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Value-based care is a transformative approach in healthcare that prioritizes patient outcomes and cost reduction by incentivizing high quality, personalized care with greater efficiency. Many emerging companies, including private equity backed startups and technology companies outside of the traditional healthcare model, are playing an important role in shaping and transforming this landscape. Understanding three key principles of value-based care is essential for emerging companies to succeed in this environment.
1. Value-based care has evolved
Value-based care originated in the 1990s with managed care organizations exploring alternative payment models. Health maintenance organizations emerged as an early example, focusing on preventive care. However, initial implementation faced challenges, including limited provider networks and narrow data and analytics capabilities.
The Affordable Care Act in 2010 introduced provisions to help promote the adoption of accountable care models, such as Accountable Care Organizations (ACOs), which are networks of healthcare providers who collaborate to deliver coordinated, high-quality care to a defined patient population. These organizations are incentivized to achieve cost savings and improve patient outcomes, leading to additional investment in value-based payment models. Payment models can be structured in a variety of ways, including a capitation model where providers receive a fixed payment per patient per period, or a pay for performance model which incentivizes providers based on quality metrics.
Value-based models have introduced programs that tie reimbursement to quality metrics and patient outcomes, rather than the historical fee-for service model that incentivizes volume over value. This evolution has paved the way for emerging companies to develop innovative processes and technologies that can help drive better outcomes.
2. Value-based care tackles rising healthcare costs
With the US spending approximately 17.3% of GDP1 (Gross Domestic Product) on healthcare annually, the traditional fee-for-service model incentivizes volume over outcomes. In contrast, value-based care encourages coordinated and effective care delivery. Providers are rewarded based on quality and outcomes, reducing low-value care and controlling costs by eliminating wasteful spending. Early detection and prevention of diseases through value-based care can result in long-term cost savings and improved population health.
Emerging companies in value-based care can help reduce healthcare costs through:
Patient engagement
Value-based care promotes patient wellness and engagement by focusing on preventive care and empowering individuals to take an active role in their health. By offering new technologies and incentivizing participation in preventive care, emerging companies can improve employee wellness and overall health. Healthier employees are less likely to require costly medical interventions, resulting in reduced healthcare costs and increased productivity.
Data analytics
Value-based care relies heavily on data and analytics to measure and monitor patient outcomes, identify areas for improvement, and track the effectiveness of interventions. Emerging companies are developing data analytics capabilities to measure and monitor patient outcomes. Collaborating with healthcare providers who can effectively leverage data allows businesses to gain insights, identify opportunities for improvement, improve employee wellness initiatives and negotiate cost-effective contracts with providers.
The US spends approximately 17.3% of GDP on healthcare annually.
Source: Centers for Medicare & Medicaid Services, 2022 National Health Expenditure Data.3. Value-based care creates a personalized approach for patients
Value-based care emphasizes patient engagement and shared decision-making, empowering individuals to actively participate in their healthcare journey.
Patients as partners in their care
Patients are encouraged to become partners in their care, with emerging companies offering technology that puts education, resources, and tools to support informed decision-making at their fingertips. By involving patients in their treatment plans, patients can establish that the care received aligns with their personal goals, preferences, and values.
Expanded patient care options
Patients have more options and control over how or where they receive their care, including the use of digital health applications. Emerging companies are playing a significant role in developing technology for population health management, including leveraging advanced data analytics, creating digital health platforms that integrate data from electronic health records and wearables, and revolutionizing healthcare through telemedicine. This can lead to more personalized, patient-centered care that improves patient satisfaction, which leads to better adherence to treatment regimens.
Enhanced care coordination
Enhanced care coordination provides streamlined access to patient information across providers, simplifying the care process. Value-based care promotes care coordination and integration across healthcare providers, enabling seamless transitions between care settings. This model encourages healthcare teams to work collaboratively, share information, and communicate effectively to provide thorough and personalized care. Through care coordination, patients receive a holistic approach that addresses their unique needs, preferences, and goals. This helps to avoid fragmented care, reduce medical errors, and improve patient satisfaction.
Better outcomes for all
Emerging companies in healthcare have the opportunity to contribute to the transformation of value-based care. By developing innovative technologies, leveraging data analytics, and focusing on patient engagement, these companies can improve healthcare programs, increase outcomes, and achieve cost savings. Value-based care is revolutionizing the industry with its emphasis on patient outcomes and quality of care, and emerging companies can play a crucial role in navigating this changing landscape towards a more efficient and patient-centric healthcare system.
1. 2022 National Health Expenditure Data, cms.gov
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