Value-based care: Will the industry ever be ready to ditch fee-for-service?

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The Triple Aim. Bundled Payments. Accountable care organizations. FierceHealthcare has written countless articles about these initiatives to move the healthcare industry away from fee-to-service to payments for value-based care.

Despite all that attention--and the federal government's push to quicken the pace of the transition--healthcare providers haven't made much progress.

In fact, this week--on the same day we ran a special report on the evolution of accountable care organizations--PwC Health Research Institute (HRI) released a new report that says while healthcare executives publicly praise the move to value-based care, they privately drag their feet while they wait for a successful model to emerge before they take on the risk.

"It was striking to us when we did report on the national landscape of progression on alternative payments just how low and difficult the transition has been for the healthcare industry, Ceci Connolly, director of HRI, told me during an exclusive interview yesterday.

HRI did interview healthcare executives who were enthusiastic about the move away from fee-for service, leaders who believed the transition would lead to better care for patients. But even those individuals who believe in the goals and have high expectations for the outcomes have made modest progress so far, according to Connolly (left).

One reason for their hesitancy--or what the authors described in the report as a "go-slow, dip-the-toe-in-the-water approach"--is the legitimate concern that revenue will decline in the early years of the transition," she said.

It will take investment in strong data analytics, improvements in the care they provide and a culture change so all doctors, nurses and healthcare professionals truly operate as a team. But the organizations that have made these front-end investments and stuck with it are beginning to see their efforts pay off, she said.

But now new research from the Government Accountability Office calls into question whether quality actually improves under value-based payment programs

Indeed, the report found there was no apparent shift in hospital performance on the quality measures included in Medicare's Hospital Value-based Purchasing Program, which financially rewards or penalizes hospitals based on care outcomes. But that might change, the GAO noted, as new quality measures are added and if Medicare reduces the weight given to clinical process measures.

Connolly isn't ready to give up on the notion of value-based care, either. She suggested that hospitals, health systems and physician practices first focus on the delivery of their care and shift to coordinated, integrated care to better manage specific patient populations.

"There really needs to be an understanding of what the challenges those patients have and how we can put together a team that will help us manage their health situations. Any healthcare organization that has good case management will be in a must stronger position to move to alternative payments," she said.

Then the organizations must put themselves in the best financial shape possible before moving to alternative payment models. She suggested that hospitals consider partnerships with providers that have capabilities and expertise their organizations don't have. This can help fill the gaps, she said, as organizations take initial steps toward value-based payments.

And there are organizations that have made progress, she said. Clusters around the country, especially in markets where Medicare Advantage plans have reduced unnecessary care and lowered costs, are moving toward value-based payments. Once the model picks up steam and reaches a more critical mass, organizations will see revenue equations change and then leaders can really change the way they deliver care, she said. - Ilene (@FierceHealth)

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