Healthcare is an expanding and complex industry. The ageing population, higher prevalence of chronic diseases, advances in digital technologies, highly efficacious and expensive drugs have led to an increase in the healthcare demand and expenditures. The global health care spending projected at $ 10.05 Trillion by 2022 represents 2018-2022 CAGR of 5.4%, a considerable rise from 2.9% in 2013–20171
Having said that, the healthcare systems are shifting from volume-based care (fee for service) to value based care (fee for value). A recent report showed that value-based care reduced the medical costs by 5.6% on average in 2018 while improving care quality and patient engagement5
Value based care is on the rise and the following US statistics also shows how true it is:
What is Value Based Care? – To deliver value for the patient
Designed by the Harvard economist Michael Porter, value-based care is a delivery framework to improve health outcomes at a lower cost. This approach seeks to achieve the triple aim of lowering costs, improving health and bettering patient experiences. Additionally, the model is designed to reward those healthcare providers who are achieving positive patient outcomes in a cost-effective manner.
This model encourages components like quality, safety, patient experience and their participation in the decision making by the health care team. The most important thing is that this model seeks to avoid extraneous diagnostic and therapeutic interventions.
What is Volume Based Care – Is it working for patients or the payers?
The traditional healthcare service (fee for service) is not working in the best interest of patients: extraneous diagnosis adversely impacts patients via costs and inconvenience without any reassurance of a positive outcome. Even for payers, the situation is not particularly pleasant: the healthcare providers are paid for each service and/or procedure performed regardless of whether a diagnosis or procedure was necessary or was successful or considered as best practice.
The benefits of Value based healthcare
Almost all stakeholders in healthcare value chain are expected to benefit in the value base model:
Are there any challenges?
The transition from a well-established fee for service model to fee for value model is not so simple. Logistically it is quite complicated, and if not implemented properly, value-based care can carry high failure risk to providers and health care facilities. Some of the common challenges to value-based programs include:
Summarily, Value-based care has great promise and it holds the potential to change the healthcare industry for good. The adoption rate for this new model is slower than expected but it will continue to increase.
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