The road to Oz: 5 ways physicians can finally reach the Emerald City of value-based care

For years we’ve been promised the Emerald City of the U.S. healthcare – a value-based care model. And for good reason. The volume-based fee-for-service care approach we have now is the most expensive in the world and among the worst in quality.

We spend 20% of the country’s GDP on healthcare at an average cost of nearly $12,000 per person annually. That’s roughly double compared to other high-income countries. Despite this expenditure, the U.S. ranks dead last compared to peers across performance indicators like access to care and healthcare outcomes.

The yellow brick road to a better system, VBC, was supposed to supplant fee-per-service with rewards for better overall health outcomes. We would improve population health, reduce per capita healthcare costs and provide better experiences for patients.

Since the Medicare Improvements for Patients & Providers Act (MIPPA) of 2008, the Affordable Care Act (ACA) of 2010, and through multiple efforts since, providers have been told that change is on the way, that the Emerald City would come. Yet almost 15 years later less than 7% of primary care providers get paid through VBC models.

So far, the promise of VBC has only increased the burden on providers. Of the $4 trillion spent on healthcare every year in America, about a quarter of that — almost $1 trillion — is spent on administrative costs.

Yet there’s hope. Providers can make real progress towards value-based care systems with these approaches:

Hire or upgrade technology resources

Every practice is using technology in one form or another, or they wouldn’t be in business. But hiring a chief health technology officer or working with a managed service provider is foundational.

Data and automation are the keys to a successful value-based care transition. Tech resources should focus on gathering and making sense of masses of data to tell providers whether they’re making money, as well as slash administrative efforts and costs. CHTOs or MSPs can assure this takes place.

Already have one of these executives in place? Great. Now tell them to focus on these next pieces.

Understanding per patient cost and revenue

What we’re really talking about here is changing how healthcare providers get paid. To wean providers off fee-based payments, they need to understand profit and loss in a VBC world.

Right now, VBC models are too complex for providers to accommodate them all. Yellow brick road? More like a spider web of constantly changing forks in the path.

But by culling data, it’s possible to understand how much money providers are making per treatment type and per patient, even in a model that pays for patients to visit less often.

Providers should direct their CHTOs and MSPs to look at cost-per-patient by type of patient, using analytical computations on detailed profitability measures. That complexity can be turned into straight-forward profit measures.

Benchmarks and key performance indicators for patient health quality

Before VBC, providers didn’t really need to measure quality. But the Emerald City requires it – without telling us how.

Technologists should be looking at which VBC measures payers are rewarding providers for, plus drawing threads to quality performance indicators.

This includes patient experience tracking, such as collecting and reporting on reviews and satisfaction scores.

It should also include population health data that show social determinants information, such as socioeconomic status or factors like pollution. This type of nuanced information is necessary for truly understanding performance results and benchmarks.

If providers aren’t sure what quality is supposed to look like, they can’t get paid for it.

Robust and reliable interoperability data

Part of the VBC model is shared risk and shared reward, but that can’t happen if systems can’t talk to each other.

Providers need IT systems that can share patient data while complying with HIPAA standards.

If a PCP refers a patient to a knee surgeon, the providers will ultimately share a payment in some VBC models. Each provider needs to know what their share will be and roll that up to broader per patient cost and revenue.

This approach also informs decision support systems that help manage patient care. In a VBC model, providers must be able to make data-informed decisions. They can only do so when interoperability exists.

It’s up to CTOs and MSPs to build systems that work together.

Revised accounting processes that use automated computations

Accounting is never the sexiest thing to talk about, but it’s one of the most important.

To accommodate the variety of VBC models, providers need systems that can automate key processes and ingest new models without disruption.

Using generally accepted accounting principles (GAAP), technologists should build accounting systems that both accommodate revenue recognition across the wide breadth of VBC payment models while also being able to record potential liabilities, such as bundled payments that may not be sufficient to cover costs of ongoing care.

The Emerald City

The road to Oz is peppered with wicked witches and flying monkeys. Sometimes, it feels like the ruby slippers don’t even fit.

But on the yellow brick road to value-based care, providers aren’t helpless. Solutions based in technology, managed by technologists, will help to move providers forward.

In doing so, we also move the American healthcare system forward, brick by brick, until the Emerald City finally appears on the horizon.

Meade Monger, founder and CEO of Dallas-based CenturyGoal, is an expert in corporate restructurings, transformations, and digital strategy. He is currently a PhD candidate in healthcare research.