By David Bucciferro, Senior Advisor, Foothold Technology
When change happens we tend to assign it a name. In software we call it a version, in the auto industry it’s a model year, with fashion it’s a trend. Each of these changes is announced with major fanfare and distinct lines of demarcation. Major software companies will often hold elaborate press conferences with online streaming to announce a new version of their product, auto companies have huge events to roll out the new model year, and the fashion industry puts together week-long shows to announce each season’s trends. In healthcare, we often have nondescript announcements or conferences where people from every corner of the industry gather to hear about the changes that are coming, but rarely do we have a distinct demarcation. We call change a paradigm shift or a new era of healthcare delivery. However, these eras aren’t always accompanied by a release date, a distinct time frame from when we can expect the old way of doing business to be replaced by the new. More often than not, we don’t know what the new might look like, just that it’s coming. There are many good reasons for this — the complexity of healthcare, the variety of healthcare systems, and the very nature of any multi-trillion dollar business. Regardless of the reasons healthcare evolves into something new, change does not spring up overnight. Healthcare often draws from past eras and past paradigm shifts to create a new one. Because of this, unlike many other parts of our culture, time is required to integrate old and new.
There is little doubt that the movement toward a new era of healthcare is upon us, with the next paradigm shift being one to a model based on value over volume. The days of volume-based reimbursement methodologies that have for years dictated the landscape, delivery systems, and often quality of care, will be replaced with a system that is structured to achieve savings, and measure quality and customer satisfaction. Conceptually it sounds pretty simple. Rather than pay for volume of services, your agency is paid for the value of services. Rather than live in a system that incentivizes how many services you provide, you are paid to provide the right service with the highest level of quality. This is not to imply that providers as a whole have gamed the system and provided services that were not necessary or appropriate. To the contrary, what it means is we created a system that incentivized practices that have increased cost, often impeded the delivery of quality treatment, and in some cases, created a dissatisfied consumer base.
While it is still in its infancy, few can argue that for our healthcare system to survive and thrive, this paradigm shift is not only desired but necessary. There will undoubtedly be many names for the new paradigm but at the heart, it will be based on paying for value. Over the next several months, and even years, we can expect starts and delays, new concepts and revisions, and hopefully more clarity than confusion.
Recently, I spent time at the Open Minds Performance Management Institute participating in a series of presentations and discussions about Value-Based Care (VBC). We discussed what it is and how this new model of care will evolve for the populations you work with every day. Conceptually, value-based care is a fairly simple concept to define: VBC is a system, an approach, a mentality in which all aspects of an individual’s healthcare are reimbursed based on individual health outcomes. Value-based care agreements are written to reward providers for helping healthcare consumers improve individual and population-based health. This is accomplished using evidence-based practices including integrated care approaches, prevention, early interventions, as well as a focus on social determinants of health.
Unlike in a capitation approach like many current managed care plans or traditional fee-for-service reimbursement structures, VBC reimburses providers, or more accurately provider networks, based upon the value of the services they provide–this value being defined as a measurement of health outcomes against the cost of delivering the outcomes. While the concept is simple, VBC is very complex with hundreds of moving parts, interrelated relationships, technological dependencies, aging infrastructure, and a rigid workforce. It also includes still emerging definitions of outcomes and many trillions of redistributed dollars. Over the next months and years, change will be front and center in the minds of providers, payers, and individuals, as a new foundation for success is created in a new world of healthcare. Some early examples of this change can be seen in states like Colorado with the Colorado SIM Project and Washington with its Washington State Innovative Care Plan.
In the coming months, I will share thoughts and information to help you prepare, participate, and succeed in this new era of healthcare. Redefining oneself is never easy and redefining oneself in a time of uncertainty can often be paralyzing. Partnership, collaborations, and mergers will become more common than before. Being prepared for a new level of integrated care will help you be a part of this new world. Understanding your value as a partner, knowing the right Key Performance Indicators, having the capacity to share and receive real time health information, being able to define the risk you can take on in a risk based relationship and many many more considerations will be critical to your success. Being able to address these considerations while remaining outcome-focused and process-efficient will allow your agency to survive and thrive. The silos of care are coming down and an open marketplace is here. Are you ready?