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Perspectives
Value-based care benefits for providers
Understanding the ‘tipping point’
To improve both patient population health and revenue financial outlooks, provider organizations should push to have 40% of their revenue managed under value-based care (VBC) contracts. But how can that 40% be measured? Discover how to create a measurable, sustainable process in our new report.
Transitioning to a value-based care model
As pressures of moving to value-based care (VBC) continue to rise, many providers are entering VBC arrangements. Through this transition, they are often unsure of how far to go. How many VBC contracts should they accept? How much risk should they take on? How will this impact their fee-for-service (FFS) business? What is the “tipping point”—the point at which an organization’s VBC financial opportunities start to outweigh FFS revenue reductions? Success within value-based care arrangements necessitates aligning payer contracting and payment reform with care model transformation.
Based on our experience working with providers, organizations need to reach a tipping point of 40% of their care delivery/clinical revenue managed under VBC contracts to be financially and operationally incentivized to manage total cost of care versus the volume of services provided. Our latest report explores how the tipping point is defined and calculated, why 40% is considered the tipping point, risks of being above or below the tipping point, and how provider organizations can increase the amount of revenue they have tied to VBC.
Is the ‘tipping point’ approach right for your organization?
As the health care industry and corresponding regulatory environment continue to evolve, it is to the advantage of providers to push toward the tipping point to improve both patient population health and revenue financial outlooks. Organizations can pull various levers to accomplish this goal, and which levers are pulled depends on the provider’s construct, including, but not limited to, the structure of their provider network, facility asset footprints, risk appetite, and general health system size.
While there are numerous stakeholders in the health care space that grapple with how much value-based care to pursue, the 40% tipping point goal is intended to be a guideline for integrated delivery networks that have a shared goal among their providers to capture payments aligned with delivering more integrated and coordinated care.
Ultimately, understanding the rationale and risks associated with not working toward that 40% contract goal for health systems will be key for organizations to continue down the path to best balance patient care with financial stability.
Get in touch
Mark J. Bethke, FSA, MAAA
Managing Director | Deloitte Consulting LLP
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