Healthcare Revenue Cycle Management, ICD-10, Claims Reimbursement, Medicare, Medicaid

Value-Based Care News

Execs Say Value-Based Purchasing to Hit Tipping Point by 2020

About 55 percent of healthcare executives agreed most healthcare payments will be under value-based purchasing by 2020, a survey found.

Over one-half of healthcare executives agreed most healthcare payments would be under value-based purchasing by 2020, a survey revealed

Source: Thinkstock

By Jacqueline LaPointe

- Over one-half (55 percent) of healthcare executives surveyed after the recent presidential election stated that the industry should reach the value-based purchasing tipping point before 2020, a recent Lazard report revealed.

The survey of 203 healthcare C-suite executives and investors also found that investors were more optimistic about value-based reimbursement adoption than executives under the new Trump administration. Eighty percent agreed that the majority of healthcare payments would be value-based by 2020.

The findings indicated that healthcare organizations may be modestly behind the federal government’s value-based purchasing goals. HHS expects to tie 90 percent of Medicare fee-for-service payments to quality by 2018.

However, executives seemed to remain confident that the value-based purchasing transition would continue despite the administration change.

“We found surprisingly strong sentiment that the industry will be transformed over the next five to ten years by the development of new pricing models broadly known as value-based care, which will displace the traditional fee-for-service model,” the report stated. “Overall, the responses indicated that value-based care may have even more of an impact on the industry than will scientific breakthroughs.”

While medical breakthroughs drive care delivery innovation, almost one-half (47 percent) of the 203 US healthcare leaders and 88 from Europe reported that value-based purchasing adoption and two-sided financial risk implementation will have the most transformative impact on the industry.

Although Europeans tended to perceive value-based purchasing adoption as having a greater impact. Nearly one-half placed it in their top three transformative trends compared to just 41 percent of US respondents.

Scientific breakthrough ranked second among all C-suiters with 38 percent, followed by:

• New care delivery models with 31 percent

• Healthcare transparency increases with 31 percent

• Advances in personalized medicine and diagnostics with 30 percent

• Big data analytics enhancements with 29 percent

• Population and demographic changes with 25 percent

• Additional care quality requirements with 23 percent

Rise in healthcare consumerism with 21 percent

Despite ranking fifth as the most transformative healthcare trend, US executives and investors viewed big data analytics as key value-based reimbursement capabilities. Forty-seven percent said big data and data analytics would play a large role in alternative payment models and 39 percent state it would play a moderate role.

However, 15 percent of executives stated that big data and data analytics challenges were the largest hurdles for the industry overall.

While healthcare executives in the US anticipated value-based purchasing adoption to tip in the next three years, most identified value-based care goals as major organizational challenges.

Approximately 62 percent of US C-suite executives chose pricing and claims reimbursement as the industry’s greatest obstacle.

American respondents felt pricing issues were more of a challenge. Only 56 percent of European healthcare leaders ranked pricing and claims reimbursement as their top concern.

Among all healthcare executives, care quality and healthcare costs came in as the second greatest healthcare industry challenge with 39 percent of respondents, followed by the regulatory environment with 37 percent.

In response to value-based purchasing adoption and challenges, survey respondents stated that healthcare mergers and non-traditional partnerships would increase.

Healthcare executives said that the top three mechanisms that would “enable the transformation of the healthcare industry” for the next five to ten years were:

• Healthcare mergers and acquisitions with 43 percent of executives

• Industry partnerships and collaborations with 42 percent of C-suite level respondents

• Partnerships with non-traditional competitors, such as Google, IBM, Apple, or Fitbit, with 41 percent of executives

Over one-half of respondents also projected a significant boost in acquisitions of public companies to occur within the next 18 months.

Another 80 percent anticipated an increase in partnerships and/or joint ventures in the same timeframe.

As a result, about two-thirds or healthcare executives expected to grow capital and resource allocation levels to healthcare mergers and acquisitions activities in the next three years. Although they also said that projected return on invested capital and discounted cash flow would drive potential acquisition decisions.

“The most important driving force that healthcare services companies consider when evaluating acquisition targets is diversification into new services,” the report added. ‘The biggest issues healthcare services executives face when considering M&A are regulatory.”


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