The U.S. healthcare industry continues to inch toward value-based care and away from fee-from-service. Over the past eight years, the number of U.S. states and territories that have implemented VBC programs has spiked – rising from three states in 2011 to 48 as of 2018.
To stay abreast of this movement, in the month of August, Definitive Healthcare polled 1,090 healthcare leaders across the provider, biotech, financial services, staffing, life sciences, IT, and consulting verticals to determine predictions for the future of the value-based care landscape in 2019 and beyond. With 791 total responses, these healthcare leaders helped identify:
1. The biggest barriers when moving toward a value-based care system
2. Factors accelerating the adoption of value-based programs
3. Benefits of value-based care programs
4. How the value-based care landscape will shift in 2020
Read on to learn more about the results of Definitive Healthcare's first-annual value-based care trends survey:
Biggest barriers when moving to a value-based system
- Changing regulations/policies: The shift from fee-for-service healthcare to value-based care has been underway since the passing of MIPPA in 2008, though the incentives from the Centers from Medicare and Medicaid Services (CMS) didn’t become mainstream until the Hospital Value-Based Purchasing Program began in 2012, which is why regulations and policies are significant barriers (16.2%) to implementing these value-based programs. Ever since, CMS has been introducing and modifying value-based incentive programs and these changes continue to be one of the biggest catalysts for the shift.
- Trouble with collecting and reporting patient information (i.e.: gaps in care): If patient data is inaccessible to providers, it is essentially useless in terms of care coordination and preventative medicine. But with only 14.8% of the votes, it's clear that there are bigger barriers in place.
- Unpredictability of revenue stream and complexity of financial risk: Respondents said that one of the biggest barriers (17%) to adoption of value-based payments, in terms of practice sustainability, was the unpredictability of revenue stream and the difficulty understanding the complexity of financial risk involved in these programs.
- Lack of resources (short-staffed, insufficient healthcare IT software, etc.): With the majority of the votes (25.3%), it's clear that providers are challenged by staffing shortages and may need to learn how to capitalize on rising opportunities such as implementing health IT systems to handle population health initiatives.
- Gaps in interoperability, internally and externally: With the second-highest number of votes (19.7%), it's clear that interoperability continues to be a challenge for providers. Value-based care requires an unprecedented amount of healthcare data exchange and analytics, so adopting technology solutions like interoperable EHR systems, patient and provider engagement technologies (like telehealth technologies), and core operational and financial applications will be critical.
- (7%) 'Other' response examples
"It's not "there" yet. It seems to be a mythical creature in many markets."
"Time, and will, to 'gather everybody at the table.'"
"We are in a transition period. Tough to implement when [an] organization is 30% value-based care [and] 70% fee-for-service."
"Not a technical integration issue. Rather, once patients are identified at-risk, they need collaborative care in the communities where they live - including non-medical care such as social and spiritual. EHR platforms are not designed for this purpose, thus coordinated care is very limited in virtually all cases."
"Complexity. Many constituents with competition priorities. Not easy and many hurdles."
"Lack of clear financial incentives for providers."
Factors accelerating the adoption of value-based care
- Appropriate provider compensation and incentives: By a landslide (44.8%), respondents cite provider compensation and incentives as the best way to accelerate the adoption of value-based care. Under the current system, providers can opt into value-based purchasing initiatives, receiving bonuses for performing above average and being penalized for performing below average. However, more clarity may be needed to entice providers to jump on board the value-based train.
- Policy requirements: With 16.1% of the votes, it's evident that policy may be an accelerating factor as well. The Centers for Medicare and Medicaid Services (CMS) continues to encourage value-based care reimbursement, but may need to continue ramping up efforts for providers through policy changes and updates.
- An increase in risk-sharing models like ACOs: In last place, at 11.9% of the votes, providers see a slight benefit to increasing risk-sharing models. Full financial risk sharing in healthcare may not be widely adopted yet. But evidence shows that the greater level of financial risk sharing, the greater care quality and costs benefits.
- Consolidating market, mergers and acquisitions, moving more providers into the VBC model: With the second highest number of votes (18.9%), it's clear that industry consolidation is accelerating the implementation of value-based care programs. Small, independent physician practices are becoming less prevalent as healthcare's transition toward VBC gains traction. In fact, the past few years have seen the highest level of healthcare provider consolidation in U.S. history. Last year, the number of accountable care organizations increased from 923 in 2017 to 1,011 by the start of 2018, and it is likely this number will only continue to grow.
- (8.3%) 'Other' response examples
"Anything that 'forces' each stakeholder, through incentives, to pay attention and devote brain power, time, and resources to the problem."
"Use of common guidelines to care and expected outcome achievements."
