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Blog Post

It's hard to move VBC forward when nobody understands what you mean

By Ryan Furr-JohnsonMegan Clark

February 16, 2022

VBC is a buzzword. Has been for a decade. Which makes it easy to assume everyone is on the same page–"we want to accomplish VBC"–and then momentum falls apart when partners aren't as aligned in what we expect VBC to do.

Case study: The playbook for population health

Take, for example, a sample of the definitions we collected when asking 'what is VBC?':

  • VBC is a way to get reimbursed for patient care based on quality of care and patient risk level instead of physician productivity/time.
  • VBC aims to make health care proactive instead of reactive, because providers and systems will be better reimbursed as their patients stay out of the hospital. Consequently, health care costs also decrease. Our market views virtual care as a great support tool for VBC.
  • An understandable industry push to contain total cost of care, for which I (life sciences) am often, and in my opinion unfairly, the poster child of the issues with the system when I make up less of health care spend than you might imagine.
  • Rhetorically, VBC is paying for outputs instead of inputs. However, the effort (in terms of government plans and legislation) is focused on vertical integration of existing providers (hospitals, primary care etc.).
  • VBC is a way of restructuring incentives to tie reimbursement to health outcomes. VBC is usually accomplished using an alternative payment model where provider reimbursement is put at risk. Rather than being paid by service, providers are paid by how they perform against defined quality, cost, and clinical metrics.

The good news: there are some clear themes about linking providers, risk, cost of care, and outcomes.

The bad news: there are also some significant differences—which become even more obvious when stakeholders are asked for the metrics to define success:

  • Patient experience/education
  • Preventive health improvement
  • Patient loyalty
  • Reimbursement rate
  • Patient outcomes
  • Cost reduction
  • Amount of provider dollars at-risk
  • Percent of surgical care covered by bundled payments
  • Shift in clinician prescription patterns in response to VBC
  • Reduction in cost of care
  • Patient activation (adherence to care protocols)
  • Total cost of care
  • HEDIS measures
  • Patient satisfaction

How to align stakeholders

One case study (pages 26-29) that struck us was an organization that ensured all stakeholders were on the same page using a definition of what they expect a VBC initiative to do. Essentially, they oriented the work (and definition) around the question "how would we judge the success of our partnership?"

At the industry level, there will still be different definitions of VBC (although, more alignment around outcome metrics would help – a blog post for another time). But, at the population level, partners would be aligned on a shared definition of success to drive toward. 

Value-based care should be more than a buzzword.

imageCommercial risk will either tip the industry towards value-based care or keep us in a world of hybrid incentives. It’s complicated, but is it possible? We think so. Learn how you can help push us towards a new cost and quality standard by visiting advisory.com/VBC.

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