Whatever business you're in, you want to provide value to your customers, and health care is no exception. And it logically follows that if what you do is exceptionally valuable, you'll realize some sort of financial reward. So paying health care providers on a value-based model just makes sense, right?
Well, not exactly. In reality, I'd contend that value-based payment is imposing needless additional pressure on providers without necessarily getting the hoped-for results.
Though it sounds fairly straightforward, value-based payment actually imposes a great deal of exposure on providers. In fact, according to a study published by Availity, roughly 75% of providers are currently participating in at least one value-based agreement, but less than 30% believe they offer good levels of reward for the risk, Healthcare IT News reports.
Sure, it makes sense for health plans and employer health purchasers to lay as much risk off as they can on providers. Health plans, in particular, are in the business of minimizing risk, and if they can get providers to take risk on, they're just doing their jobs. In fact, value-based purchasing may be a very good idea for them.
It’s so good, in fact, that value-based or other forms of contingent payment are likely to be increasingly more common as time goes on. More than 60% of providers surveyed by Availity are predicting that value-based payment will become the dominant payment strategy health plans use going forward.
But let's hold on here just a minute. While there may be some providers that are equipped to handle risk-based contracting, it's a big stretch for others. As Availity notes, one major obstacle providers face in handling value-based payment is staffing up to manage the contracts; 80% said they would need additional staff and time to do so. And 75% said they needed workflow tools and real time access to data to be successful.
In other words, the majority of providers with value-based contracts today don't have what it takes to really take control of those arrangements. No wonder most feel that the risk of taking one on is greater than the reward they're likely to realize.
Given that health leaders know value-based payment is a runaway train at this point, it's forcing them into alliances and mergers which they might not considered prior to this drastic change in reimbursement. While value-based payment admittedly isn't the only factor driving providers into each other's arms, it's certainly a major driver. Given the IT requirements and staffing required to make value-based compensation a success, some providers doubtless have given up on trying to pay for it all themselves.
So, why is all of this bad for the industry? Isn't value-based payment just an attempt to save money and improve quality which is been a long time in coming? Yes, it is, but that doesn't make it a good idea.
I'd argue that forcing providers to take on insurance risk is a flawed attempt to force institutional change on providers that will only work in a small percentage of cases. In the rest of the cases, providers will sweat and attempt to meet externally imposed goals — and if they fail, fall further behind than they were before.
Look, I'm aware that for some providers, assuming risk is a profitable strategy, and if they want to do that, great. Those who pursue risk-bearing contracts are likely to be well prepared to manage them, and efficient enough to meet the goals they've agreed upon with the health plan. But assuming that value-based payment is a one-size-fits-all strategy that should become the dominant mode of health plan contracting with providers just doesn't make sense.