3 benefits of value-based care

The healthcare landscape has been shifting for a while, moving from the traditional fee-for-service model toward reimbursement models focused on value-based care. These models prioritize patient outcomes and cost-effectiveness over volume of services. In the following sections, we'll look at the advantages value-based care offers to various healthcare stakeholders, including providers, payors, and suppliers – highlighting how this shift creates a win-win-win scenario for the entire healthcare ecosystem.

What is value-based care?

Value-based care is a healthcare payment and delivery model that emphasizes improving patient outcomes while controlling costs. In contrast to the traditional fee-for-service model, where healthcare providers are reimbursed based on the volume of services they deliver, value-based care incentivizes providers to deliver high-quality, cost-effective care by tying reimbursement to the quality and efficiency of care provided.

In general, value-based payment is linked to achieving certain performance measures or outcomes, such as reducing hospital readmissions, improving chronic disease management, or enhancing patient satisfaction. This encourages healthcare providers to focus on preventive care and early intervention, rather than just treating acute illnesses or performing procedures.

While all value-based reimbursement arrangements share a common emphasis on quality, not all models are the same. Value-based arrangements alternative payment models (APMs), advanced APMs, bundled payments, pay-for-performance, shared savings programs, and global capitated payments, each offering unique approaches to achieving this shared goal.

1. Value-based care benefits for providers

For healthcare providers, embracing value-based care heralds a new era of delivering patient-centered care. Here are some key benefits for health systems, physicians, and other healthcare providers.

Better patient outcomes

Value-based care encourages building stronger relationships with patients through preventive care, early interventions, and comprehensive chronic disease management. This proactive approach is designed to not only improve health outcomes but also foster patient satisfaction and better patient engagement, establishing a solid foundation for long-term healthcare relationships.

Improved care coordination

Value-based care encourages coordination among multidisciplinary care teams, leveraging technology such as electronic health records (EHRs) to enhance care continuity across care settings. This interconnected approach ensures that every healthcare encounter is informed by a comprehensive understanding of the patient's medical history and care goals. From primary care physicians to specialists and from hospital staff to home health providers, every member of the care team plays a role in delivering coordinated, patient-centric care that transcends traditional silos and fragmentation.

Financial rewards

While the transition to value-based care may initially pose financial challenges for providers accustomed to fee-for-service reimbursement, the long-term benefits are compelling. Successful performance in value-based programs translates to bonuses and shared savings, incentivizing continuous improvement and ensuring financial sustainability.

2. Value-based care benefits for payors

For payers, value-based care offers a strategic framework to contain costs, mitigate risks, and improve the overall quality of care. Here’s how value-based care benefits payors.

Cost containment

Value-based care incentivizes providers to prioritize preventive care and proactive management of chronic conditions. By focusing on early interventions and preventive measures, providers can help patients avoid more costly care, such as hospitalizations and emergency room visits. These models also encourage providers to adopt efficient practices, reduce waste, and eliminate unnecessary tests or treatments, which could lead to cost savings for payors.

Risk mitigation

Some value-based payment arrangements involve risk-sharing agreements between payors and providers. In these models, providers assume financial risk for the cost of care delivered to a specific patient population. This encourages providers to manage costs more effectively while maintaining quality of care, as they have a financial stake in the outcomes.

Improved population health

Value-based care's focus on preventative care has the potential to improve the overall health of the population covered by payors. This may translate to fewer hospitalizations, reduced complications from chronic diseases, and ultimately, healthier beneficiaries with lower healthcare costs in the long run.

3. Value-based care benefits for suppliers

Any sales rep knows that the key to closing a deal is to demonstrate value. For suppliers of medical products, value-based care presents an opportunity to demonstrate the efficacy of their offerings in improving patient outcomes at lower costs.

Demonstrate value and differentiation

Value-based care creates an opportunity for suppliers to showcase how their products and services directly contribute to improved patient outcomes at lower costs. By partnering with providers in value-based programs and collecting data on clinical performance, suppliers can build robust evidence for the value proposition of their offerings, gaining a competitive edge.

Value-based contracting

Medical suppliers can also negotiate value-based contracts with payors that link reimbursement to demonstrated outcomes. Suppliers can also secure favorable reimbursement and market access by showcasing the value proposition of their products through real-world studies and comparative effectiveness research.

For example, if a medical device supplier offers antibiotic-infused surgical sutures that can reduce the risk of patients developing surgical site infections, that could improve care outcomes and the provider might be reimbursed at a higher rate under value-based contracts. The higher supply costs that may be associated with specialty sutures might pale in comparison to the costs and patient health risks associated with treating healthcare-associated infections—making it an easy sell for suppliers.

What’s next for value-based care?

The future of value-based care will see continued evolution and expansion as healthcare systems, providers, payors, and policymakers work to control healthcare costs and improve patient outcomes. Future iterations of value-based care are expected to increasingly incorporate social determinants of health (SDOH) as well as the use of advanced analytics and AI technologies to support more accurate risk stratification, predictive modeling, and personalized interventions. As the cost of pharmaceuticals continues to rise, there is also growing interest in value-based models for drugs. These models link reimbursement to the clinical effectiveness and real-world outcomes of drugs, ensuring that payors receive value for their investment and that patients have access to high-value therapies.

Unlock greater value through data-driven insights

Healthcare is evolving, and hopefully, your strategy is evolving with it. To thrive in a value-based care environment, you’ll need data, analytics, and the expertise to put them to work for your organization. Sign up for a free trial today and see how our healthcare commercial intelligence can empower your organization to succeed in the value-based future.