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The value of change: Challenges and strategies transitioning to value-based care | Viewpoint


The move from the fee-for-service model requires a full-scale cultural shift within a healthcare organization.

In the supermarket, we look for fish that’s sustainably raised. We’re swayed by sustainable practices from hotels and retailers. So why wouldn’t the same standard apply to the most important service industry in the world, healthcare?

Image credit: Odesso

Zameer Rizvi is the founder and CEO of Odesso.

The fact is that the traditional fee-for-service model, charging patients and plans for every blood draw, X-ray, and surgery, is an unsustainable norm that has pushed hospitals and patients toward bankruptcy. The volume approach brought many of America’s largest health systems to financial loss in 2022, while news stories report on hundreds of rural hospitals closing in recent years, with nearly 30% of those still open at risk. This is exacerbated by burnout among overwhelmed physicians, nurses and other personnel.

Momentum toward VBC

In the U.S., rising healthcare costs – from patient deductibles to employer premiums to insurance drug coverage – are accelerating change.

According to health service company Optum, “It’s estimated that 238.8 million Americans receive healthcare in a value-based care model. These numbers are expected to grow significantly in the coming years,” with patients treated in the VBC paradigm expected to increase 15% annually. And no wonder: the New England Journal of Medicine writes that patient claims with value-based doctors were lower than average while reporting higher quality service.

Deloitte’s Center for Health Solutions says that “instead of rewarding volume,” value-based medical standards “reward better results in terms of cost, quality, and outcome measures.” Some health organizations are actively embracing this reality. To create a one-stop health shop, pharmacies are purchasing clinic groups.

Opportunities and challenges

Value-based care has been proven to reduce overhead costs and effect more positive health outcomes. With its potential for greater efficiency, less waste and better integration, providers stand to boost revenues if they can make the shift.

VBC benefits derive from such factors as prevention (keeping patients from costly hospital visits through proactive early intervention), bundled payments (which streamline billing, reduce administrative costs and increase synergy among healthcare providers), and patient data (wider access to a breadth of health information across medical teams within HIPAA regulations).

The challenge of transitioning to value-based care, as might be expected, is fueled by inertia (sticking to what we’ve always done even though it’s unsustainable), fear (it could destabilize personal and practice earnings) and cost (uncertainty about initial investments). Yet with momentum pushing the industry toward needed equilibrium, those eyeing the shift to VBC can take the right steps toward delivering healthier outcomes for everyone involved.

Embrace education

Learning doesn’t end with graduation from med school – health professionals pride themselves on staying abreast of new research, techniques, tools and therapies.

Providers should learn all they can about VBC elements like bundled payments, shared savings and pay-for-performance. Easily accessible courses, in-person and online, need to be developed, bolstered by everything from medical journal articles to online town halls with interactive Q&As.

The VBC transition requires a full-scale cultural shift within a healthcare organization. Doctors must create platforms to engage and educate their staff about value-based care and how it will impact their day-to-day roles. They should expect to devote more time on prevention-based services and far less time on chronic disease management. Empowering staff involves training in care coordination, patient engagement and data analytics.

Physicians must also take the lead in encouraging patients to be more proactive with their own health and wellness, to gain a greater sense of health literacy that facilitates better outcomes.

Assess options

Value-based care isn’t a monolithic approach. To implement it, physicians need to assess and choose among different VBC models, usually in collaboration with payers and other partners. With direct primary care (DPC), patients bypass insurance to directly pay their physicians a type of membership fee to gain unlimited contact with providers. In the concierge model, these membership fees are supplemented by insurance payments to providers.

To share risks and boost quality service, physicians may opt to join with other doctors, hospitals and other providers in an accountable care organization (ACO), which can offer new access to dedicated staff like a nurse case manager, social worker or team pharmacist. Then there’s the patient-centered medical home (PCMH) model, delivering more comprehensive services.

With a full team of providers responsible for a patient’s end-to-end health needs – from prevention to acute care to chronic care – ACOs are recognized among the best methods for transitioning medical practices to value-based care.

Leverage technology

The power of data is transforming healthcare. But providers must know how to fully harness it.

The VBC model is driven by robust data collection, analysis and sharing, and the power of shared data is being embraced by states such as California, which in 2024 is launching a Data Exchange Framework, a first-of-its-kind centralized system designed to provide access to patient health information among health care entities, government agencies and social service professionals.

VBC efficiencies can be facilitated by implementing electronic health records (EHRs) and other information technologies to better track patient progress, identify areas for improvement, and take data-driven actions to improve processes and outcomes.

Ramping up the needed digital infrastructure, medical practices should invest in a cloud-based analytics platform that provides or supports data-driven care redesign, predictive modeling to ensure effective and timely preventative care, real-time data on provider services and patient activity (including remote monitoring), unit cost management to achieve operational efficiency in care and support settings, and quality measurement and reporting tools.

McKinsey recently reported that the use of technologies like AI in medical care could “reduce medical costs by 5% to 11% and increase revenue by 3% to 12%.”

From analyzing vast amounts of patient data to optimize therapies to helping personalize treatment plans, AI and machine learning can offer invaluable assistance to physicians looking to improve the sustainability of their practice.

Zameer Rizvi is the founder and CEO of Odesso.

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