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Value-Based Reimbursement 2020
How Far Have We Come?
Author
Bradley Hunter
Author
Paul Warburton
Insights from CHIME’s 2019 “HealthCare’s Most Wired” data, KLAS Population Health Management Cornerstone Summit, and KLAS Decision Insights
In the nearly 10 years since accountable care organizations were first established, healthcare organizations have been slow to take on risk-based agreements, especially those with downside risk. While the industry agrees that the rising costs and stagnant outcomes of fee-for-service (FFS) are not sustainable, healthcare executives are becoming less optimistic about how quickly value-based reimbursement (VBR) will outpace FFS. This report examines data from a variety of sources to measure industry progress toward VBR and explore how technology is being used to support it.VBR Contracts Now Account for 26% of Hospital Revenue
Based on CHIME’s Most Wired data, an average of 26% of hospital revenue in the US comes from VBR contracts. The specific percentage varies from state to state, and those states with higher averages often have one or two large organizations that have adopted VBR more rapidly than their peers. South Carolina and Pennsylvania have the highest average percentages of revenue from VBR contracts; at double the national average, Arkansas and Indiana have the highest adoption of downside risk. However, FFS still outpaces VBR, and as reported by participants in KLAS’ Population Health Management Summit, the lack of significant progress toward VBR has, over time, eroded confidence that the change will happen in the near future. The biggest factors limiting adoption of VBR are uncertainty that an ROI will be achieved and a lack of needed infrastructure.
How Is Technology Being Used to Support VBR?
Organizations Invest in IT When There Is a Concrete ROI
Provider organizations are most willing to make a financial investment in IT for PHM activities that they know have a concrete ROI. For example, solutions that help organizations identify and act on care gaps see some of the broadest adoption as they can be helpful with just about any VBR contract. Once a gap is identified, organizations need to reach out to the patient and close it, so patient engagement tools are also highly sought after. Fewer organizations report adoption of customer relationship management solutions or AI tools for predictive analytics; these tools are not as crucial to PHM activities, and their ROIs and use cases vary greatly.
Provider Organizations Look First to the EMR to Drive PHM Workflows
Once organizations decide to invest in technology to help with VBR, they generally turn first to their EMR. This is due in large part to (1) assumed integration with EMR data; (2) anticipated cost savings; and (3) increased ease of access for clinicians to PHM data. EMRs are slightly less likely to be used for administrative and financial reporting—EMRs have historically struggled to provide the nuanced views needed in these areas, so organizations often opt for third-party solutions that provide additional analysis, visualization, and ad hoc reporting. Third-party solutions may be used on their own or in conjunction with EMR functionality.
Organizations’ analytics and business intelligence needs can vary widely based on what types of risk contracts they are engaged in, so third-party solutions are also used in a variety of other areas. Additionally, many processes are still done manually as organizations feel their current PHM solutions lack many needed capabilities.
Functionality a Significant Driver in PHM Purchase Decisions
Healthcare organizations are looking for enterprise EMRs and broad business intelligence platforms capable of tackling a large swath of their PHM and VBR-related functionality needs (e.g., root cause analysis, A/B testing, etc.). In this quest for consolidation, organizations are seeking to eliminate ad hoc interfaces and replace vendors who haven’t delivered on functionality or quality.
The data in these charts comes from KLAS's Decision Insights data, which measures which vendors are being replaced, considered, and purchased and what factors drive these decisions.
Designer
Natalie Jamison
Project Manager
Robert Ellis
This material is copyrighted. Any organization gaining unauthorized access to this report will be liable to compensate KLAS for the full retail price. Please see the KLAS DATA USE POLICY for information regarding use of this report. © 2024 KLAS Research, LLC. All Rights Reserved. NOTE: Performance scores may change significantly when including newly interviewed provider organizations, especially when added to a smaller sample size like in emerging markets with a small number of live clients. The findings presented are not meant to be conclusive data for an entire client base.