Can you imagine going to a local ATM to withdraw $100 from your checking account but having the process take three or four days, a fax and then several follow-up phone calls to sort out identity records and bank statements? Or shopping for groceries to find prices can vary depending on your payment method?
That’s precisely what would happen if banking and retail businesses operated like the healthcare industry.
It’s no wonder healthcare system leaders are on a quest to transform how they deliver services to patients demanding better consumer experiences. The New England Journal of Medicine (NEJM) defines value-based healthcare as a “delivery model in which providers, including hospitals and physicians, are paid based on patient health outcomes.” In other words, providers should be rewarded for helping patients achieve the health outcomes that matter most to them.
Patient or consumer demand alone isn’t the only impetus for change. Insurance carriers are shifting from a fee-for-service (FFS) model to an outcome-based definition of value — and Medicare is leading the charge.
This ultimately leads to a world where providers will no longer be compensated for numbers of transactions; rather, they’ll be compensated based on their patients’ outcomes. This pay-for-value concept is changing the way healthcare views care delivery as well as system goals.
For patients, the benefits of value-based healthcare can mean achieving better health while spending less money. But the benefits extend far beyond patients. NEJM says providers achieve efficiencies and greater patient satisfaction while payers (insurers) do a better job controlling costs and reducing risks.
To bring value-based healthcare to life over the past few years, industry leaders have recognized the need for a “new generation of enabling information technology.” A report by NEJM noted, “New systems are needed to facilitate dramatic improvements in patient outcomes and efficiency and, importantly, to end an era in which health IT has entrenched the status quo, perpetuated silos, and blocked reimbursement reform.”
This article will walk through ideas healthcare systems can use to adopt value-based care models, which begins with aggregating patient data across disparate sources to measure outcomes more efficiently and transparently share findings.
Questions we’ll address include:
- How can you corral patient data into common repositories and structures that make it easier for multiple stakeholders to draw conclusions and make data-driven decisions quickly based on shared data?
- Where do you begin when modernizing the healthcare system’s technical operating system?
- How can you reduce the technical debt — or chronic IT overspending — and the corresponding burden on employees and providers who have to log into up to 10 siloed systems to complete typical workflows?
- How are macro demographic changes impacting how healthcare systems design IT systems?
What if healthcare delivery looked like banking or retail?
Legacy healthcare technology systems evolved within a fee-for-service environment, which means tracking patient care and payments occur within specialty silos like anesthesiology, critical care, radiology and many others. Moreover, EHR systems were primarily designed to track meaningful use criteria—computerized order entry, electronic prescribing, and electronic messaging with patients—and improving billing speed and accuracy for siloed services.
What would health-care delivery look like if we could instantly apply the experiences customers have come to expect from companies in other industries like banking or retail? Patients and payers could experience something like:
- Records that are immediately updated and accessible to patients, caregivers, and other stakeholders across all system touchpoints.
- Patient and family needs and preferences as a central part of the care planning process.
- Stakeholders informed about each other’s activities in real-time, thus streamlining workload and improving operational efficiency.
- Prices and total costs seen by all participants — providers, patients and payers. Payment incentives would be structured to reward outcomes and value, not volume.
- Errors promptly identified and corrected.
- Results routinely captured and analyzed for continuous improvement.
Hence, value-based healthcare requires healthcare systems to create a patient-centered, condition-focused model of care that incorporates payment for a bundle of services resulting in improved health or a return to wellness. To be successful with this model, healthcare systems must follow patients from diagnosis to care outcomes, which should also be linked to cost.
Challenges to creating networked care solutions
The transition to value-based healthcare won’t be without obstacles. The U.S. healthcare system structure — in which we have mixed for-profit, nonprofit, and quasi-public healthcare — creates complexities in sharing data and creating true data interoperability.
What’s more, the healthcare industry hasn’t invested enough in technology, partly because it hasn’t been necessary to remain competitive. Notes Harvard Business School’s Institute for Strategy & Competitiveness:
"Per capita investment in health IT has lagged behind other industries. Although the recent emphasis on “meaningful use” of IT has expanded the health IT industry, its functionality has been limited to being excellent revenue cycle tools in a fee-for-service based delivery system. The transformation to a VBHC (Value-based healthcare) system requires the support of condition-based care through data sharing, outcomes, and cost measurement and reporting enabled by information technology, and technical support of new value-based payment methods."
