Cofounder & CEO of PointClickCare, a leading healthcare technology platform enabling meaningful collaboration across the care continuum.
Hospitals found 2022 to be the worst year financially since the start of the Covid-19 pandemic, with many finishing the year in negative margins. Although pandemic recovery is well underway, it continues to rock financials across the healthcare continuum, and with providers starting to take on more risk, value-based care models might accelerate the road to full provider recovery.
Obstacles To Provider Recovery
Many of the U.S.’s largest health systems suffered staggering financial losses last year, and the outlook for not-for-profit hospitals, in particular, is equally troubling. Hundreds of rural hospitals have shut their doors in recent years, and close to 30% of the remaining ones are at risk of closing. Current obstacles to provider recovery encompass a loss of pandemic financial support, staffing shortages, burnout among healthcare providers, rising costs and a looming recession, among others.
Burnout And Staffing Shortages
One of the most pressing concerns in the healthcare industry is the alarming increase in burnout among healthcare professionals. A 2022 American Medical Association survey of 11,000 doctors and other medical professionals revealed that more than half reported feeling burned out and indicated they were experiencing a great deal of stress. And though the pipeline of physicians entering the profession is strong, the ranks of doctors in the U.S. aren’t growing fast enough to meet future demand. This prevalence of burnout exacerbates workforce shortages, imposes financial burdens on providers, and—if it continues—may limit the ability of some patients to access basic care.
Rising Costs
Healthcare spending in the United States continues to soar, with costs reaching $4.3 trillion, or $12,914 per capita, in 2021, reflecting a 2.7% increase from the previous year. It’s crucial to note that approximately 5% of the population, comprising the most vulnerable and clinically complex patients among us, accounts for nearly half of all health spending. These escalating costs further strain providers’ financial recovery efforts.
Why Value-Based Care Is A Positive Step
Amid these challenges, transitioning away from fee-for-service models can offer a positive trajectory for providers executing a financial recovery plan. Since value-based care reduces overhead costs and reimburses based on positive health outcomes, the potential for new efficiencies, less waste and more intuitive integration can help providers achieve more, boost revenues and recover quicker. This happens in a few key ways.
Bundled Payments
A key feature of value-based care is the implementation of bundled payments. Rather than charging patients for individual tests or services, payments are bundled together, which proves especially beneficial in complex cases. This approach streamlines the billing process, reduces administrative costs and promotes greater coordination among healthcare providers.
Patient Data
Today, health systems have access to data that extends well beyond claims and is inclusive of the entire care team—from physician and nurse notes to labs, medications and nutrition. For example, providers can not only see what kind of medication a patient is on, but they can also see when they took it, their revenant vitals and the effectiveness of that medication in real time. And with more and more healthcare stakeholders leveraging AI to empower providers, providers could soon be able to quickly analyze vast amounts of patient data to help personalize treatment plans, identify patterns and optimize therapies to improve patient outcomes.
Prevention
Another key tenet of value-based care is focused on keeping individuals out of the hospital through proactive, preventive measures. Because the goal should be optimizing care while reducing its cost, the key lies in lowering costly hospitalizations. If this is achieved, it would mean providers have been able to mitigate acute patient health incidents.
Addressing Social Determinants Of Health (SDoH)
Further, value-based care models can provide financial flexibility and accountability. By integrating social drivers of health services into the financing mechanism, value-based care promotes holistic patient care and optimizes resource allocation for chronic resource constraints associated with social determinants. These models enable healthcare organizations to address social determinants of health (SDoH) more effectively at the population level.
Getting Started
Transitioning from the traditional fee-for-service model to a value-based care model requires careful planning and execution. Healthcare leaders must navigate a series of steps and challenges to make this shift successful.
Assess the landscape. Start by thoroughly assessing your current healthcare model. Understand its strengths, identify areas for improvement and set clear, measurable goals. Whether your focus is on reducing costs, improving patient outcomes, or enhancing care quality, a comprehensive assessment is the first vital step.
Engage and educate. This transition requires a cultural shift within your healthcare organization. Engage and educate your entire staff about the principles and benefits of value-based care. Ensure that every member of your team comprehends their role in achieving value-based care goals. Providing training in data analytics, care coordination and patient engagement will empower your workforce to contribute effectively to the transition.
Leverage technology. Embrace technology and data analytics. Implement electronic health records (EHRs) and other health information technologies that enable seamless data sharing and analysis. This technological foundation will help you track patient outcomes, identify areas for improvement and make data-driven decisions to reduce waste and elevate care quality.
Foster collaboration. Encourage collaboration among healthcare providers and organizations. Forge partnerships and alliances with stakeholders such as primary care physicians, specialists and community organizations. Collaborative care models can streamline care coordination, elevate patient experiences and diminish the fragmentation of healthcare services.
The transition to a value-based care model is not without its challenges. It involves financial adjustments, complex data integration, evolving regulatory compliance, change management and the need for effective risk assessment. However, by methodically addressing these challenges and embracing the principles of value-based care, healthcare leaders can lay the foundation for a patient-centric, financially sustainable and higher-value healthcare system.
The Path Forward
For providers striving to recover financially despite constraints like burnout, staffing shortages and decreased federal funding, value-based care is the correct path forward. By focusing on outcomes, reducing waste and enhancing care quality, providers can not only achieve financial recovery but also deliver higher value care to their patients and communities.
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