Population Health Management

Value-based Reimbursement vs.
Volume-based Care

Value-based reimbursement adoption in 5 years
Source: 2014 value-based reimbursement study conducted by ORC International and sponsored by McKesson

In the rapidly changing healthcare landscape, payers are asking providers to shift from volume-based care (fee for service) to a value-based reimbursement structure (fee for value) with a population health approach. This evolution toward value-based reimbursement benefits the patient, the healthcare provider and the payer. Value-based reimbursement encourages healthcare providers to deliver the best care at the lowest cost. In turn, patients receive a higher quality of care at a better value.

Preparing for the Challenges of Value-based Reimbursement

Making the move to a value-based reimbursement model requires:

  • Transforming the traditional "siloed" care model into a network care model, both for increased care coordination and the ability to scale effective interventions with the patient population
  • A significant increase in the need to acquire, aggregate, and analyze data across a healthcare network
  • An integrated financial and clinical platform for a common view of the patient across care settings and over time
  • Reorganizing institutional structure to accommodate value-based payments. This restructuring can also help healthcare providers identify changes that could reduce operating cost and boost efficiency
  • Physician engagement with common goals and an incentive structure that supports these goals
  • Instituting new clinical and operational processes that foster sustained behavior change

Value-based reimbursement helps healthcare providers and institutions prepare for an evolving patient population with:

  • Increased access to care, which can lead to more patients and less network leakage
  • A higher number of chronic diseases that must be treated
  • An aging population and sicker patients with multiple chronic conditions
  • A more engaged patient population that is responsible for its own care. Patients in turn want more insight into their care and value for their dollar
  • Increasing market share when patients have more choice in where they receive care

As healthcare delivery moves toward value-based reimbursement, the business model and the care model become increasingly intertwined. Changes made to care processes can have a significant impact on financial performance. Organizations need tools that help them identify their revenue and cost drivers and provide insight regarding how cost, quality, and care decisions impact the network as a whole.

Next: The population health approach

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