For decades, health care’s fee-for-service model charged patients and plans for every CT scan, blood draw and surgery. This has been an unsustainable approach that incentivized volume, not value or health outcomes.
While change has been slow, payers and providers alike have increasingly embraced a value-based care (VBC) model, which rewards providers for the outcomes they deliver rather than the services they provide.
This transition has gained notable momentum. It’s estimated that 238.8 million Americans receive health care in a value-based care model. These numbers are expected to grow significantly in the coming years. In fact, the number of patients treated within the VBC model is expected to increase 15% per year.1
As health care models continue to transform, payers, providers and patients all stand to benefit greatly.
Let’s explore the benefits of VBC programs, as well as ways payers can partner with providers to ease the transition while driving better care and lower costs.
How value-based care drives higher-quality and better outcomes
As this change continues, value-based care benefits are becoming more and more clear. By focusing on evidence-based and preventive health, disease and illness prevention and management are prioritized over costly interventions.
Value-based care also has the potential to reduce medical procedures and other forms of overtreatment that aren’t needed. In the U.S., it’s estimated that health care waste costs $760 to $935 billion a year, or 25% of total health care spending.2
For these reasons and more, McKinsey estimates that if current trends continue, value-based care could create $1 trillion in potential enterprise value.3
But value-based medical care isn’t just a potential economic benefit. It’s also a way for providers to deliver the right care at the right time in the right place, resulting in better health outcomes and quality of life for their patients.
This upside is clear from VBC successes to date, including capitated fees that pay primary care providers a specific amount of money for each person under their care, no matter the volume of services provided.
According to research published in the New England Journal of Medicine, medical claims for patients with primary care doctors who participated in a VBC model were lower than average, while quality measures were higher.4
Procedure-based specialists, meanwhile, may join in VBC models through bundled VBC payments that encourage improved efficiency and coordination of care by providing a single payment for all the services involved in each care visit.
One example is a typical kidney transplant surgery. By focusing on collaboration and improving processes, bundled payments can result in5:
- Shorter hospital stays
- Reduced costs
VBC also encourages earlier transplants in patients with chronic kidney disease. This helps those patients avoid long-term dialysis.6 According to the National Kidney Foundation, early kidney transplants7:
- Offer patients a far higher quality of life
- Require fewer dietary and lifestyle limitations
- Result in fewer organ rejections
That’s a better way forward for both patients and payers.
VBC has also benefitted the oncology field. This was done by helping compensate both the payer and the member by reducing ER visits and inpatient admissions.
Cancer care often requires the coordination of specialists from several disciplines, such as medical oncology, surgery and radiation therapy. Collaboration required within VBC models is a natural fit.
Oncology providers are better supported to select from a variety of evidence-based treatment pathways. This helps ensure the most effective and appropriate approach throughout the continuum of cancer care.
Given the many ways that VBC can impact a provider’s practice, payers would do well to support providers as they transition away from fee-for-service models. By encouraging them to embrace this payment model, payers can help support better care and higher value for all stakeholders.