Value-based health care is an outcome-based approach to healthcare in which care providers are compensated based on patient health outcomes. This delivery model includes both hospitals and physicians. Under value-based healthcare agreements, care providers are remunerated for aiding patients in the improvement of their health, the reduction in the effects and incidence of chronic disease, and the enjoyment of a healthier life in a verifiable, evidence-based way.
Value-based care differs from a fee-for-service model or capitated approach in terms of how their providers are compensated on the basis of the number of healthcare services they deliver. The “value” in value-based healthcare comes from the measurement of health outcomes against the cost of delivering the outcomes.
The benefits of a value-based healthcare system encompass patients, providers, payers, suppliers, and society as a whole.
Patients spend less money to obtain better health
Managing a chronic illness or condition like diabetes, cancer, obesity, COPD, or high blood pressure can be expensive and time-consuming for patients. Value-based care models emphasize hastening a patient’s recovery from illnesses and injuries and avoiding chronic disease in the first place. As a result, patients have fewer visits to the doctor for medical tests and procedures. They spend less money on prescription medication as both their short-term and long-term health improves.
Providers achieve efficiencies and patients have a higher degree of satisfaction
Providers must may need to invest more time for new prevention-based patient services which also means less time on chronic disease management. Quality and patient engagement measures elevate when the focus is more on value instead of volume. The providers do not have the financial risk that comes with fee-for-service payment systems. Even for-profit providers who can generate a higher value per episode of care can expect to be rewarded under a value-based care model.
Payers control costs and reduce risk
Risk is more effectively mitigated when it is spread across a larger patient population. A healthier population with fewer claims minimizes the drain on payers’ premium pools and investments. Value-based payment also allows payers to be more efficient by bundling payments that cover the full care cycle of the patient or for chronic conditions, covering periods of a year or more.
Suppliers bring prices in line with patient outcomes
Suppliers benefit from being able to align their products and services with positive patient outcomes and reduced costs. This is an important selling point due to rising national health expenditures on prescription drugs. Many stakeholders in the healthcare industry are calling for manufacturers to correlate the prices of drugs to their actual value to patients. Such a process will likely become easier with the growth of individualized therapies.
Society becomes healthier while overall healthcare spending is reduced
People are spending less money to manage chronic diseases, costly hospitalizations, and medical emergencies. In the United States, where healthcare expenditures account for almost 18% of Gross Domestic Product (GDP), value-based care promises to reduce the overall cost of healthcare significantly.
Moving from a fee-for-service to a fee-for-value system will take time and the transition has been more difficult than expected. As the healthcare landscape continues to evolve and greater numbers of providers adopt value-based care models, short-term financial setbacks may be seen first before longer-term costs decrease. However, the transition from fee-for-service to fee-for-value has been and is still being embraced as the best method to lower healthcare costs while increasing quality care and helping people lead healthier lives.
About CSuite Solutions
CSuite Solutions works with healthcare providers throughout the United States to deliver innovative solutions that improve patient care while driving efficiencies and profitability. The professional health system advisors assist with direct-to-employer self-funded insurance plans, value-based care, revenue cycle management, and accountable care organizations. Founded by seasoned C-level healthcare executives, CSuite Solutions is expertly positioned to work alongside healthcare systems in an advisory capacity.