How health care organizations can overcome inertia to implement value-based care

As the health care industry increasingly shifts to value-based care (VBC) and alternative payment models, its biggest challenge is inertia. Fee-for-service (FFS) and pay-for-performance (P4P) have been firmly entrenched for years, along with the associated business processes and costly legacy systems that support them.

To fully realize VBC’s value, these existing processes and legacy infrastructures must be transformed. Health care organizations can be strongly resistant to change, however. A primary obstacle relates to sunk investments in business processes and internal systems. In both cases, existing infrastructure creates a commitment to the status quo that makes change difficult or even impossible.

Most health care IT systems are structured to enable FFS and/or P4P payment models under which the exchange of data is one-to-one. For example, a primary care physician sees a patient, generates a claim, and submits it to the payer for payment.

A VBC ecosystem requires hierarchical and far more complex relationships among providers, payers, community-based organizations, social service networks and other stakeholders in the VBC network. In addition to facilitating payments, a VBC platform must support social determinants of health, quality reporting, and other use cases.

Legacy limitations

Within these networks are relationships in which a PCP in one network may be engaged in several other networks under various contractual arrangements with other entities. An organization that offers mental health services, for example, may have contracts with health care providers across multiple VBC arrangements. This type of “network of networks” can work only with an infrastructure that supports the hierarchies between these entities.

One major barrier to the effectiveness of a VBC network run on legacy infrastructure is the inability of providers to establish and manage a complex multi-stakeholder care network while accommodating the event-driven and episodic requirements of payment models that are no longer claim-centric. Another common obstacle is the failure of providers both to obtain timely data reporting and accurately forecast contract performance.

In a VBC network hierarchy, sources of funding sit at the top. Risk-bearing entities – such as hospitals, accountable care organizations, independent practice associations, direct primary care, and specialty carve-out organizations – reside in the middle, while participating providers are at the bottom.

These relationships for movement of funds, data exchange and patient episode tracking are “many-to-many” in nature. They enable providers to participate in VBC programs as individuals, as part of groups, across multiple locations, and across different payer programs and networks. Most legacy systems lack the flexibility and interoperability to implement and sufficiently scale such VBC programs.

Fortunately, technology exists that provides the capabilities required to execute VBC programs without the need to rip and replace the existing technical infrastructure. A purpose-built VBC cloud-based platform with the flexibility to be implemented as a Software as a Service, Platform as a Service or Data as a Service can help fill the gaps and ease the transition to VBC from the other models.

Using an incremental implementation approach facilitated by such a platform, existing organizations can implement their value-based programs in a step-by-step process that provides the clear insights and quality measures needed for VBC success.

Fear of complexity

Another drag on VBC adoption is concern that managing a complex, hierarchical many-to-many network would be overwhelming. This would be a legitimate fear if one tried to build a VBC network on top of legacy systems because, as discussed above, these systems do not support the hierarchical relationship structures necessary to support value-based contracts. Any attempts to try to fit the complexity of value-based contracts into such a legacy system is not going to scale and will require lots of manual processing and manpower, making it time consuming, costly and error prone.

Further, traditional approaches and legacy systems cannot scale the orchestration of cascading payment models, under which payer-provider collaborations incorporate risk-bearing entities and downstream participating providers. This reduces the ability of providers to accelerate adoption of varied alternative payment models.

In contrast, a cloud-based microservices platform smooths onboarding of stakeholders and includes mechanisms for financially rewarding them for their roles. These mechanisms make the administration of funding pools, including downstream distribution of funds and data exchange to participating partners, one of the most vital functions of value-based execution.

As long as healthcare stakeholders believe they need to replace existing infrastructure with another capital investment, VBC adoption will lag. Concerns about the complexities of VBC also will hinder adoption. Cloud-based microservices platforms running on top of legacy systems can enable provider organizations to build a value-based administrative data architecture that will help them meet the VBC goals of improving patient outcomes while reducing costs.

Lynn Carroll is chief operating officer of HSBlox, which makes software to assist in administering value-based care programs.