Every decade or so, it seems the U.S. healthcare system shifts the way healthcare is provided and how providers are reimbursed. The ideal is that healthcare gets better, healthcare systems become financially healthier, and somehow a cost savings opportunity is created. Value-based care (VBC) has been the healthcare buzz phrase for many years, in part because government programs like Medicare have been adjusting their reimbursement model to favor this sort of care. But there is evidence that the bloom is off the rose as far as VBC being the final answer in terms of providing the best healthcare outcomes and properly reimbursing providers for that care.
VBC has not progressed for a couple of major reasons. One is the amount of investment required to make it work well. Many healthcare systems have invested heavily in recent years in technology like Epic and Cerner and with operating losses at the top of everybody's list of concerns, there isn’t much money left to invest properly in VBC.
The impact of COVID-19, both in increased costs of providing care and the effect it had on healthcare employment, is another headwind stalling the progress of VBC. In addition, another challenge for VBC is simply the diversity of players involved in putting together an effective VBC system. A hospital or health system may engage in 20 different deals with 10 different payers, including the government and several private payers, as it tries to build a VBC system. This diversity makes the need for investment even larger. A recent survey of healthcare CFOs and C-suite executives by the Healthcare Financial Management Association (HFMA) asked if quality would improve materially if their systems were largely value-based care; 40% of respondents said no.
Finally, providers who have invested deeply in VBC and have enrolled a half million or more people into the system are looking for a good return on their investment and may be re-evaluating their strategy if the return is lacking. These providers are not looking merely at the reimbursement side of VBC, but also the care delivery side. Innovative ways of leveraging technology, like through “hospital at home” care, is becoming top of mind for some providers.
For more information on this topic or to learn how Baker Tilly’s healthcare specialists can help, contact our team.