The Price of Value Based Care
Value based care is a term that seems to be on the tip of the industry’s tongue in any conversation involving healthcare and where it is headed. The Ambulatory M&A Advisor works with some industry leaders in order to examine what value based healthcare is, and how it may have an impact on sectors of the industry like urgent care.
Lawrence Earl, MD, physician management consultant with Urgent Care Mentor says that in the broad sense of the word, value based care is care that is delivered and payment for that care that is paid for some outcome; not fee for service where it is being paid for each individual item of services delivered.
“Value based care is getting paid for some eventual outcome. In the urgent care sense, for instance, that could be what some of us are doing with global fee arrangements, where we are not charging for every little service that we do; we are charging for one global rate for the total care of that patient when they come in the door,” Earl says.
On the one hand it gives an urgent care center the knowledge that across the whole population of patients that they are going to be taking care of, they are going to get a fair rate per visit from all of those patients, Earl says.
From a payor side, they know they are going to just pay the one rate. In a broader, primary care sense of the word, it’s taking care of a group of some population of patients where you may be receiving some fee for service payment, or you are getting a set fee per month. Earl goes on to explain that physicians practicing in value based care are receiving some additional payments for some beneficial outcome to that population of patients.
“It might be where you are providing a certain level of preventive care for your group of patients and you get rewarded financially for that. Or, your patients have a good outcome. Say that you have a group of diabetic patients that you are keeping under pretty good control. There is a way to monitor that, and then reimburse those practices based on keeping those patients under good control,” he says.
“Then you’ve got the whole accountable care type organizations that are looking at Medicare populations and shared savings programs where they are looking for ways to manage the population at a set fee and look for ways to save, so that when they save money and have better outcomes and less hospitalizations and less expenses that go out to achieve the same results, that they share in that savings.”
Sarah Thomas, research director for the Deloitte Center for Health Solutions adds that the term means a lot of things to a lot of people.
“We have written quite a number of papers around value based care recently. We tend to focus on a number of specific payment models in the context; but I acknowledge that the concept is broader. It boils down to providing care In a more efficient way. So, it is better quality at a lower cost. A lot of the buzz is around these different payment models, which include things like shared savings, accountable care organizations, to some extent, patients under medical homes, and also bundling,” Thomas says.
According to Thomas, there has been a huge drive from The Centers of Medicare and Medicaid Services to experiment with all of these different payment models. She says that in any given one of the initiatives, there are examples of success stories in health systems that have done well and earned savings a number of years in a row, and others that haven’t.
For the urgent care population, Thomas says that on the one hand, they may face a disadvantage in value based care contracts if they are freestanding entities.
Thomas explains that this can be a direct result of hospitals and their associated physicians being more prone to direct patients to their own facilities so they can have better control of their patients’ care.
Doing so might ensure they get the information they need about what services the individual got and allow them to easily follow up and coordinate care after procedures, Thomas says.
Thomas says that the other side of the coin involves outpatient care providers. She says that providers like urgent care, retail clinics etc. that approach value-based care payers like hospital health systems, might be able to show a value proposition that allows them to win business and competitive advantage.
Since the buzz of value based care has picked up, there has been a mixed bag of reactions from physicians in the field.
“It’s hard work. Anytime you shake up the system and you don’t do things status quo, then people don’t like it. It’s a challenge. It’s a challenge to figure out because you have to have more cooperation between all of these different practices. You can’t just go about your daily grind and just do what you have normally done,” Earl says, explaining some of the reasons for backlash.
“Now you have to have collaboration between the payors, the specialists, imaging centers, hospitals, ERs…all of these different factions operating in the “silos” that we have become accustomed to thinking about in healthcare, now have to have more connections, more interaction and that is hard to do.”
Earl explains that when these challenges tend to arise there are people who will grumble about it, but then there are others who will look at it as a challenge, and think, “Look, if we do this, then we are also going to be rewarded for it.”
“I think that’s the attitude you have to take. This is the way it is going. The public, everybody is demanding that we get our healthcare costs down. So, we have to provide more value, just like any other service you are shopping for,” Earl says.
Steve Samudrala, MD, owner of America’s Family Doctors says that these reactions are merited because In medicine, it takes time to shift.
“In an independent practice, there is only so much that we have control over, and the one thing we can do is try to keep our practices as efficient and smooth as possible. There is so much more and more paperwork coming out, that it takes longer and sucks up more resources away from patient care. Again, that’s easier to do it when we have no choice,” Samudrala says.
“It’s going to be hard for people to switch over. How do you calculate value based care when somebody sprains their ankle and has PPO insurance and can go anywhere they want.
I can understand value based care with somebody that is diabetic and is on Medicare. How many times are you able to keep their numbers under control, keep them out of the ER, keep them out of the hospital, that type of thing. But, what do you do when somebody has an injury or a sore throat?”
Although the spread of value based care is inevitable, and some physicians have not grasped the concept yet, there is still the question of the future this can bring and Earl predicts that the future is bright because there will be more collaboration between the various sectors of the healthcare industry to provide top-notch, valuable care to the patients at their doors.
If you have an interest in learning more about the subject matter covered in this article, the M&A process or desire to discuss your current situation, please contact Blayne Rush, Investment Banker at 469-385-7792 or Blayne@AmbulatoryAlliances.com.