VBC Happening

Is Value-Based Care Really Going to Happen?

At the beginning of 2018, Leavitt Partners released a survey that showed only 22% of doctors they spoke with feel accountable care organizations lower spending, and only 21% of doctors felt bundled payments would successfully drive down costs.

This combined with several stories I’ve heard of health systems moving into, and then quickly out of, value-based plans gave me pause. What if value-based care (VBC) never happens in the US?

It takes a colossal effort to shift the core revenue method for an industry, especially one so fraught with regulation and incumbent processes as healthcare. In fact, if fee-for-value didn’t strike directly at the heart of healthcare’s mission, I suspect the idea would have been dead on arrival.

Yet it’s precisely because VBC aligns so closely with healthcare’s mission and purpose that the idea of fee-for-value has persisted for so long. In fact, most healthcare providers agree that the mission behind value-based care is the right one.

VBC Charts
Hence, when KLAS asked providers if they felt VBC would happen, a majority said the transition to VBC is “very likely/likely” to happen. This data comes from a presentation given by Paul Warburton, a lead analyst for KLAS’ value-based care research. He dove into this research during the recent KLAS Cornerstone Summit.

In light of the data Paul shared, the question shifts from “will value-based care happen?” to “how will value-based care happen?” How someone answers that question likely changes drastically depending on who you ask. For providers, it means first identifying the outcomes they want to achieve and aligning those inside a restructured payment agreement with various payer organizations.

Currently, the majority of provider revenue still comes from fee-for-service payments. However, that is slowly shifting, with upside-only risk bringing in nearly a third of revenue for health systems on average.

avg rev

Healthcare providers and payers should continue to align on what the outcomes of a value-based care world look like. As they do so, I imagine that VBC contracting will quickly follow. Another key factor is the ever-increasing sophistication of VBC firms and platforms. VBC relies on good, solid data for measuring success and aligning stakeholders on the pathway forward.

Paul closed his Cornerstone Summit presentation with a quote from Alex Azar, Secretary of DHHS, “There is no turning back to an unsustainable system that pays for procedures rather than value. In fact, the only option is to charge forward — for HHS to take bolder action, and for providers and payers to join with us. This administration and this President are not interested in incremental steps. We are unafraid of disrupting existing arrangements simply because they’re backed by powerful special interests.”

Paul zeroed in on Sec. Azar’s admonishment to “charge forward.” Recent KLAS data shows that the number of providers who say “VBC is 3 to 5 years away” has increased 15% over the last two years. Providers who say 6 to 8 years has increased 26% in the same amount of time.

As more providers come to face the reality of VBC, they realize the length and complexity of the road to value. Paul however remained optimistic. He argued that as more and more providers pioneer the VBC path and establish best practices, the perception of a 6-8 year path will shrink dramatically.