By Brian Croegaert, RN, BSN
Providers once sought to avoid financial risk when caring for patients, but today’s rise of value-based care has made risk an essential component of providers’ business models.
The key tenet of value-based care is that provider reimbursement is directly connected to care quality. Value-based arrangements stand in sharp contrast to how providers are compensated under fee-for-service models, which reward more revenues for more tests and procedures.
By focusing intently on improving patient outcomes, such as reduced hospital readmissions and increased preventive care, value-based arrangements can result in higher-quality care for patients and more solid financial footing for health systems. However, value-based care presents not only the promise of increased revenues, but also the potential for financial losses if a health system does not produce positive patient outcomes.
When faced with the latter possibility, providers may be reluctant to take on the additional risk that value-based care arrangements demand. Some providers feel that, by putting once-safe revenues at risk, they may be forced to compromise the quality of their patient care.
In reality, nothing could be further from the truth. Indeed, the best way to manage risk is simply to provide better care—which requires accurate data to guide improved decision-making.
Improved financial performance through shared savings
While the thought of willingly taking on additional financial risk may make some providers nervous, capitulating to fear might mean losing opportunities. One advantage of value-based models is that physicians can have higher earning potential in a risk-based model, since salary and bonuses can correlate with increased savings.
The Centers for Medicare and Medicaid Services’ Next Generation Accountable Care Organization (ACO) Model represents an example of providers’ ability to share in the savings they generate through delivering high-quality care. Medicare ACOs are comprised of groups of doctors, hospitals, and other healthcare providers and suppliers who come together voluntarily to provide coordinated, high-quality care at lower costs to their patients. Under the Next Generation model, when an ACO succeeds in both delivering high-quality care and spending healthcare dollars more wisely, the ACO shares in the savings it achieves for the Medicare program.
To reach that point, however, providers must obtain a firm grasp of the risk they face and their options for best mitigating that risk. In the past, understanding risk meant flipping through archaic reports to get an appreciation of a provider’s financial baseline. Today, providers can leverage modern data and analytics platforms to base decisions on accurate, up-to-date information.
Doctors need these platforms because, regardless of their knowledge and experience, they cannot be expected to be risk management repositories. Providers are inclined to think about the squeakiest wheels—the sickest, most bedbound patients—but a large data set is necessary to contextualize those individuals within the greater patient population.
Within the context of a risk pool, the key is to identify at-risk patients before they get sick and keep them well, because that is where a health system can find unrealized savings. For example, a system can use an analytics platform to evaluate its diabetic patient population and identify patients whose conditions are at risk of deteriorating. The health system can then enroll these patients in a care management program to ensure they’re receiving the right treatment to keep their blood glucose levels under control. This enables them to live longer with fewer complications, which enhances patient outcomes while generating savings for the system.
Four steps to value-based care
There are four critical steps on the path from fee-for-service to value-based care: governance, data, planning, and implementation.
On the governance end, systems should hire the most passionate physicians who want to earn more and change care delivery. With a trove of data, a network can stop wasting hours digging through records and immediately pinpoint where interventions might improve outcomes, down to specific patients and populations. Planning entails negotiating care contracts to take on that first dollar, and implementation puts all of these steps into action.
As the healthcare industry transitions to more value-based care, additional financial risk is becoming a fact of life for providers, but risk is not something to be feared. By placing a greater emphasis on delivering high-quality care, providers can mitigate risk while improving financial performance.
Brian Croegaert, RN, BSN, is senior vice president of value-based care services for Arcadia, a leading data analytics platform for healthcare and life sciences that transforms data into powerful insights.