How to Save Value-based Care

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COVID-19 threatens to wreak havoc on shared savings and quality improvement measures for value-based programs. Payors and providers must act together to ensure progress does not stall.

It has been all hands to the pump for payors and providers since the outbreak of the pandemic. Senior leaders across both industries continue to fight fires. Dwindling PPE for front-line staff is a ubiquitous concern for providers, while non-existent utilization in outpatient settings and cancelled elective procedures continue to impact revenue. For payors, unemployed members shifting between employer-sponsored coverage and Medicare, Medicaid, and state exchanges, is creating retroactive disenrollment, administrative nightmares, and strained relationships within their networks.

Everyone is searching for cash. While fee-for-service arrangements are by no means sheltered from this impact, it is value-based care that faces true disruption. The performance metrics against which the whole system operates, both in terms clinical outcomes and cost-savings, will naturally be compromised by providers’ lack of “normal” patient volume and utilization-based revenue. This creates significant financial shortfalls for the coming year and risks impeding the long-term momentum of value-based care, given the structure of Medicare and commercial insurance contracts. Providers will be grappling with the fallout of missing performance targets for years to come.

So what can be done to avoid collapse? The most actionable solution is common to value-based and fee-for-service arrangements. Payors – both government and commercial – will have to contribute in the near-term with financial relief. Whether in the form of advanced payments or low-interest loans, payors must do their part to stave off critical collapse in healthcare infrastructure.

The longer-term priority is less of a one-size fits all solution. Value-based care organizations should begin planning investment in low-cost service offerings to retain members, and specialty services to drive margin as patient volume begins to normalize. Some investments made in reaction to COVID, such as digital health capabilities, may offer organizations a way to evolve their cost structure and better deliver primary care and essential services. Digital health capabilities also offer a unique opportunity for integrated care to better manage referral pathways, ensure patient adherence as utilization levels normalize, and capitalize on more equitable reimbursement. This downturn opens the door for transformation of administration and delivery of care – it is time to embrace big data, AI, care pathway management, and cost reduction programs holistically.

The real opportunity for providers will come as they turn elective procedures and specialty visits back on at scale. Now is the time for leaders to evaluate their portfolio of service offerings and determine how well positioned they are to capture their fair share of the groundswell. Leaders should consider the following questions as they prioritize investment for the coming year:

    • Which departments require additional administrative support to scale back up effectively?

    • Are there new clinical offerings or specialties that should be considered to help offset revenue shortfall?

    • How can the organization ensure retention and growth of patients returning for delayed elective procedures?

    • How are competitors positioning for a return to less restricted access to care?

Undoubtedly organizations will be operating from different starting points. It is critical they begin proactive analysis and planning of potential growth pathways to ensure they can supplement constrained value-based payment arrangements with new revenue sources.

Authors

Jaime Batista

Jaime Batista

Principal, Santa Barbara

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