Value-Based Care News

Physician Practices Trail Hospitals in Value-Based Care Readiness

Large provider organizations, such as hospitals and health systems, are better equipped for value-based care than small and non-affiliated provider groups, according to Insights’ Value-based Care Assessment.

physician practices behind hospitals for value-based care

Source: Getty Images

By Emily Sokol, MPH

- Small, non-affiliated physician practices fall behind hospitals and health systems when it comes to value-based contracting, found the Value-Based Care Assessment: 2020, the latest report from Insights by Xtelligent Healthcare Media.

Hospitals and health systems have a greater market share, giving them the bargaining power to negotiate rates and innovative contracts with payers. These large provider organizations also have bigger patient populations that are more attractive to payer partners; these bigger patient populations lets payers impact the greatest number of members.

“We’re a medium-sized agency and a nonprofit. So we don’t have payers wanting to be partners with us because we don’t have enough patients to make it worth their while,” said a director of palliative care at a hospice facility during qualitative follow-up. “We don’t have a lot of options in terms of partnerships.”

Hospitals, though, have options for value-based care partnerships and the market power to negotiate contracts more effectively in their favor. As such, they are less reliant on fee-for-service reimbursement.

Only 24 percent of hospitals report 76 percent or more of their revenue is linked to fee-for-service reimbursement. This is compared to 64 percent of physician practices saying the same. These results were statistically significant, demonstrating a true divide between the two different types of organizations.

There is also a divide in direct value-based care participation between hospitals or health systems and provider practices: 84 percent of hospitals report participating in value-based care while only 51 percent of provider practices say the same.

The lower participation rate among provider offices is, in part, due to access to fewer resources.

“We knew at the time when value-based care was starting that we didn’t have the bandwidth for it because back then we were only two providers,” explained a chief operations officer at a community oncology practice. “We did not have the administrative staff or even the nursing staff to be able to accommodate what that would look like—extended hours, weekends, nurse triage.”

Right now, it appears those with the largest market share have the resources and bargaining power to effectively participate in value-based reimbursement. Meanwhile, smaller practices are left to their own devices. Leaving this essential group of providers behind will impede the value-based care transition.

So the industry must start moving together as a whole. Smaller provider practices need a place in the value-based care conversations. Otherwise, they will be trapped in a fee-for-service world and their patients within a system of care that rewards volume rather than value.

The Value-Based Care Assessment:2020 highlights the impact of COVID-19 on the value-based care transition. Results also track perceptions of innovative reimbursement models over time, comparing results from 2020 to 2019. The full report is available here.