The landscape of the healthcare industry is changing rapidly. With the growth of the aging population and the dramatic rise in chronic disease, both governments and providers are scrambling to find a way to reduce the skyrocketing healthcare costs.
In the search to increase efficiency while lowering costs, many healthcare leaders look to value-based care for the future. Not only does value-based care mean better care for patients, but it stands to increase ROI and create a more sustainable business model for both providers and payers. It is no wonder, then, that more providers are taking the time to switch to a value-based care model.
That is why in a recent survey, one-third of providers stated that using value-based care yielded a strong or moderate return on investment. It makes sense that running a business well will have more long-term profit than a system built on unnecessary tests and procedures, and inefficient, impersonal care.
What is Value-Based Care?
Traditionally, the healthcare industry has subscribed to a fee-for-service model. Payment was based on the tests and procedures performed and each service was paid for separately. This created an environment that encouraged providers to perform as many services as possible and increased the amount of processing paperwork.
The value-based care model, on the other hand, reimburses providers based on the quality of care provided and not necessarily the quantity. Reimbursements are based on specific metrics that demonstrate the quality of care and improvement in the patient. These metrics include hospital readmission and patient engagement, which reflect better care.
The value-based care model has incredible potential for better care for patients, but can it work on a business level? Here are three reasons why the value-based care model can mean better business for providers and payers.
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Save on Medical Costs
With a country that spends nearly 18% of its GDP on healthcare, the overall cost of hospital care is an area for concern to many. Hospital stays and medical emergencies can be costly, but by improving patient outcomes, many payers and providers find that they can lower much of their spending.
The value-based care model helps to reduce the unnecessary cost of inefficient care. In fact, payers reported that they saved 5.6% on average; and nearly a quarter saved up to 7.5% under value-based care. Performing unnecessary tests and procedures is costly and takes away from patient engagement and quality of care. The cost of fixing mistakes from past insufficient care can also mean significantly more expensive payments. Furthermore, a healthier population from better care and preventative measures will reduce the cost of care overall.
Increase in Patient Engagement
Patient engagement is essential for the best healthcare. Patients that are engaged are more likely to show up to appointments, adhere better to instructions, and have improved outcomes. With a national no-show rate of up 30% for some specialties, patient engagement is essential for reducing costs for providers.
The improved care through the value-based model makes patients feel more engaged and invested in their care. This patient engagement means more savings for both providers and payers, and an increase in efficiency of care. In fact, one recent report found that patients with value-based care payers had 11 more points in their engagement scores.
If you are looking to get more engagement from patients to help drive down cost and reduce waste, value-based care is one of the best ways to do so.
Increase in Physician Efficiency
New research revealed that there is a critical shortage of physicians in the healthcare system. According to research done by the AAMC, there will be an estimated shortage of 120,000 physicians by 2030. In addition to — or perhaps because of — this shortage, there is also an alarming amount of physician burnout in the field. Finding physicians and caring for their well-being can be a costly endeavor for many hospitals as physician burnout can be a significant drain on finances — costing almost $1 million to replace a physician.
However, value-based care can go far in increasing both physician efficiency and reducing the risk of burnout. The fee-for-service model requires physicians to fill out much more paperwork and documentation in order to bill payers. The value-based care system allows physicians to spend more time with patients and less time drowning in paperwork.
The emphasis on patient care as opposed to tests and procedures means that hospitals can operate more efficiently and reduce the need for as many physicians — a critical advantage in a workforce shortage. It also means that physicians are able to do what most wanted when they entered the field — help patients.
Value-Based Care: Good for Business
What is good for the patient is good for business. Providers and payers that decide to follow the value-based care model see a decrease in spending, an increase in efficiency, and an overall more sustainable business.
Want to learn more about value-based care and chronic care management solutions? Contact us and we’d be happy to talk!