It’s 2020 and healthcare is at a crossroads. Will this be the tipping point in the transformation of care or are we in for yet-another decade of radical change and resistance? In all honesty, it’s probably a little bit of both. But if twenty-plus years in healthcare have taught me anything, it’s that there are always a few canaries in the coal mine to look to for clues. Over the next several weeks, I’ll be sharing six key trends that I believe will shape the healthcare business model of the new era. Up first: the breakthrough moment for value-based care.
Trend #1: Value-Based Care Breaks Through
The shift away from fee-for-service to value-based care began with passage of the Affordable Care Act in 2010. But even today, the fee-for-service payment model continues to dominate. In the last several years, however, value-based care has gained serious ground—accelerating from 25% in 2015 to almost 35.8% in 2018.
Just like it sounds, value-based care is reshaping the traditional fee-for-service reimbursement model in which healthcare providers are paid based on services delivered with no regard for effectiveness and instead ties payments for care delivery to quality of care and patient outcomes. The change began in earnest with the launch of the Hospital Value-Based Purchasing Program from CMS in 2012 and has been expanding and changing continually ever since. In fact, the national healthcare expenditure in 2018 was $3.6 trillion dollars, over one-third of which was in value-based payment models. According to the Healthcare Payment Learning and Action Network (HCP-LAN), this represents approximately 226.5 million Americans and 77% of the covered population. With this trend expected to grow to 39% in 2020, we have officially reached a tipping point.
The place we’re in today—which finds only two states without some form of VBC program implemented—is partially explained by the simple march of time. But greater clarity and stability of the regulatory requirements around VBC, in combination with the availability of useful data about ROI—neither of which were possible until this point—does go a long way in explaining just how and why this will be the decade that the promise of value-based care becomes reality.
What else explains the momentum?
Employers as Activists
While we have done a decent job of holding national healthcare spending down in the last two years, employers remain frustrated with a 4.8% rate of growth in 2019 healthcare expenses, which is higher than the rate of inflation and wage growth numbers, combined. Fed up with these ever-growing cost-burdens, a new wave of "employer activists" have begun to work together to negotiate contract prices and set up private provider networks (among other things) to take care of their own employees at more manageable costs. The most well-known example of this is Haven, the joint health-care venture between Amazon, JPMorgan Chase and Berkshire Hathaway.
Formed in 2019, the nonprofit company’s mission is to tackle rising health-care costs by partnering with care providers to focus on the health-care needs of their combined 1.2 million employees. And they’re not alone. Recent research suggests nearly half of employers have already implemented a high-performance network, center of excellence or private/preferred health center or plan to do so by 2022.
Increase in Payor-Provider Partnership
We’re also seeing a trend of increased collaboration between payors and providers to enter into more risk-sharing payment arrangements and launch truly innovative co-branded products or joint ventures. In 2018 alone, out of 27 new products that came on to the market, 70% were joint ventured or co-branded products that are designed to improve quality and access to care.
Humana’s partnership with Cleveland Clinic to expand their co-branded $0-premium Medicare product to five Ohio counties in 2019 serves as one example. We also see examples of this in our own work with a pair of payors and providers that are teaming up to strengthen their mutual appeal with innovations in access to care. A few of the offerings we’re helping to develop include guaranteed access to a PCP within 24 hours and specialist access within five days.
Driving Better Care with Data & Analytics
Value-based care is also working to advance the role of data, analytics and technology in new efforts to lower cost and improve quality in team-based models. According to a recent survey by Deloitte, hospitals participating in value-based care models are investing more on data, analytics and population health tools than their peers.
With an estimated five million medical notes created daily, and 21% of Americans using wearables, there’s certainly no shortage of patient data. There is a significant increase, however, in combining patient data from all sources and applying AI and Deep Learning algorithms to spot population trends, identify high-risk patients or measure clinical outcomes to improve quality and cost of care. A recent example that helped one client find success in this area was the development of a risk model that identified patients likely to be readmitted within 30 days and issue a discharge plan with interventions to reduce readmissions.
As it currently stands, value-based-care is not where it needs to be but is certainly at a tipping point. I expect that both payor and provider organizations along with CMS will take on more advanced approaches to alternative payment models to bolster value-based care in the next decade and continue to improve quality and outcomes while reducing cost.
Want to know what the other five trends are and not the wait ‘n see type? Download the full on-demand webinar and fill in the blanks right now.