However, the evolution of value-based healthcare is likely to accelerate, given the Centers for Medicare & Medicaid (CMS) goal to advance the model to lower costs while improving care.
Indeed, the federal government — acting as a single-payer — accounts for 25.9% of national health expenditures (NHE), making the federal government the largest single-payer of healthcare in the U.S. With the federal government backing the model, look for it to have implications across all healthcare systems — private and public.
Amid record losses of $323 billion in 2020 from the nation’s hospitals and healthcare systems — primarily due to COVID-19 — value-based healthcare’s promise of lowering costs and improving care quality is an opportunity to accelerate change.
Focus on healthcare outcomes
Structure your internal system data to monitor the performance relative to business and patient KPIs consistently. This provides your healthcare system with the information it needs to understand how well internal processes and services function to create health outcomes and reduce costs and services inefficiencies. From here, you can make adjustments to enhance care quality and bottom-line returns.
The key to value-based healthcare, as it turns out, is to focus on outcomes. “Standardized outcomes, transparently reported by condition, are essential for both care improvement and for making informed choices by patients, payers, and other provider organizations. Outcomes represent the ultimate measure of quality,” said Harvard Business School.
Healthcare outcomes result from a complicated mix of community and system characteristics. For instance, certain medical conditions are more prevalent in narrow populations. Consider these demographic-specific facts:
- Older adults have higher levels of hypertension, arthritis and Alzheimer’s disease. And communities of color bear a disproportionate share of chronic conditions such as asthma and diabetes.
- Increased rates of hypertension, high cholesterol and diabetes appear in communities with less access to fresh foods, fruits and vegetables, and greater access to processed and fast foods.
- Viruses and infectious diseases spread more quickly in densely populated areas, while medical self-neglect is often seen in rural areas with longer distances to access healthcare services.
Understanding population and demographic differences help anticipate healthcare needs, reduce service inefficiencies and better plan. This ensures you’re providing the right services at the right time in the right place, which results in lower costs, improved care and increased revenue.
How to pivot to value-based healthcare
From creating interoperable systems to an integrated data strategy, here are five steps you can take to begin building a value-based healthcare system:
- Break down information silos: We counsel healthcare systems to break down their information silos as a first step toward creating a value-based archetype. One-off and standalone databases are a bulwark to value-based healthcare.
- Create interoperable systems: The key to value-based care is your ability to share and track data across the healthcare system — from diagnosis to care to outcomes. Breaking down silos and centralizing the data provides a holistic picture of a patient instead of individual data points. Nerdery specializes in working with healthcare systems across the country to connect disparate data sources to create a single source of truth.
- Create an integrated data strategy: An enterprise-wide data strategy addresses complex healthcare data’s unique requirements, which allows for data extraction across systems regardless of differences in data models. Here, you’ll want to map your data assets and design a strategy that helps your team use all the data points to inform operations and business decisions.
- Create health conditions-based systems and platforms: Organize data around health conditions, and allow interdisciplinary practice teams to coordinate care across disparate systems. Consider finding a technology partner to help you design patient-centered, condition-based digital systems to organize and coordinate integrated care.
- Develop systems that measure and track outcomes: These systems are essential for collecting and analyzing clinical data to compare against patient-reported outcome measures. For instance, Nerdery has helped providers connect current systems and create outcome-based reporting structures to enable value tracking and transparency of results, the foundation for value-based care models.
Mining and leveraging patient data
Healthcare system leaders indeed view value-based healthcare’s promise of lowering costs and improving care quality as an opportunity to accelerate change within the industry. Mining and leveraging patient data enables one to understand what patients are doing and provides visibility into why they behave the way they do. To be sure, there’s never been a shortage of patient data.
However, to realize its real power, we’ll have to break down our antiquated notions of information silos and present a 360-degree view of patients. At the same time, you must create a data strategy that uses every data point throughout your healthcare system. These changes will ultimately lead to improved outcomes, better care, lower costs, and higher revenue.
If you’re looking for a strategic partner, learn more about how Nerdery works with healthcare leaders to link business value creation with patient needs.