Payers, providers are cautiously optimistic about their value-based care efforts. Here's how their sentiments differ

Most providers, payers and payviders believe their value-based care (VBC) programs to date have been somewhat, not very, successful, a recent survey has found.

Alongside industrywide trends, the Terry Health survey sought to identify areas in which the VBC experience of providers, payers and hybrids aligned or were at odds. It reached more than 400 providers, payers and payviders in the spring of 2023. Terry Health is a part of the Terry Group, a health and actuarial consulting firm.

Most respondents said they were from healthcare organizations currently engaged in VBC, while some did not yet have VBC programs but plan to launch them. A few others have no current plans to engage in VBC at all. Organizations of all sizes were represented and across commercial, Medicare and Medicaid.

Bottom-line business interests are important in an organization’s decision to engage in VBC, the group found. Improving clinical outcomes and a belief in patient-centric care were among the leading drivers for respondents. Half were also interested in improving patient retention, health equity, profitability and alignment with Centers for Medicare & Medicaid Services goals.

Most respondents thought their VBC programs had been somewhat successful in controlling costs, improving the patient experience and improving clinical outcomes. Less than half thought they were somewhat successful when it came to improving the provider experience. Notably fewer respondents thought their programs were very successful at addressing any of these areas.

A third of respondents believe VBC has great potential to improve clinical outcomes for the healthcare system at large, still representing a minority of total respondents. Respondents already engaged in VBC were more optimistic about VBC’s long-term potential than those who were not yet but had plans to be, who were still more optimistic than those with no plans to engage in VBC.

More than half of respondents believed that reluctance to assume downside risk is a very significant factor in slowing the growth of VBC in the U.S. The smaller the organization, the greater the concern was about assuming downside risk, the survey found. About 59% of respondents include shared savings with downside risk in their contracts, while fewer than half include comprehensive population-based payment.

Among other cited factors slowing the growth of VBC were administrative costs and the requirement to prove near-term return on investment. Other factors were upfront investment costs, a near-term focus on leadership and the finance team, and a narrow definition of ROI. 

Among the most common physician concerns about participating in VBC is a lack of their involvement and a lack of sufficient or accurate data to perform effectively, the report said, yet a minority thought that doing more to get physician input and feedback was a priority. Just a third of respondents had concerns about data availability for docs.

At the same time, three-quarters of respondents believed a capability gap in data and analytics had a negative effect on their performance.

“The relatively low priority given to physician concerns about data availability is surprising, since providers, payers, and hybrids all acknowledge that it constitutes a significant capability gap in their organizations,” the report said.

Other factors reported to have had a negative effect on the performance of VBC programs included staff and skill sets, critical care management, financial planning, risk management and contracting expertise.

Payers were more likely to think providers have capability gaps in implementing VBC than vice versa. Meanwhile, half of providers believed that the payment terms in their VBC contracts favor their payer counterparts. Providers and payviders also overwhelmingly agreed that payers benefit most from VBC.

Payers and payviders were more optimistic than providers about the impact of VBC on costs. 

Overall, only a minority of respondents believed VBC is very successful in improving outcomes, controlling costs or improving patient experience. Though organizations are optimistic, they are cautiously so.

“Respondents seem to believe that VBC is having only a marginal impact on how the healthcare system works, not the transformative one that many of its architects and advocates hoped it would,” the report concluded.

Unless the reluctance of organizations to take on downside risk abates, the underlying incentives in healthcare financing and delivery will remain the same. Addressing gaps in digital capabilities and more alignment among stakeholders on the benefits of VBC is needed, the report suggested. 

The government could encourage organizations to assume more risk, while organizations could lean more on external support to close gaps that are undermining VBC performance. 

Finally, though all types of organizations play a vital role in VBC, “providers are the pivot on which the whole healthcare system turns,” the report said. “If significant numbers find that participating in VBC is not to their advantage, its long-term success could be doomed.”