Downside risk: healthcare's shift to value-based care
By Mike Doane, Associate Director, Content at Arcadia
Risk Adjustment Value-Based Care
If the pandemic taught us one thing, it's that capitated models succeed. Providers who had value-based care contracts in place fared much better when demand for elective surgeries decreased and desire for on-demand virtual services increased. Those with access to data and the know-how to use it were able to put their patients first and still achieve crucial business outcomes. They didn't end up in the red like the many of the providers under more traditional fee-for-service contracts.
Arcadia Vice President of Enterprise Partnerships, Anna Basevich, and KLAS Research Director, Bradley Hunter, discuss these shifts in the marketplace and how more providers can access the benefits of at-risk models through key strategic initiatives.
This discussion is now available as episode 2 of the Arcadia miniseries, The Schema (watch it here). We summarize three areas healthcare executives can focus to future proof their business models, take on more risk, and achieve better outcomes for populations.
1. The shift from fee-for-service to value-based care
"Fee-for-service, which has been the dominant model for a long time in healthcare, was really exposed for what it was — a monstrous beast."
Bradley Hunter
Hunter emphasizes the need for buy-in from the executive level of healthcare organizations to drive successful adoption of value-based models. When the C-Suite is on the same page, organizations can really make value-based care work.
This shift is natural after what happened during the pandemic. Health systems that were in capitated contracts were prepared for marketplace changes like increased virtual services. Their revenue, therefore, was largely unaffected. It was business as usual.Because of this, there's a lot more interest in going fully at-risk through these types of contracts and other popular models like Medicare Advantage. Some states are also becoming more aggressive in entering into risk-based contracts — New York, for example, with the DSRIP program.
2. Tools to take on more downside risk in healthcare
"We talked to leading organizations across the country from several different vendor organizations where we said, hey, what are you doing to be successful? Number one is good data. That strong data foundation, that is something that all of them have in common."
In their latest report on downside risk, KLAS found that healthcare organizations who have access to great data, and can further analyze that data and act on the insights to take on increased risk, are those who are adopting VBC most effectively.
The process is not an easy one. Moving beyond big data to identify actionable insights is difficult enough. Using those insights to make informed decisions about care can be a huge lift.
But it's worth the effort. Hunter says the best performing health systems all have one thing in common. A strong data foundation and the ability to use it.
3. The importance of partnerships in at-risk models
"As people look to get into value-based care, finding that collaborative payer, that's really a key part. Another way that you can go is just to find a good vendor that you feel like you could have a good partnership with."
If you're only taking on a small percentage of risk, you're putting the rest of your fee-for-service revenue at risk. This is because value-based care targets the root of problems affecting a population's health. Once you resolve a core issue across your population, patients come in for elective surgeries less because they're taking care of themselves and have a reduced need for this type of care.
But taking on increased risk can be daunting. Hunter suggests easing the burden by finding strong partners in both payers and vendors.
Many providers find themselves under multiple value-based contracts with sometimes 70 quality measures that they need to report on. A collaborative partnership with payers and vendors, however, may be able to reduce those measures to 12 across all contracts.
Sitting down together at the table and getting consensus on the quality measures that are actually important can help providers drive the conversation around how their value-based care contracts are structured.
"That's been really eye opening for a lot of folks and something that I've seen consistently with those that are taking on substantial amounts of downside risk," says Hunter. "They regularly have those conversations with payers."
These aren't the only ways to future-proof your healthcare business
These are only a few of the insights Hunter discusses in his 20-minute conversation with Arcadia VP, Anna Basevich.To get access to all these insights and more, watch the full episode of Arcadia's miniseries, The Schema.
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Insight How does value-based care and population health work together?
Value-based care and population health work hand in hand to identify patients who are at risk for complex illnesses and in need of preventative screenings. Population health case managers can use an EMR (electronic medical record) or data aggregation tool to identify who the sickest patients are and what care they need. 
Value-Based Care Population Health Management Healthcare Analytics