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:
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:
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.
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:
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.
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:
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.
From creating interoperable systems to an integrated data strategy, here are five steps you can take to begin building a value-based healthcare system:
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.