Value-based care: What is it and what are its benefits?
Article at a glance
Value-based care revolves around the idea of improving healthcare quality for patients and preventing problems before they begin.
Value-based care models stress an integrated team approach.
Value-based care models include medical homes, accountable care organizations, capitation, shared savings/shared risk.
Benefits of value-based care are lower costs, higher patient satisfaction, reduced medical errors, better-informed patients.
There are six components, such as wide-spanning access to care, to an “ideal” high-value healthcare system.
In the United States, healthcare spending accounts for nearly 18 percent of the gross domestic product (GDP) — this is more than other wealthy countries. Yet the healthcare system in the United States is still lagging behind in many ways. While the U.S. system produces some of the best medical outcomes in the world, it also produces some of the worst, in some cases providing ineffective or unnecessary care. What value-based care aims to do is decrease the instances of poor medical care and increase positive patient outcomes, safety and service. The future of healthcare may be uncertain, but it’s hard to dispute the many benefits of value-based care — from lowering costs to reducing medical errors, promoting healthy habits for patients and increasing patient satisfaction.
What is value-based care?
Value-based care is centered around the idea of improving healthcare quality for patients and preventing problems before they start. This focus on prevention lowers the need for expensive medical tests, ineffective medications and unnecessary procedures.
In a value-based system, providers such as hospitals and doctors are paid based on patient outcomes, rather than the current “fee-for-service” model. In other words, the provider is rewarded for helping patients become healthier. It’s a proactive approach, rather than a reactive one.
In staying healthy, the patient cuts costs for everyone. Someone with diabetes, for instance, would work with an integrated team of physicians to stick to a healthy diet, come up with an exercise plan and keep blood sugar under control.
What is the value-based care model?
Value-based care models stress an integrated team approach in which patient data is shared and care is coordinated, making it easier to measure outcomes.
Medical homes: The integration of primary, specialty and acute care is called a patient-centered medical home (PCMH). This isn’t a physical location, but a team approach to patient care led by the patient’s primary care physician. PCMHs share electronic medical records (EMRs) with all doctors and others on the coordinated care team, so that they all have easy access to the same patient information.
Accountable care organizations: Accountable care organizations (ACOs) were created specifically for Medicare patients. Hospitals, doctors and other healthcare providers work together to provide the most effective care for the lowest cost possible. Like PCMHs, ACOs focus on teamwork and data sharing.
Bundled payments: Instead of charging patients for each individual service, payments are lumped together (called “bundled”) so that multiple providers are reimbursed together rather than paid individually.
Capitation: With a capitation model, providers take financial responsibility for the health and wellbeing of a given patient population. Members pay an annual premium, which is then combined and used by the provider to care for the population. Rather than providers getting reimbursed by payers (e.g., insurance companies) for each service provided, they would spend the funds in a way that best serves the health of the population. There would be, for example, a greater payment for those patients with a significant history of medical issues, which would incentivize providers to keep individuals healthy and prevent disease. Capitation rewards cost-effective and high-level healthcare rather than volume.
Shared savings and shared risk: Shared savings involves the payers having a budget for costs associated with care and delivery of that care. Providers whose costs fall below the set budget would share the savings. With “shared risk,” providers would have to pay for any care-delivery costs that go over the set budget.
What are the benefits of value-based care?
Cost reduction: Value-based care focuses on recovery, which ultimately results in less spending. Imagine you’re managing a chronic disease such as diabetes, high blood pressure, cancer or obesity — this could not only be time and energy-consuming, but it can also end up costing a lot of money. Value-based care can help you more easily manage these conditions, or in some cases, avoid them altogether. You may require fewer medical visits, procedures, and tests and more affordable medications.
Increased patient satisfaction: Quality of healthcare improves when the focus is on value instead of quantity, and on prevention rather than chronic disease management. Generally, value-based care programs result in higher overall patient satisfaction with healthcare plans.
Overall reduction in medical errors: Value-based care can help reduce medical errors. Medical errors are a top concern among insurance sponsors (e.g., large employers), who have realized that much of their spending goes toward treatments that are harmful or ineffective. Consequently, more companies are turning to value-based care to reduce medical errors.
Society becomes healthier overall: With value-based care, society generally becomes healthier, and at a lower cost. Hospitalizations and medical emergencies would decrease and less money would be spent on managing chronic diseases. As a result, overall healthcare spending costs are reduced.
Healthcare suppliers will align their prices with patient outcomes: Suppliers too can benefit from the value-based care model with the focus on patients outcomes and lowered costs. This can be appealing as prescription drug prices continue to soar. There’s been some talk from healthcare industry stakeholders of basing drug prices on their value to the patient.
Keeps patients informed: With value-based care centered around shared data in the form of EMRs, patients are more able to stay informed. Having all the care information in one place can help the patient take proactive preventative measures while spending less.
Encourages healthy habits: Focusing on prevention can reduce poor habits such as overeating, cigarette smoking and excessive alcohol consumption.
According to the American Medical Association, there are six components to an “ideal” high-value healthcare system. Those primary features include:
A patient-centered model in which the medical team has a clear, shared vision
Healthcare workers possessing professionalism and leadership
A functional and robust IT system
Payment models that reward quality improvement over quantity
Wide-spanning access to care
That said, the United States has a long way to go before checking off all these boxes. The system, after all, wasn’t created with these characteristics in mind. Doctors are playing an important role in moving the dial toward higher-value care, identifying when treatment may be excessive, unnecessary or incorrect. Hopefully, we will continue to move in a direction that lowers costs, places patients at the center of care, promotes teamwork and clear communication, and creates an overall healthier society.
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