According to Dartmouth-Hitchcock, most modern health care providers operate under the fee-for-service billing model—rewarding quantity of services over quality of care. This method incentivizes doctors for the number of services preformed, making it monetarily beneficial for doctors to order more tests, perform more procedures and prescribe more drugs. Because fee-for-service distributes payment for quantity of services performed, some practice owners take advantage of the opportunity for financial gain. However, while the fee-for-service billing model may seem lucrative, it can actually end up costing practices patients, and in turn, revenue. Many health care professionals are instead shifting to value-based care.
Because fee-for-service distributes payment for quantity of services performed, some practice owners take advantage of the opportunity for financial gain. However, while the fee-for-service billing model may seem lucrative, it can actually end up costing practices patients, and in turn, revenue. Many health care professionals are instead shifting to value-based care.
What is value-based health care?
As opposed to the fee-for-service approach where payments are based on quantity, value-based care encourages practitioners to focus on what their patients really need. It pushes health care professionals to provide higher quality care at more reasonable costs. Instead of scheduling unnecessary tests or prescribing treatments that are expensive but ineffective, value-based practitioners focus on more accurate diagnoses and treatment plans with enduring results.
How to incorporate value-based health care into your practice
Practices interested in incorporating the value-based care method should consider three things:
- Organization – For practitioners switching to value-based care, Harvard Business Review lists this as the most important step to take. The source suggests changing from traditional care delivery methods to Integrated Practice Units, or IPUs. IPUs "not only provide treatment but also assume responsibility for engaging patients and their families in care – for instance, by providing education and counseling, encouraging adherence to treatment and prevention protocols, and supporting needed behavioral changes such as smoking cessation or weight loss."
- Measurement – The source also states that practices must also change the way they evaluate patient success. Instead of measuring care in terms of finances, practitioners should base the success of their clinic on patient outcomes and the cost of the treatments prescribed. These are known as "quality metrics," and they encourage health care professionals to take a more compassionate approach to patient care.
- Reimbursement – While providing quality care is essential, practitioners still need to get paid. Operating under the value-based care model requires practices to move away from payment approaches such as fee-for-service and global capitation. Instead, health care professionals should look towards bundled payment approaches. Combining all the costs associated with diagnosis and treatment, bundled payments encourage practitioners across the medical field to work together to provide the best care possible and disincentivizes ordering frivolous services.
The benefits of value-based health care
A major criticism of the value-based care system is slow ROI compared to other methods of care. However, consider this: A practice can receive large amounts of reimbursement for fewer patients with a higher turnover rate, or it can build a steady, consistent patient base. These satisfied patients are more likely to recommend value-based practices to their friends and family, thus increasing the patient pool. In the end, abandoning the cold fee-for-service approach for the more genuine value-based method will yield a better, more reliable financial outcome for practices.
In the increasingly competitive health care field, it is vital for practices to embrace the changes that will make them stand out. For more advice on switching to a value-based health care system, contact a health care consulting firm, such as LW Consulting. Additionally, you can click the image below for a look at our most recent infographic.