What is value-based healthcare?

Healthcare is a hot issue that can be buried under tons of words. Solutions sometimes are presented via buzzwords that the average end user will have the impression of understanding without actually grasping the implications. One such buzzword is “value-based payments” or “value-based healthcare”.

Perhaps the best way to understand what is behind the value-based healthcare is to see its opposite: volume. Currently, physicians and organizations are encouraged to “do" more; more procedures, more patients, more hours, etc. The more everything you do the more money you will get. It is very easy to see that this system is deeply flawed. One result of this (so-called) fee-for-service payment model is enormous variation in rates of procedures and tests such as imaging and screening. We have already touched on that in our previous post, where we cite an interesting analogy / contrast that Eric Just draws between standardization that exists in the airline companies and the lack thereof in the medical practices as a whole.

Blue Cross Blue Shield of Michigan: a positive experiment

Actually, the wonder is not this newfound desire toward paying for earned services. The wonder is that the americans tolerated this state of affairs so long when there is a very strong capitalist ethos that values the demand / offer equation. At the start of this month FierceHealthPayer.com published an interesting interview with Steve Anderson - Blue Cross vice president of provider contracting and network administration. Why BCBSM? Because they are a leader in the value-based payment movement. BCBSM managed to accumulate $50 million in total savings for services rendered in 2013. According to Anderson the system can work but “It was much more of a challenge to move the hospitals than the physicians to the value-based contracts.”

Value-based payment implementation

The federal government seems to recognize this reluctance but intends to press the issue further - HHS Secretary Sylvia Mathews Burwell posted a statement that not only the switch from volume to quality will proceed, they even have a timeline to effect the change. Washington Post mentions ambitious goals: 30% by 2016 and fully 50% of all Medicare payments to be handled this way by 2018 under the administration's new goals. This 10% per year change remains to be seen, as the industry at large is quite divided over this issue.

Тhe problems value-based payment model has to address

Much more important than the issues surrounding adoption, however, are the two central problems of value-based healthcare: how to measure value and who gets to decide the measurements?

It is precisely this issue where CashDoctor’ approach departs from this line of argumentation. While certainly welcoming a value-based payment model we think that value algorithms imposed from the top will address the issue. "If you can prove that you can make a grassroots, community driven, constantly reforming system committed to wellness, not fixing sickness, but wellness, everyone in America will take notice". The words were spoken by the former President Bill Clinton at an event in Palm Springs, California.

While he was referring to a specific initiative, his words could not be any truer. This is precisely what many think is needed to address the seemingly insurmountable problem of financing health care that the US population is facing. Including us, at CashDoctor.com.