Value based healthcare is a framework for delivering healthcare that encourages practitioners to prioritize the quality of services provided over their quantity. In this approach, healthcare providers (hospitals and doctors) are paid according to patient health outcomes. Physicians in value based healthcare agreements are compensated for using evidence-based medicine to improve patient outcomes, lower the burden of chronic diseases, and help their patients live healthier lives. Programs prioritizing values in healthcare delivery and financing are essential to a bigger, higher-quality plan.
Advantages of Value Based Healthcare Delivery:
A value based healthcare system has advantages for suppliers, payers, providers, patients, and society.
1) To improve their health, patients spend less money:
For patients, managing a chronic illness or condition such as diabetes, cancer, high blood pressure, COPD, obesity, or both can be expensive and time-consuming. In Value based healthcare models, the goal is to prevent chronic disease in the first place and aid patients in recovering from illnesses and accidents more rapidly. As a result, patients have fewer doctor’s appointments, medical tests, and operations and spend less money on prescription medication as their short- and long-term health improves.
2) Increasing patient satisfaction and provider efficiency:
While doctors may need to devote more time to new, preventive patient treatments, they will spend less time managing chronic illness. When value is prioritized over volume, indicators of quality and patient engagement rise. Furthermore, providers do not bear the financial risk associated with capitated payment schemes. A value based healthcare model can even reward for-profit providers, as they can produce more excellent value per care episode.
3) Payers manage expenses and lower risk:
Dispersing the risk over a more significant number of patients lowers it. A healthier population that makes fewer claims means that the premium pools and investments of payers are less depleted. By combining payments that cover the patient’s whole care cycle or, in the case of chronic diseases, more extended periods (up to a year), Value based healthcare payment also enables payers to improve efficiency.
4) Providers match costs to clinical results:
Suppliers’ ability to link their goods and services to better patient outcomes and lower costs is advantageous. This is a crucial differentiator given the steadily rising national costs associated with prescription drug use. Numerous stakeholders in the healthcare sector are advocating for medication manufacturers to link the cost of their products to the actual value they provide to patients. This process should get easier as customized therapies proliferate.
5) Spending on healthcare overall declines while society gets healthier:
Spending on managing chronic illnesses, expensive hospital stays, and medical crises is declining. Value-based healthcare has the potential to drastically lower overall healthcare costs in a nation where medical expenses make up approximately 18% of GDP.
Value-Based vs. Fee-for-Service healthcare:
Significant distinctions exist between a value based healthcare strategy and the more typical fee-for-service (FFS) model. Healthcare providers receive payment under the fee-for-service (FFS) model based on the number of services rendered. These services include a doctor’s visit, tests, operations, or other treatments. For every therapy that clinicians do, reimbursement rates are set. Clinicians are compensated for each service rendered separately under the FFS paradigm. As a result, healthcare professionals are effectively encouraged to offer more services per patient.
Importance of value based healthcare:
Value based healthcare is crucial because the current fee-for-service delivery model must be updated or replaced. In the past, the quantity of services a healthcare professional provided was given more weight than the caliber of care they provided. The emphasis on quantity over quality of service has led to an explosion in US healthcare expenses, among other problems. Regretfully, these expenses frequently don’t match the health results, as seen in the following section.
How Value Based Healthcare Can Be Implemented:
You can take action as a healthcare provider to start incorporating Value based healthcare into your practice. The American Medical Association (AMA) lists five actions that medical professionals should take to get their practices ready for value-based care:
- Determine the potential and patient population you have;
- Create the model of care;
- ally to achieve success;
- Encourage the right use
- Evaluate the impact and make constant improvements.
These five steps might appear simple, but value-based care implementation is complex and requires careful consideration and planning. For many doctors, this involves navigating traditional revenue cycle management with their clinics while balancing value-based and fee-for-service care.
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Switching from a fee-for-service to a fee-for-value system will take time, and the process has been more complicated than anticipated. Before long-term costs decrease, providers may experience short-term financial setbacks as the healthcare industry changes, and they embrace more value-based care models. However, the shift from fee-for-service to fee-for-value has been acknowledged as the most effective way to reduce healthcare costs without sacrificing the quality of care or the ability to help people live healthier lives.