The Tipping Point of Value-Based Care

By | January 29, 2019

If one studies the life span of a company, progression occurs in many stages. Once a business has reached a level of “maturity,” its survival depends on its ability to innovate and adapt. Regarding value-based care and payment models, healthcare experiences a similar metamorphosis.

Fee for service has been the prevailing payment model, and the consumer historically remained more as an observer rather than an active participant. However, both dynamics are changing, thereby causing a shift in the healthcare ecosystem. For example, health plans are incredibly slow in moving towards risk-based models as it brings into question the “value” they bring to the market. Providers are slow in adapting since their present business model is a fee for service, and historically, providers have not driven market change. “Progressive” healthcare companies are attempting to adopt, but it is difficult to have a foot in two different canoes.

Innovators have long known that this is a difficult situation. If I wait for the market to indicate what they require, I have missed the opportunity, but if I try first to define what the market needs, I might be wrong. For example; before automobiles, if questioning a person, “What do you need in order to arrive somewhere faster than you have today” they likely would have replied, “Faster horses!”

Everyone focuses on person centricity, because we understand that whomever “owns” that relationship will be in the optimal position for success. However, just acknowledging this fact does not define the outcome. Thus, traditional healthcare delivery systems will need to change who they are, how they do business, and more importantly, how they innovate in ways that influence their present business models. Moreover, being agile and adaptable as well as leading, is necessary whether it is evident that people will follow.

Additionally, even if a player in the industry decides to adopt these changes, the internal dynamics must overcome certain tipping points concerning care and payment models.

Value-based care is designed to lower overall production costs and improve affordability for the consumer. Effectively, this latter component means there will be fewer dollars spent on healthcare. Value-based payments are designed to allow margins to be made based on this new dynamic. However, as we begin to create an environment where clinical quality focuses on the appropriateness and the decrease of unnecessary services, we do not segregate such care based on payment models. This conundrum presently leads to improved care with decreased reimbursement.

Therefore, the healthcare systems mindset must shift to driving the market concerning payment model redesign. The dilemma of how fast or how slow will not dissipate. Internal arguments abound. The key to success is having such conversations, making decisions, and the willingness to evolve. Such a mindset will require an immensely different level of coordination and shared purpose between various components of the delivery system that historically have not had strong incentives to work together nor felt the need to co-create different models. That day is gone. Let us define the future that is better for those we serve and create sustainable models that support the delivery of such care.