More hospitals embrace value-based payment models

The number of hospitals that have delved into value-based care is on the rise, and even more say they plan to make the transition soon, according to new research from Kaufman, Hall & Associates LLC.

From August 2014 to February 2015, the share of hospitals that reported that 10 percent or more of their revenue is tied to value-based contracts nearly doubled--from 22 percent to 42 percent, according to the company's survey results. In the same six-month period, the percentage of hospitals that said they expected 50 percent or more of their revenue will be tied to value-based contracts within two years jumped from 7 percent to 22 percent.

Two strong motivators for these trends, according to Kaufman Hall, are the Department of Health and Human Services' watershed announcement in January that it intends to tie 30 percent of Medicare payments to alternative payment models by 2016 and half of all payments by 2018, as well as the subsequent formation of a provider-payer alliance known as the Health Care Transformation Task Force.

"These findings suggest that more providers are viewing the movement toward value-based payment as inevitable," Mark E. Grube, managing director of Kaufman Hall, said in an announcement. "As the shift from volume to value gains momentum, hospitals and health systems need to move quickly to understand the likely trajectory in their markets, to identify their desired role, and to make the significant structural and operational changes needed to succeed in the changing business model."

This may be easier said than done, however, as many providers are wary of jumping head-first into risk-sharing payment models, Paul Keckley, policy expert and managing director of the Navigant Center for Healthcare Research and Policy Analysis, recently told FierceHealthcare. Thus the Obama administration's recent announcement of the Health Care Payment Learning and Action Network, while short on details, is a promising sign that the federal government intends to "bring the market along" with the value-based movement, he said.

In addition to its findings regarding value-based payment models, Kaufman Hall noted that 85 percent of hospitals that responded to its survey experienced an uptick in outpatient visits in the last six months of 2014, compared to 72 percent that reported an increase in the first six months of 2014, which it deemed "another sign of healthcare's shifting business model."

To learn more:
- here's the survey results
- read the announcement

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