It’s coming. Over the past couple of months, we’ve covered how all payers are introducing many variants of value-based reimbursement – The Management Transition To Value-Based Reimbursement Is All About The Performance Metrics, Moving To Value – Easy To Say & Hard To Do, and Pay-For-Value In Action. One of the big stories in the next 24 months will be the shift in payment methodology in the Medicare program – with $123 billion in spending moving to pay-for-value by 2018 (see System Reform, Value Purchasing, & The Future Of Behavioral Health).
While the payers are moving ahead with the speed and inevitability of glaciers, the bigger question is how ready is the service delivery system for these changes? The answer is, not as prepared as they should be. Here is a summary of a few of the recent surveys:
According to a 2015 survey of 165 health care providers by KPMG LLP, Alternative Payment Arrangements – Implications for the Finance Function, 85% of finance departments lack the “very sophisticated” capabilities needed to support capitation, bundled payments, and quality-based payments. Of respondents, 13% feel their financing department is “undeveloped” for risk management and accounting for innovate payment mechanisms (see Healthcare Provider Finance Trailing New Demands Tied To Value-Based Contracts: KPMG Survey).
The 2015 HFMA’s Executive Survey: Value-Based Payment Readiness, surveyed 146 senior financial executives, comprising CFOs, vice presidents of finance, and finance directors, about where their organizations’ readiness is for value-based mechanisms and found that only 12% currently incorporate these payments and 40% don’t believe their organizations have the capabilities to succeed at value-based payments within the next three years (see HFMA’s Executive Survey: Value-Based Payment Readiness).
The 2014 Survey of U.S. Physicians from The Deloitte Center for Health Solutions surveyed 561 physicians to examine current levels of value-based care participation and found that 52% report having 10% or less of their compensation from value-based sources in the previous 12 months and expected this to stay the same for the next 12 months. While the survey didn’t gauge “readiness”, it found that 78% reported “contentment” with traditional salary and fee-for-service (FFS) payment arrangements (see Perspectives From The Deloitte 2014 Survey Of U.S. Physicians).
This situation is both a challenge and an opportunity. The challenge for payer and health plan executives is finding provider organizations that are ready for this shift to value-based reimbursement. The challenge for provider organization executives is building the required competencies. The opportunity is being able to create a sustainable system with value-based payments – and surviving what will be a very turbulent period in the market. The value-based payment models are moving ahead, with or without all of the provider organizations being either “ready” or “content” with the old reimbursement models.
For more on preparing your organization, check out these resources from the OPEN MINDS Industry Library:
- The Business Model Transition To Value-Based Care
- Are You Really Ready For Value-Based Payment?
- Pay-For-Value In Action
- Finding The New Opportunities With Health Plans
- Moving To Value – Easy To Say & Hard To Do
And for more on value-based care, join me in New Orleans on June 8 for The 2016 OPEN MINDS Strategy & Innovation Institute opening plenary address, Strategic Diversification In A Time Of Value-Based Care, by Kristopher L. Smith, M.D., MPP, Vice President & Medical Director, Northwell Health Solutions.