The shift towards value-based performance in healthcare has been gaining traction over the past few years. Already, the Department of Health and Human Services (HHS) has allocated 30 percent of Medicare payments to value-based models by the end of 2016. This figure is set to increase to 50 percent by 2018. The decrease in fee-for-service reimbursements means that healthcare providers should have started restructuring their operations in compliance with reforms to the national healthcare system.
Fee-for-service versus value-based care
In fee-for-service care delivery, providers conduct various, fragmented, and sometimes redundant services, and each type of service is charged with a fee. Healthcare providers can therefore increase revenues with more services rendered. This system, however, does not necessarily improve outcomes and also increases the costs of healthcare. It also ensues more administrative work because claims for reimbursement are reviewed and processed per service.
Value-based care is the industry’s attempt at fixing an ineffective fee-for-service model. A 2014 State Health Care Cost Containment Committee report defines value-based service as “comprehensive, coordinated care using payment models that hold organizations accountable for cost-control and quality gains.” In a value-based model, other metrics have been established to determine how much is reimbursed to the provider. In general, with standards set by Medicare, Medicaid and other healthcare payers, providers are assessed by such measures as reduced hospital readmissions, healthcare technologies, preventive care, patient experience, and improved population health.
Several value-based models have been developed but generally operate under the same principle: a network of providers can increase revenues through shared savings by operating below estimated costs; likewise, if they operate above targeted costs, providers bear the risk of losses or are penalized for missing the mark. Safe to say, this system promotes a collective effort among all industry players to bring down the costs of healthcare to achieve profits.
Participating in a value-based system necessitates the acquisition of various technologies for enhancing care as well as for tracking and organizing data. The comprehensive quality metrics as conditions for reimbursement call for data-driven, evidence-based care delivery. Providers will then need platforms for complex accounting capabilities and for more accurate performance analytics. HExL Advisors, especially its founder and CEO Richard Kimball, help healthcare providers transition to a value-based performance structure with the right tools and technologies. They are most ready to assist clients in adapting to the changing reimbursement environment by connecting them with the right partners and capital sources in the business.