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Transitioning from Volume to Value

Created Jan 04 2016, 07:00 PM by Lippincott Solutions
  • accountable care organization
  • VBP
  • ACO
  • volume-based care
  • value-based care
  • value-based purchasing

Tuesday, January 5, 2016
Public and private insurers are shifting from volume- to value-based payments. So why are hospitals hesitating?

Welcome to 2016! This is the year the federal government aims to make at least 30 percent of Medicare payments under value-based models, such as accountable care organizations, patient-centered medical homes and bundled payments. In another 2 years, it plans to ramp that ratio up to 50 percent. 

Private insurers, too, are in the process of shifting from volume- to value-based payments. Some have achieved extraordinary results. Just last month, Blue Shield of California announced that its 35 accountable care organizations (ACO) saved more than $325 million in five years. They also reduced hospital admissions by up to 13 percent and hospital bed days by up to 27 percent.

 “We have achieved solid results in the first five years of our ACO program, and we are just getting started,” Kristen Miranda, Blue Shield's senior vice president of strategic partnerships and innovation, told attendee at a recent state summit. “We continue to deepen and refine the work we are doing with our ACO providers to ensure our members receive the right care at the right time and in the right setting, all the while helping to make healthcare more sustainably affordable."

Testing the Waters

The tide may be turning from volume to value. But, according to a recent FierceHealthFinance report, “the prevailing sentiment in the industry is a ‘go-slow, dip-the-toe-in-the-water approach.’"

The publication wrote about a report from PricewaterhouseCoopers that revealed a complex dynamic: Publicly, healthcare executives claim to approve of the shift to value-based care. Behind closed doors, however, they’re sweating the loss of predictable revenue streams.

"When do you take the leap [from volume to value]?” Douglas Shirley, senior vice president and chief financial officer at Cooper University Hospital in New Jersey, mused in the article. "At this point, it's not one or the other but finding the right balance. It's not something you want to change overnight."

Instead, the healthcare executives are watching and waiting, seeing what works for other hospitals and health systems before they chance a move themselves. Yet, even that approach is a bit of a gamble, the CFO continued.

"A potential concern is that someone else in the market figures it out and grabs a large percentage of the population and links them up to an ACO-type model," Shirley said. "To truly manage populations, you need a substantial market share or well-defined partnerships or alliances."

No Guarantees

Unfortunately, there aren’t any one-size-fits-all models for value-based care. In fact, FierceHealthFinance also reported on another paper, this one from the Society of Actuaries, that noted how difficult it is to observe examples of value-based care and draw meaningful conclusions on how to make it work for your own situation.

"The authors found that it is neither easy nor transparent to see how these organizations interact or coordinate results, even for those well-versed in U.S. healthcare," the publication quoted from the Navigating the Transition to Value-Based Care report.

"In addition, methods of reporting results of payment reform studies were not necessarily methodologically rigorous, which made it difficult to reach definitive conclusions on whether specific reported payment reform models were successful."

Tips for a Smoother Transition

Still, general strategies to help hospitals transition from volume- to value-based care are out there. Here are a few that may help:

  • Reach out to providers. By establishing relationships with primary care providers and specialists, you can break down barriers and pave the way toward enhanced care coordination and better patient outcomes, Healthcare Business & Technology advised.
  • Reach out to payers. “Taking the initiative is also wise when it comes to value-based payments from private payers,” Healthcare Business & Technology continued. “A hospital’s best bet is to reach out to its top payers and find out their plans for value-based care initiatives.”
  • Focus on best practices. Writing in HealthLeaders Media, Michael Rowan, president of health system delivery at Catholic Health Initiatives, explains that his national health system is adopting standard models of clinical care to reduce variability in outcomes.

“To be successful in a future that continues to shift under our feet, we must deliver consistent, high-quality outcomes at lower costs,” he writes. “If an organization is being paid $2,000 for, say, a joint-replacement operation, it will not be successful if one physician is delivering the procedure at $1,500 and another doctor in the same town is charging $5,000.”

  • Embrace technology and all it offers. From mining data in electronic health records to using home-monitoring devices, technology is a key player in value-based care.

 “We’re seeing a number of organizations that have data-mining capabilities, the tools for predictive analytics. Leadership needs to take a front-and-center role in defining value and monitoring, which will drive where an organization needs to focus its efforts,” Lorren Pettit, vice president of market research at HIMSS, told For the Record. “Having a cohort of analysts on board at an organization is critical to defining, monitoring, and recalibrating in order to become a value-based organization.”


Did you know that a recent independent research study by The Rockburn Institute found that hospitals using Lippincott Procedures and Lippincott Advisor have higher clinical process of care & patient outcome scores within the Value-Based Purchasing (VBP) model than hospitals that do not?  

Click HERE to download our free White Paper to learn more about how Lippincott Solutions can help you make the transition from volume to value