THE OUTLOOK FOR HEALTH CARE IN 2023:

What you need to know about the forces reshaping our industry.

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Blog Post

You're afraid of change, not value-based care

By Katie EvertsClare WirthDaniel Kuzmanovich

May 17, 2022

    Fear plays a surprising role in the path to value-based payments.

    Last month, Advisory Board convened 44 leaders from across the health care ecosystem to discuss the future of value-based care. We asked participants: What would be different if in 2028 the majority of health care dollars resided in meaningful value-based contracts?

    Are the barriers to commercial risk insurmountable? No, they are not.

    Several answers surfaced. But at the core of the dialogue was the concept of action in spite of fear.

    Executives recognized four fears which they believed the industry must name, define, and overcome to make progress towards better outcomes and lower costs. 

    Fear #1: Giving up 'your secret sauce' (i.e., your competitive advantage)

    Often, health care actors don't share data or metrics because they're afraid of losing their competitive edge. And with tight margins for both plans and providers, it's hard to blame either side for having a tight grip. But progress on VBC requires more transparency and partnerships.  

    Not all pieces of information are strategic differentiators—and all actors stand to gain from transparency. For example, if plans identified and set standard quality metrics, it would reduce the administrative hurdles for providers and enhance the overall delivery system. And if providers shared readable pricing data, plans could create better cost benchmarks and save money for the whole system.

    Fear #2: Reducing revenue-generating demand

    Like your competitive advantage, it's nerve racking to consider restructuring how your organization serves its patient population and generates revenue. Even small changes in patient volumes can have a significant impact on your revenue.

    In a meaningful VBC future, providers must base business models on outcomes rather than volumes. It's in their best interest to apply appropriate care sites and services to patient needs. This doesn't mean reducing overall demand: a focus on population health would likely increase volumes in cheaper, preventative services like screenings, primary care visits, and mental health treatments.

    Fear #3: Depending on an external partner to stay afloat

    Embracing vulnerability is easy to say but hard to do. Like many industries, health care actors used to be able to function "well enough" in their own independent worlds. But the increasing costs of care demand collaborative solutions—and better outcomes require support from partnerships across the industry. 

    You can't go at VBC alone. Nobody can control clinical transformation and payment transformation for every patient. Partnerships such as health plans partnering with PCPs and specialists together could hold the key to decreasing significant costs through reducing low-value referrals or increasing E-consults. Even a health system with its own health plan will require partnerships with employers.

    Fear #4: Failure

    Leaders fear failing in the transition to risk—but they're also afraid of being left behind. Within an industry pumping $72B into innovation, it can be overwhelming to keep up with new disruptors. VBC start-ups are even taking aim at some of the industry's most challenging areas: interoperability, primary care, and partnerships.

    The organizations who overcome this fear realize VBC is enabler of so many other strategic priorities—it's not just one initiative. By improving VBC, organizations will improve primary care, chronic care, and the health of their communities.

    Parting thoughts

    You're not the only one grappling with these fears. And that should be comforting—because it means other organizations need you as a partner

    Value-based care should be more than a buzzword

    imageCommercial risk will either tip the industry towards value-based care or keep us in a world of hybrid incentives. It’s complicated, but is it possible? We think so. Learn how you can help push us towards a new cost and quality standard by visiting advisory.com/VBC.

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