Physicians, Hospitals Size Up Value-Based Healthcare

Healthcare Dives Into Big Data

Many healthcare providers now participate in value-based payment models, which most see as the wave of the future, but few of them are happy about it.

"Value-based" is a catch-all label for Accountable Care Organizations (ACOs) and other ways of restructuring healthcare around payment for value delivered, as measured by metrics of healthcare quality or the aggregate health of a population rather than by the volume of visits, procedures, or hospital stays a healthcare organization records. In other words, it's a highly data-driven vision of healthcare reform, intended to improve quality and efficiency while reducing costs.

According to a survey sponsored by Availity, 75% of providers currently participate in at least one value-based payment model, and more than 60% expect this model to dominate the future of healthcare finance. Fewer than 30% believe these schemes offer a good level of reward for the risk (see detailed findings). Availity, which offers data and collaboration services to both payers and providers, is interested in these dynamics as a player promising to smooth the transition.

[Seeking to increase value in the age of ACOs? Read CIO To CIO: Advice On ACOs.]

Meanwhile, a pair of researchers at Weill Cornell Medical College report that if history is any guide, hospitals will survive and thrive despite reforms aimed at diverting care (and healthcare dollars) away from hospital care.

The Affordable Care Act specifically promotes Medicare ACOs, and many other government and private payer initiatives share the goal of using better care coordination to treat patients proactively and avoid expensive hospitalizations at all costs. Penalties for hospital readmissions are meant to encourage better follow-up care outside of the hospital.

Value-based plan participation rates are higher for providers who work in hospital facilities compared to professional practices, but more than 80% of providers in both groups say one of their main operational concerns is that value-based plans require more staffing and time management -- more administrative effort going into gathering the metrics to justify payment, according to the Availity study.

Providers are not opposed to making healthcare more efficient, but they are wary of the complexity of the model and have yet to see the value for themselves, says Ryan Miller, senior VP strategy and corporate development for Availity. "It reflects more the degree of difficulty of executing on it, rather than the intent."

Hospitals have reason to be wary of reforms that explicitly target hospital care as the most expensive mode of healthcare delivery and therefore something to be minimized. However, US hospitals have been squeezed before and always manage to bounce back, according to an analysis by Dr. Andrew Ryan and Dr. Alvin Mushlin of Weill Cornell Medical College published in the Annals of Internal Medicine.

Hospitals benefited from the introduction of Medicare and Medicaid, which expanded the demand for care and paid for innovation in medical technology, but since at least the 1970s there have been concerns about the increase in healthcare costs. Regulations and the introduction of new payment models such as Health Maintenance Organizations made only a temporary dent in hospital revenues, according to the authors.

"For every policy change designed to incentivize efficiency and reduce costs, hospitals have vigorously responded to maintain their market position," they write. "Despite dramatic changes in the payment and financing of hospital care over the past 60 years, with concomitant changes in technology, care delivery, and patterns of use, hospitals have remained remarkably consistent in their share of health care expenditures."

Of course, some reformers might say that's exactly the problem -- no matter what efforts are made to contain costs, hospitals continue gobbling a bigger share of healthcare dollars. So is the resiliency hospitals have shown an obstacle to needed reform? "It is if they don't change -- if they don't respond to opportunities to make healthcare better," Mushlin told us in an interview.

The authors say that their point was more that hospitals are not doomed as organizations even though they present a big target. Reformers tend to target hospitals as the most centralized organizations in a loose-knit healthcare system, they pointed out, and it's hard to see where else that attention might be focused.

However, while Mushlin and Ryan argue that hospitals can continue to survive and thrive as organizations, that does not mean they can do so without changing. Many hospitals have already responded to pressure to reduce expensive inpatient care by expanding their outpatient services, with the result that hospitals still control a lot of the resources in our healthcare system, Ryan said.

"When we look at the historical changes, we see that hospitals responded to changes in unexpected ways," Ryan told us. "So we should expect that." In the best case, he added, they will respond by delivering better integrated care as they play a bigger role in both inpatient and outpatient care.

Has meeting regulatory requirements gone from high priority to the only priority for healthcare IT? Read Health IT Priorities: No Breathing Room, an InformationWeek Healthcare digital issue.