essential that you know your patients and determine which patients contribute most to the care cost or use ED frequently. This step ensures that you identify your target population and places of improvement.
For example, you can segment the patient population based on the risks, i.e., healthy, low-risk, medium-risk, and high-risk. This segregation helps prevent readmissions and connect to community-based resources to allow your patients to live healthier lives.
- Plan the value based care for transformation
For planning a value based healthcare for transformation of patient care, you need to consider the following:
- Identify your payers and the benefits you expect for them
- Identify the expected benefits for your patients
- Design the workflows to provide healthcare depending on patients
- Involve legal advisors to ensure that the value based care design is as per the government regulations
- Discuss the team members who will support the value based care model and discuss the roles and responsibilities of each member
- Design the frequency of patient contact and patient visits
- Identify revenue needs and risk stratification
Other than the doctor, each member of the healthcare team, such as the patient outreach coordinators, nurse educators, care coordinators, certified medical assistants, referral coordinators, extensivists, and hospitalists, will have designated roles in the inpatient care process.
- Design value based care model via partnerships
You may need to partner with someone that can provide your organization with additional resources. Depending on the size of your organization, a partnership may help you transform your organization into a value based care.
Suppose you do not have all the necessary facilities at your organization. In that case, you can collaborate with local hospitals, emergency care centers, or other healthcare practices to enhance your ability to provide and manage better outpatient and transitional healthcare.
Collaborating with other healthcare systems may help you with ED visits, inpatient admissions, prevent duplication of services, and drive coordination of patient care.
You can also partner with the IT sector, pharmacies, home health agencies, or other community services that can provide benefits like resource sharing, which, in turn, help you work together across the continuum of care.
Emphasize the goal of your healthcare outcome so that the providers do not experience any unnecessary administration. However, involve your legal advisors to ensure that the multi-provider arrangements are within the laws applicable to the healthcare system.
Likely, all value based payment models may not result in cost-savings, but you can always talk with your collaborators and modify the model. Also, you must negotiate with your collaborators so that the measures you select are beneficial to all the parties involved, including your patients.
- Drive appropriate utilization for value based pricing
After adopting the newer value driven healthcare model, look for measures that can help you to cut unnecessary costs and deliver the highest-quality care. The clinical needs and choices of a patient control where they receive care.
You can work with your financial expert to see the spending patterns of your organization and accordingly check if there are any unnecessary costs associated with your care practices.
Your partners or collaborators may increasingly rely on and refine the newer healthcare practices after your organization adopts the value based care model.
For example, a laboratory testing method is costlier in your facility than in nearby places. So, you can refer your patient to that facility if it is a cost-effective approach. However, you should ensure that the facility does not compromise on the care quality.
The value based healthcare examples you choose should ensure that your medical providers focus more on new and annual appointments and critical patients. Other practices, such as patient education and intermediate care, can be provided by other healthcare members.
Another example where an organization can reduce the costs is the type of mobility devices provided to disabled patients. Instead of using highly costly devices, you may use generic ones that are much cheaper yet practical.
- Monitor your progress
When you monitor your organization’s progress, you will know what impact VHBC had on your target patients. It also helps you reassess whether your methods are helpful enough to accomplish your goals; if not, you can modify them.
A method where your team can regularly monitor the organization’s progress is by reevaluating the value based care model at fixed intervals (for example, every quarter). You can check whether your healthcare team and patients are satisfied with the adopted methods.
While you constantly reevaluate your measures, keep track of the contracting options with your collaborators or payers. Check your contracts yearly and ensure that you receive appropriate compensation.
Have a transparent and routine conversation with your providers during scheduled team meetings and ensure that your team works with positivity while delivering value based care.
While implementing and monitoring value based pricing systems, you may notice that some decisions may or may not work. But you should take it as a learning experience about what works the best and make the necessary changes.
The Future of Value-Based Healthcare
As healthcare professionals begin to adapt to value based healthcare frameworks and the healthcare landscape continues to evolve, you may see a more significant number of long-term costs decline. Value based reimbursement model will:
- Indemnify for quality rather than quantity
- Focus on value-based, holistic, and patient-centered care
- Improve patient experience and health
- Reduce per capita cost of your organization
- Promote collaboration of healthcare professionals to achieve the best possible outcomes
While the healthcare system evolves to shift from FFS to value based payments model, it might take a long time and be a challenge to transform the sector. Also, you may initially experience financial hits. But this slow transition will remain an ideal approach for decreasing costs and increasing quality of care.