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What is Value-based healthcare?

October 18th, 2018 - By Kristen Nehk

Value-based healthcareWith growing pressure from the government and business groups to change the emphasis of the health care system to enhancing outcomes, lowering budgets and growing general access, the healthcare sector is shifting away from the fee-for-service payment model. The shift towards quality-based care and patient outcomes (such as reducing hospital readmissions, using certified health IT, and improving preventative care) along with a new reimbursement plan is compelling providers to focus their efforts on providing better care for individuals. The demand from public and commercial payers to cut down costs and improve healthcare delivery are pushing them away from long-lasting volume-based healthcare models toward “value-based healthcare”. This method aims to completely adjust payment and objective measures of medical quality of care.

In value-based care, providers are reimbursed for assisting patients to recover their health, decrease the impacts and occurrence of long-lasting diseases and live better lives in an evidence-based way. Value-based care is different from fee-for-service and capitation in which doctors are rewarded according to the number of healthcare services they provide. The term ‘value’ in value-based healthcare has originated from shaping health results against the price of providing the outcomes.

Related: What Is Capitation Fee In Healthcare?

Value-based healthcare appears as a substitute for fee-for-service which pays providers all together for services offered based on the bill charges or yearly fee. It is a simple idea of improving the results and quality of health for patients. The aim of value-based healthcare is to regulate the process of healthcare through best practices. Wellness and prevention are also highlighted in value-based care. Protecting health through quitting smoking, nutritional and lifestyle changes lessen the need for costly processes, tests, and medicines.

Difference between Fee-for-Service and Capitation

In the fee-for-service payment model, the medical services are bundled and paid for separately. This model incentivizes doctors to offer more treatments or services since costs are dependent on how many procedures, treatments, and services are offered. As an outcome, medical practices and physicians might overlook the quality of care for increased profits. Whereas in capitation the physicians are discouraged to perform procedures,  as they are not paid extra for them. Capitation often regulates the use of healthcare assets and put physicians at the peril of services provided. Capitation fee in healthcare is the fixed sum of money per patient per unit of time paid in advance. Value-based healthcare is significantly different from these models. In this model, hospitals and doctors are paid for the quality of the services provided as well as helping people improve their health in a cost-effective way. Read More – Capitation vs. Fee-for-Service

Value-based care delivery models

Currently, at least 75% of the providers participate in at least one of the value-based healthcare models. The payment process which encompasses doctors, hospitals and other providers is based on a different measure including quality, effectiveness, and cost and in enhancing the patient experience. The available value-based healthcare models are as follows:

  1. Medicare Quality Incentive ProgramValue Based Care
  2. Pay for Performance
  3. Bundled Payment
  4. Patient-Centered Medical Home
  5. Payment for Coordination
  6. Accountable Care Organization
  7. Capitation

The shift in the market toward value-based payment model is driven by the pressures to cut down costs and improve the quality of healthcare. Government payers, employers, health plans and consumers are asking the healthcare system to deliver value. These new models are an essential component of that process.

Pros and Cons of Value-based Healthcare

The pros of value-based healthcare include:

  • Respected and involved customers are at the heart of healthcare and are sustained by a more synchronized care team.
  • Proactive care prevents and manages chronic disorders with a focus on keeping patients well.
  • Data is assessed across the organization of care provider to recognize particular well-being risks, improve care management and improve the operations.
  • Value is the new benchmark for insurance firms and providers pay is based on the quality of care.
  • Quality and patient engagement increases when the focus is on value rather than volume.
  • Suppliers get the advantage to support their products and services with positive patient results and decreased costs.

The cons of value-based healthcare include:

  • Increased patient load makes doctors responsible for wellness issues that are beyond their typical scope.
  • The demands of a value-based system can lead to the tougher, less sustaining work environment for physicians.
  • Organizations which lack data managing skills find it difficult to reach value-based care objectives which might end up in hefty penalties.
  • Lack of transparency in data and irregularity in reporting models.

Also Read: Universal Benefits of Value-Based Care

Future Prospects of Value-based Healthcare

Transforming from fee-to-service to value-based care will take some time and the shift might be harder than estimated. Physicians are finding themselves with unpredictable performance reports, and variations in performance measurement. There are less staff time and a lack of transparency among payers and providers. As the healthcare sector continues to evolve and providers accept the value-based care models, they might initially experience some financial hits but this transition eventually translates to an ideal method for decreasing the healthcare costs while expanding quality care. In order to succeed in this new model, providers need to garner new abilities such as making clinically combined physician networks, gathering and assimilating data, and applying analytics to find cost and prospects for quality improvement.

Value-based healthcare is bending the cost curve, reducing redundant medical costs while improving care quality and patient engagement. To succeed, healthcare providers must understand that they need to engage patients, families, and consumers.  It means captivating the patients in their healthcare outcomes from the beginning to the end. Healthcare providers should work to support patients in all aspects of their health and wellness journey. Apart from generating strategies to support a value-based model, conducting strong patient outreach within the community is also important. Offering positive experience and outreach by using innovative technology will deliver on the promise of quality health care at a lower cost.

PrognoCIS offers powerful solutions to medical practitioners which include Practice ManagementTelemedicine Solutions, and Medical Credentialing, e-faxing, and texting. Contact us for more information


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