Winning the shift from volume to value
Value-based payment models have the potential to upend traditional patient care and business models. What can your organization do to effectively make the shift and “win” in the new value-based care (VBC) payment landscape?
- VBC market shift
- Watch the video
- Population health and VBC
- Implications for industry sectors
- Read the latest insights
Winning the value-based care market shift
The payment landscape is shifting under the US health care industry. With the volume-to-value transformation put in place by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), traditional fee-for-service payments are being replaced with a financial incentive framework that rewards for improved quality, outcomes, and costs. This shift to value-based reimbursement models creates a new paradigm in which care is delivered by an entire coordinated care community sharing in the responsibility—and risk—of outcomes and costs, touching almost every part of the health care delivery operations. While the law directly impacts only Medicare payments today, it lays the groundwork and provides strong incentives for other payers to move in the same direction, thus potentially disrupting the health care system at all levels.
Ultimately, value-based payments transform traditional business models by putting significant revenue– and risk– at stake. Building the outcomes-based financial models and data infrastructure to maximize value-based care (VBC) reimbursement pathways will be fundamental to sustainable growth in the future. The health care players left standing strong will likely be the ones that strategically embrace change starting now to understand the impact of MACRA and the new value-based payment models to their organizations and customize the broad array of value-focused shared saving, shared risk and bundled payment models that will work for their individual situations and populations.
With accountability and risk more broadly shared across the care continuum, VBC challenges health care providers, health systems, and health payers to change their traditional role in the health care ecosystem. Key to winning the volume-to-value shift will likely be business integration and data aggregation: inside and outside an organization, across sectors and across models of care. Health care organizations should dramatically transform coordinated care models, improve physician engagement and alignment, and build the technology infrastructure for sophisticated data analytics and financial modeling to effectively manage the new clinical and financial risks.
The level of dollar investment in VBC is substantial, yet the market shift toward VBC presents unprecedented opportunities – as well as challenges for the US health care system. What can your organization do to effectively make the shift?
Value-based care: The game is changing. The stakes are high. Are you ready?
Population health and value-based care
Value-based care and population health: two words that are probably "not new" to hospital CEOs. But these issues are starting to feel more expedient, according to our recent survey of hospital and health system CEOs. How are CEOs preparing for value-based care and population health, and how does MACRA fit into these strategies?
Read more about our 2017 Hospital CEO series
Implications for health plans
The shift from volume-based to value-based care challenges health plans to change their traditional, payer-focused role in the ecosystem. VBC will likely be fundamental to sustainable growth in the future as insurance margins and discount differentials continue to diminish. Though the ride may be bumpy today, in three to five years, VBC will likely produce a more equitable health care market built upon aligned incentives, transparency, and consumer and provider engagement. In the meantime, health plans should use this transition period to select the right high-value providers, align incentives, invest in capabilities and enterprise-level business model changes that can help position them favorably in the evolving landscape.
Read more about Deloitte's VBC insights for health plans:
- Addressing social determinants of health in hospitals
- Navigating bundled payments: Key strategies to reduce costs and improve health care
Implications for health care providers
As the shift from fee-for-service payment models to VBC continues—including Medicare’s plans for increased value-based payments by 2018—health systems will likely need to blend financial, operational, clinical, and other data to achieve their goals of improving quality, providing access, controlling cost, and managing provider networks. Analytics investment will be essential to support the VBC payment and delivery models that require insights to support more effective decision-making. Organizations may need a coordinated business model with sophisticated capabilities to be able to integrate, analyze, and leverage their data to reap the full benefits of VBC models.
Read more about Deloitte’s VBC insights for health systems:
Implications for life sciences
Succeeding in a value-based world means a new value proposition for life sciences companies and their product offerings. Competition will no longer focus on clinical innovation alone, but also on how products and technologies drive long-term economic value, impact care delivery efficiencies, and/or enhance patient experience while at the same time improving clinical outcomes. Many life sciences companies are making operational changes to address this shifting competitive landscape, such as redesigning customer teams to better align with consolidating provider organizations, adopting new contracting models (e.g., pay-for-performance) for drugs and devices, and investing in wrap-around solutions such as patient-oriented apps to support treatment adherence Additionally, the shift to outcomes-based health care is driving the importance of real world data and end-to-end evidence management across the entire product life cycle, and many life sciences companies are building these capabilites across product development, marketing and distribution.
Moving forward, life sciences companies have an opportunity to engage customers in assessing where both clinical and economic value is leaking from the system and how R&D efforts can potentially address it–making them valuable innovation partners “at the table” with providers and health plans. With the right strategies to optimize the life sciences industry’s scientific expertise and analytic capabilities, opportunities abound for new strategic collaborations to identify, deliver, and drive value across the health care system.
Read more about Deloitte’s VBC insights for life sciences:
- The evolution of oncology payment models
- Can new investors help medtech refill the new product pipeline?
- Technology, value-based care are changing the journey for cardiac patients and device manufacturers
- For biopharma, value-based competition is the new reality regardless of policy change
Look deeper. Explore Deloitte's latest insights on value-based care.
How we can help
Fee-for-service isn’t over yet, but the shift to value-based care is here and evolving rapidly. It will vary by health sector and even by geography, affecting different systems at different times. The players left standing strong will be the ones that strategically embrace innovative changes starting now.
Strategic integration and deliberate organizational transformation are essential to fully realize the benefit from the volume-to-value reimbursement shift and effectively manage financial and clinical risks.
Deloitte is guiding clients across all sectors of the health care industry and across critical dimensions of the volume-to-value transformation:
- Strategic planning
- Financial planning including revenue and risk modeling
- Care model transformation
- Physician engagement and alignment
- Organization transformation
- Technology and analytics
Deloitte teams are specifically helping health systems and health care provider practices to:
- Establish a strategic vision and plan that can guide your organization through the volume-to-value shift
- Unlearn the volume habit and generate greater margin through a change in service mix.
- Proactively capture the economic rewards of the new market model.
- Build the capabilities that can open the doors to profitable outcomes in population health.
- Reduce the downside risk of lost share, disintermediation, and reduced market relevance.
The game is changing; the stakes are high. What should you and your organization consider doing differently to win in this new value-based world?
Hospital CEO survey series
Medicare Access and CHIP Reauthorization Act of 2015