By Kevin Mehta, chief technology officer, Payformance Solutions
The U.S. healthcare system is today stuck in its awkward teenage phase – pointed in the direction of rewarding value over volume, but nowhere near real and universal value-based reimbursement. Health plans and providers are being pushed to lower costs and improve quality, but the system still primarily operates on the fee-for-service reimbursement model.
While most key players in healthcare regard the transition to value over volume as inevitable – and rightfully so – many barriers to achieving value-based care remain.
For example, just 47 percent of physicians reported that they were actively pursuing value-based payment opportunities, according to a November survey from American Academy of Family Physicians and Humana. More surprising, though, is how little that number has increased in recent years; two years ago, the same survey found 44 percent of physicians were actively pursuing value-based care opportunities.
Nonetheless, Humana’s chief medical officer was spot-on when he remarked that “fee-for-service has a tremendous amount of demonstrable inefficiencies,” which is why the march towards value will proceed, though likely not without some tough lessons learned along the way. The healthcare system certainly is in the early stages of the value-based care evolution, but below are three lessons that will be key to achieving success as alternative payment models continue to evolve.
Focus on high-value care: Healthcare organizations must develop strategies that enable them to drive care to lower-cost settings that provide equal or higher-value care. Value is defined by patients’ health outcomes. This is where data and analytics can play a key role in identifying where those high-value opportunities exist. For example, say upon hospital discharge a physician suggests that her elderly patient with comorbidities move into a long-term-care facility. However, analytics might reveal that patients who share this patient’s particular comorbidities and social determinants of health have historically realized better outcomes from in-home care.
In this case, the physician thought she was performing the medically appropriate action to reduce the patient’s chances of long-term complications by referring him to the long-term-care facility, but through analytics could have discovered a better treatment plan. Whether it pertains to the choice of drugs, devices, procedures or facilities, data holds the potential to help payers and providers uncover opportunities to reduce costs and improve outcomes under value-based care.
Invest in your network: Determine how patients move through the delivery system, and closely track them throughout the continuum of care. In value-based reimbursement, having the right network enables healthcare organizations to improve care coordination and population health management, as well as obtain the right patient outcomes while balancing costs with outcomes.
The key is that all network participants must be aligned from an incentives standpoint in improving care and reducing costs. By leveraging analytics, payers and providers can mine historical data to design contracts that properly align their financial incentives. Contracts that properly align network participants’ incentives, in turn, can lead to a reduction in unnecessary hospital admissions and utilization of high-cost treatments.
Prioritize your core competency: For most participants in the care-delivery system, that competency is patient care, not health data analytics. Yet when it comes to value-based care, data is king. Therefore, healthcare organizations should use their data to benefit value-based reimbursement strategies. Specifically, they should examine ways they can leverage patient data to drive new strategies and decision-making.
Common questions around this often include, “But how do you do it? Who do you hire to do it? What do they need to be successful?” An efficient team requires the right technologies (advanced analytics technology stack), the right team (data scientists, biostatisticians, data engineers, contracting specialists), and a feedback loop to implement the insights. Partner with companies that provide the necessary analytical talent and technologies, and then focus on finding the data and implementing the results.
To sum it up, value-based care is coming, but we aren’t completely there yet. Getting healthcare organizations to where they need to be in rewarding value over volume will require a lot of trial and error in the coming years. We don’t know exactly how the health system will arrive at that destination, but focusing on high-value care, building the right network and finding partners with expertise in analytics are steps that lead in the right direction.
About The Author
Kevin Mehta serves as chief technology officer for Payformance Solutions. In this role, Mr. Mehta focuses on building data-driven, turnkey software solutions that provide payers and providers with the technical tools and resources needed to design, evaluate, build, measure and negotiate value-based reimbursement contracts.