As more and more aspects of my life become increasingly tailored to my needs and preferences (eg, shopping online, paying bills, etc.), I’m struck by how little my interactions with the health care system have changed over the past decade. But as the industry shifts from a fee-for-service model, a change may be in the works to accelerate the industry’s focus on providing value.
The imperatives for the shift to value-based care are quite clear. Given the unsustainable increases in health care costs, most health care services will likely evolve to incorporate some element of outcomes-based compensation. By this I am referring to a payment model that will seek to reward health care providers based on providing the right care at the right time, thus driving down costs and creating value.
A change this monumental would be difficult for any industry to execute, let alone in health care where fundamental interests and accountabilities across stakeholders are largely misaligned. In today’s system, most health care providers are incentivized by fee-for-service. And the average consumer is largely disassociated or shielded from the true costs of care. Since value depends on results, aligning stakeholders and shifting focus from volume to value is a central challenge.
Although this isn’t an easy transition, there are plenty of signals in the industry that a market shift is starting to occur. These shifts manifest in many ways where providers are participating in government-sponsored accountable care organizations (ACOs), taking on initiatives to drive clinical integration and population health across their practices, partnering with health plans in sharing risks/rewards, and / or buying up hospitals or practices as a way to preserve margin and growth. The latter is not necessarily a true long-term answer as acquisitions are typically a short-term response to help organizations adjust volume and market share by moving dollars from one pocket to another. Sustainable value can only be created when the health care provider is disconnected from the unit-based services model, and the incentives of fee-for-service are transformed to focus on value for patients through improved health outcomes relative to the cost of achieving those outcomes.
So what will drive scale and adoption of these new models by care delivery organizations? What ingredients will be necessary to support an overhaul of the health care system? We see several critical factors requiring consideration within a provider organization and coordination with other stakeholders or partners:
- Reimbursement models that stick: It is simply not enough to connect everybody together and say, “Okay, now you’re clinically integrated. Make it work.” Providers will need meaningful payment models and incentives that grow and evolve to drive alignment and integration in the right direction, coupled with reliable measurements to indicate their progress. It has to be an exchange where the system bears both the clinical and the financial risk, so they can access the true value generated by their efforts.
- Sustainable clinical transformation: Care coordination is not something that has been a traditional focus for providers.Scaling these operations will require investments and partnerships to enable population-based management to coordinate care across multiple conditions and settings. A model of care that will enable a team-based approach will be crucial to driving savings and efficiencies. Effective clinical and health care practice transformation will be the lynchpin to value-based care. True financial success will be driven by the ability to optimize utilization and enhance brand value and strength to drive market share.
- Integrated technology: Siloed technology systems that separate provider, hospital, and payment systems create fragmentation and lack of transparency. Technology platforms must be put in place to integrate the patient and provider to share clinical and financial insights and support decision-making. This underlying infrastructure is critical to enabling care coordination and monitoring outcomes.
- Aligned physicians: Core to making this transformation stick will be the sharing of patient care and financial goals between a health system and its affiliated physicians. The strategy to achieving those goals must be developed together and taken into consideration to achieve success for each party. A fully aligned organization requires a degree of trust in which physicians and administrators see each other as “co-owners” of a health system, working together to deliver the most effective care and experience to their patients.
- Engaged consumers: If the health care system is really going to deliver better health for the health care dollar, consumers will need to more actively follow medical advice and take actions to prevent illness. More work needs to be done to understand how to get physicians engage their patients and what supporting capabilities such as technology, benefit designs, and information sharing strategies will be required to support the interactions.
- Building lasting governance: This level of systemic change will require an effective governance process and leadership capable of aligning all incumbents, ultimately enabling decision making and driving responsibilities. Given the dynamic and multi-year nature of these transformations, there will be a need and ability to change direction when necessary, which can be quite complex given the number of ‘partners’ involved.
At this stage, the long-term success of the shift to value has yet to be determined. However, given the triple aim of decreasing cost, improving quality, and enhancing the patient experience, these are the capabilities that health care providers should focus on to survive.