Making the Case for Value in a Fee-For-Service World

October 25, 2018

Value-based payments are growing at an impressive pace, from 23 percent of all payments two years ago to 34 percent today, according to a new study. Yet, many health care organizations are holding fast to fee-for-service models without substantial investments in value-based care. Are there any risks in this approach? How should they adapt? If they increase their stakes in value-based care models, how do they manage the conflicts between the two models?

These were among the topics that Frazer Buntin, Evolent Health’s president of value-based services, discussed in a recent episode of Relentless Health Value, a weekly podcast hosted by health care entrepreneur Stacey Richter.

For those unable to listen to the entire 34-minute discussion on “The P&L of Value-Based Care,” here are several key takeaways:

Why focusing too heavily on fee-for-service could put health systems at a disadvantage (1:39)

Health systems that ignore value-based care are going to have a more difficult time affiliating with independent physicians in their area, Buntin pointed out. When courting these independent practices, they will be at a competitive disadvantage against other health systems that have embraced value-based care. That’s because value-based care models foster close working relationships with these physicians through clinical integration. “When you have value-based care you’re linking technology systems between independent physicians and a health system,” Buntin said. “You’re linking care coordination or care management between a health system and independent physicians. You’ve got reporting and clinical programs, and the level of connectivity is just much deeper. There are more points of integration from a patient standpoint and from a physician workflow standpoint. So your mindshare just increases.” In a fee-for-service model, reimbursement doesn’t support that level of integration and care coordination, he noted.

Why value-based care needs to be a separate business unit in a health system or physician group (13:06)

There is inherent friction between the “value” and “fee” sides, Buntin acknowledges. As a result, value-based care needs its own home, with dedicated staff, workspace, tools and more. It can’t be seen as an additional role for people entrenched daily in the fee-for-service world. “People tend to default back to what they know, Buntin says. “And what they know is fee-for-service. If you’re trying to go find and eliminate unnecessary health care costs and improve quality and outcomes, you have to look within your own four walls as well. That can be very difficult to do if you live on both sides. So, having a team that is walled off from the fee-for-service side of the business and has a focus on the value side is really necessary emotionally and from an experience standpoint.”

How C-suite leadership must balance competing payment models. (16:14)

Organizations that invest in value-based care must tolerate a great deal more unpredictability than they’re accustomed to having on the fee side. Rules change, new programs are introduced and shared savings methodologies are altered midstream. C-suite leaders need to bring a fluid approach, managing this uncertainty while balancing the “value” and “fee” books of business. “You can’t take your health system into the ditch and go all in [on value-based care] too quickly,” Buntin said. “But you also can’t wait and be left out and not have all the [physician] relationships lined up and secured. It is a bit of cannibalization from existing business with a bet on same or higher returns on the value-based care side.”

What happens when value-based care takes hold in an organization. (26:48)

Buntin has been inspired by what he’s seen at organizations that have invested on the value side. “It’s pretty amazing when value-based care gets set up and people get on board with it. I’ve been in meetings with senior executives within health systems that have been in a fee-for-service world all their careers, and they are extremely creative. They are pushing the boundaries in new ways to reduce unnecessary health care costs...It’s goosebumps-exciting to see.”

He’s seen stunning responses on the physician side as well. “They say, I want to see my reports. I want to see how I compare to [other providers]. I want to know how many of my patients who went to the emergency room went into observation versus admission. That stuff is real and it’s happening out there. And that is incredibly exciting to see.”

Listen to the podcast.


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