Hospitals’ Value-Based Revenue Increasing Significantly
By - As the healthcare pendulum swings in the direction of value-based care, recent data suggests it may be swinging more quickly than anticipated away from fee-for-service initiatives, according to a pair of hospital surveys from Kaufman, Hall & Associates (Kaufman), LLC.
Forty-two percent of hospitals confirm more than ten percent of their revenue stems from value-based contracts, confirms Kaufman. This amount doubled within the past six months, between August 2014 and February 2015. Additional “dramatic growth” was confirmed via collected survey data regarding the future implications of value-based payments.
Earlier survey data suggested only seven percent of hospitals anticipated value-based contracts would represent at least half of their revenue within the next two years. However, February’s data confirms twenty-two percent of hospitals surveyed maintain this belief.
Regarding the significance of such numbers, the discrepancy in recent results compared to those earlier reported may imply a formal shift in attitude towards the healthcare industry’s emphasis on value-based revenue.
"These findings suggest that more providers are viewing the movement toward value-based payment as inevitable," states Mark E. Grube, Managing Director, Kaufman Hall. “As the shift from volume to value gains momentum, hospitals and health systems need to move quickly to understand the likely trajectory in their markets, to identify their desired role, and to make the significant structural and operational changes needed to succeed in the changing business model.”
The pendulum has been clearly swinging away from fee-for-service payments since an announcement from Sylvia M. Burwell, Secretary of Health and Human Services (HHS) stating the department’s established specific initiatives for value-based payment and alternative payment models. Such an announcement was the first time HHS confirmed such plans since the inception of the Medicare program at large.
This goal from HHS to shift 85 percent of traditional fee-for-service Medicare payment to quality or value within the next year confirms alternative payment methods dictate an actively defined transition is underway. HHS surmised this number will rise to 90 percent through programs such as the Hospital Value Based Purchasing and the Hospital Readmissions Reduction Programs.
Shortly following Burwell’s announcement last January, the Health Care Transformation Task Force, consisting of 20 leading insurers and provider organizations, such as Partners HealthCare and Trinity Health, vowed to convert 75 percent of their business to value-based arrangements by 2020. The alliance intends to improve the accountable care organization model, establish a standard system for bundled payments and advance high-cost care.
In relation this active industry push, said David Lansky, President and CEO of Pacific Business Group on Health, “The country cannot continue down the path of fee-for-service medicine that produces fragmented and unsafe care. The cost of health care undermines our global economic competitiveness and erodes the financial security of individuals and families. Our goal is transformation that achieves value and improved health outcomes.”
Dramatic growth regarding the implications of value-based care for the healthcare industry at large means accepting the pendulum is swinging onwards without ceasing.