"Cooperation and communication internally (within Providers) and external (Payers)."
"No one will take-on extra work efforts (normally) without incentives (intrinsic or extrinsic). Thus, there has to be a sufficient motivating parameter that both: a) starts this process, &, b) sustains it. This demands physician interaction overlaid with departmental leaders to develop a pragmatic solution."
Biggest benefits of value-based purchasing in healthcare
- Reduced costs: 28.4% of respondents see the cost benefits associated with value-based payments. Value-based payments reward clinicians for providing proactive, preventative, and efficient care using data and technology to understand emerging needs. This and other value-based care programs create a more integrated approach to managing people's wellness, instead of treating illness and disease as it occurs, which saves money in the long-term
- Increased patient satisfaction: Patient satisfaction is an important benchmark that health care administrators use to measure organizational performance, but, with only 17.6% of the votes, it's clear that reduced costs and better outcomes are most important to this set of healthcare leaders.
- Fewer medical errors/better outcomes: By a landslide (48%), respondents see fewer medical errors and better outcomes as the biggest benefit of value-based purchasing in healthcare. With value-based care programs, providers can spend more time focusing on preventative medicine and population health issues rather than struggling to keep up with high patient demand and readmissions.
- (6%) 'Other' response examples
"A few things, most importantly patient satisfaction, communication, staff engagement, sustainability and at a decent price."
"A shift towards a population of wellness with preventative medicine to benefit our citizens, rather than 'fixing issues' when they arise after individuals are sicker, likely with more than one chronic condition."
"Accountability from the clinician side. That will have a direct impact on patient satisfaction, thus driving the intrinsic value of value-based purchasing."
"I believe a big benefit of VBC is that it forces providers (and patients) to focus more on 'preventive' care management rather than reactionary, episodic care."
How value-based care programs will shift in 2020
- Shift away from voluntary programs in favor of mandatory participation (stricter limits on fee-for-service models): Without a fundamental paradigm shift, it will be difficult for value-based care to become the go-to-standard. That's why 27.6% of respondents anticipate a greater movement away from fee-for-service models as a result of mandatory regulations. For instance, the 2020 CMS Primary Cares Initiative aims to reduce administrative burden for providers, while incentivizing clinicians to spend more time with patients and focus on preventive care. And, HHS Secretary Alex Azar told a crowd of stakeholders at the American Medical Association in Washington in April 2019 that the CMS projects the new voluntary programs will shift at least a quarter of people in traditional Medicare out of fee-for-service.
- ACOs and bundled payment arrangements will continue to evolve: The majority of the votes (31.1%) went to the evolution of ACOs and bundled payment arrangements. According to Definitive Healthcare ACO data, there are nearly 1,400 active ACOs in the U.S., with approximately 560 participating in the Medicare Shared Savings Program. As these payment programs continue to evolve and become easier to understand, the more likely providers will make the shift toward value-based care.
- Market consolidation: new partnerships and networks to capture market share: In last place, 18% of respondents believe that market consolidation (i.e.: mergers and acquisitions) will influence value-based care programs in 2020.
- Providers will be more focused on benchmarking their success against that of their competitors: With 21.3% of the votes, benchmarking success will be a big factor in 2020 and years to come. According to Definitive Healthcare data, in 2019, 56% of hospitals participating in value-based purchasing received a positive adjustment, which means more than half of hospitals are performing "above average." Many providers may be ill-equipped to benchmark performance, understand how payors stack up against each other, and lack a real sense of the competitive market. Software platforms like Definitive Healthcare can help providers understand important industry benchmarks and foundational data, including length of stay, cost, volume, quality, and patient statistics.
- (2%) 'Other' response examples
"APM, shared business models between payer/provider."
"Any major shift in behavior or practice in healthcare has required regulatory incentives focused on tightening reimbursement. VBC could have been instituted decades ago - yet only CMS reimbursement policy has driven the program forward."
"There is a change but in this market, it will move over a few years - not one. I find that there are a collaboration of decision makers in the sales process."
"Inability of 'most' to do what is required with force lead to the 'least common denominator' consolidation. However, that is just a band-aid; it will only help short-term."
Want to understand how many members a given accountable care organization has, or how large the ACO's patient population is? Definitive Healthcare can enable you search for, and fully understand, which hospitals and providers are participating in value-based care programs across the U.S., and benchmark your progress against competitors with:
- Detailed hospital financial, clinical, and quality metrics for your practice, and that of competitors
- Affiliations with hospitals, ACOs, GPOs, HIEs and other institutions
- Population health analytics
- Physicians data, quality metrics, and referral patterns to specialists
- Hospital and physician procedure volumes and complexity analysis
- Merger and acquisition activity, new hospital services, and other provider developments