In 2006, Michael Porter and Elizabeth Olmsted Teisberg co-authored the book “Redefining Health Care.” The book was the first-ever introduction of the term “value-based care,” further popularized with the value equation, which equals outcomes/costs. A higher value for the equation indicates better healthcare, and a lower value suggests opportunities for improvement. It sounds simple, but producing higher outcomes at affordable costs is challenging.
The majority of providers often need help in the execution of value-based care (VBC), even though it makes sense on paper. In this guide to value-based care, we address six critical questions that can help understand the nuances of value-based care, what it takes to implement it, and how value-based care is different from traditional fee-for-service models:
At the conclusion of the guide, learn how leading health systems across the U.S. are implementing VBC initiatives with data-driven technologies.
What are the Core Principles of Value-Based Care?
Value-based care focuses on quality of care over volume. The latter can be measured with numbers, but how do we quantify quality? To simplify, quality requires optimization. For example, reducing care costs at a minimum level translates into quality outcomes in terms of cost. A successful VBC initiative starts with a strong foundation built on principles that keep the patient at the center of care. Each of these principles emphasizes different aims encompassed under the Quadruple Aim–enhancing patient experience, improving population health, reducing costs, and improving the work life of healthcare providers.
What is the Current State of the Value-Based Care Landscape?
If we trace the history of value-based care, instances such as the introduction of the Affordable Care Act (ACA) accelerated quality care. It’s been more than a decade since the inception of the ACA, but it’s challenging to deliver quality care, let alone at affordable costs. With increasing interest as they see the benefits, providers, payers, and patients support the value-based care approach.
According to research by McKinsey & Company, growth in value-based care has accelerated from creating approximately $500 billion in enterprise value today and may be on track to reach $1 trillion as the landscape matures. With strong support from federal agencies, value-based care has become a lucrative segment for investors. Center for Medicare and Medicaid Services (CMS) has consistently invited providers to participate in innovative models and build a roadmap for the entire industry to follow.
Source: McKinsey and Company
The McKinsey report also noted that the highest VBC adoption is in primary care, but other specialties are also evolving and embracing transformation. CMMI (Center for Medicare and Medicaid Innovation) has introduced several innovative payment models for specialty areas, such as
Source: McKinsey and Company
What are the Different Payment Models That Support Value-Based Care?
The transition from the traditional fee-for-service (FFS) model to the VBC model requires extensive resources and continuous iterations. The best way to motivate providers to adopt VBC is to incentivize those who deliver value. From an independent practitioner to a network of hospitals, such as an ACO can participate in VBC programs that are benchmarked and regulated by CMS. The following table highlights the different payment models that incentivize quality:
|Pay for Performance
|Healthcare providers are only compensated if they meet certain metrics for quality and efficiency.
|APMs and Advanced APMs
|APMs can apply to a specific clinical condition, a care episode, or a population. Advanced APMs are a subset of APMs and allow clinics to earn more for taking on some risks related to their patient's outcomes.
|Under this payment structure, different healthcare providers who are treating a patient for the same or related conditions are paid an overall sum for taking care of a condition rather than being paid for each treatment, test, or procedure. In doing so, providers are rewarded for coordinating care, preventing complications and errors, and reducing unnecessary or duplicative tests and treatments.
|The shared savings program facilitates coordination and cooperation among providers to improve the quality of care for Medicare Fee-for-Service (FFS) beneficiaries and reduce unnecessary costs. Eligible providers, hospitals, and suppliers can participate in the shared savings program by creating or participating in an Accountable Care Organization (ACO).
|The global capitation system operates on the basis of a network of hospitals and physicians receiving fixed payments on a per-member basis for enrolled health plan members. Generally, providers sign a single contract with a health plan to cover care for members and then determine a method of dividing up the capitated payment among the provider group.
For a deeper understanding of the nuances of VBC payment models, read these suggested blogs:
How Can Providers Execute Successful Value-Based Care Initiatives?
Executing value-based care initiatives requires a multi-pronged approach. From the right mix of people to technology, VBC is a complex puzzle with pieces scattered across the care journey. First, VBC must be seen as a continuous process, not a plug-and-play manual to create value. To successfully implement VBC strategies at scale, providers must:
How To Accurately Measure and Evaluate Value-Based Care Outcomes?
What are the Must-Have Tools and Technologies for Successful Value-Based Care Initiatives in 2024?
|Technologies and Tools
|Why It is Needed
|EHRs (Electronic Health Records)
|To access and update the digital footprint of a patient
|Population Health Management Software
|To drive care management strategies at scale and keep populations healthy
|Healthcare Contextualized CRM Software
|To find relevant patients, guide them to required care services, and retain patients
|Data Analytics Platform
|To make sense of healthcare data and achieve better outcomes
|Patient Engagement Applications
|To empower patients and keep them at the center of care
|Care Coordination and Referral Management Systems
|To drive seamless patient transitions in and out of the network for specialized services
|Quality Performance Measurement Tools
|To track, assess, and report on quality measures
Value-Based Care Success Stories
Franciscan Alliance’s Partnership with Innovaccer Yields $2.2 Million in Value
Franciscan Alliance is one of the largest Catholic healthcare systems in the Midwest. Their aim has always been to deliver quality- and patient-centered care across populations, including Medicare Advantage, MSSP, and commercial populations. Franciscan leveraged the Innovaccer platform and its full stack of solutions—Care Management, Patient 360, Population Health Management, and Physician Engagement—to implement customizable polypharmacy protocols to manage high-risk prescriptions and automated strategies to reduce readmissions, hospital stays, and emergency room visits, ultimately improving the continuity of care for each patient.
Franciscan Alliance generated $2.2 million in value across multiple Medicare and Medicare Advantage plans. The health network leveraged the Innovaccer platform to integrate clinical and claims data into a unified patient record and used Innovaccer’s advanced analytics to identify leading indicators that help them better manage risk and quality of care. Read more about the Franciscan Alliance’s journey in the case study.
CHI Health Generates More than $2.7 Million in Value with Innovaccer’s Automated and Data-Driven Care Management Solution
CHI Health focuses on implementing a transformative data-driven care management strategy that ensures comprehensive care during the recovery period to reduce inpatient and ED readmissions and ultimately reduce the total cost of care. To assign appropriate care management pathways for patient populations, the health system leveraged the Innovaccer platform and its comprehensive care management solution to implement automated TCM protocols.
By empowering care managers with data-backed insights at the point of care, CHI Health generated $2.75 million in value across Commercial, Medicaid, Medicare, and MA populations in just ten months. Read more about CHI Health’s value-based journey in the case study.