Third of Execs Don’t Think Value-Based Payment Will Usurp FFS

March 11, 2020 - Value-based payment adoption has steadily increased, but a third of healthcare executives in a new survey do not believe the alternative payment mechanism will usurp fee-for-service.

Fee-for-service mindset and model are too entrenched for value-based payment to take off in the near future., the C-suite executives from hospitals, health systems, and physician groups said in the survey conducted by Sage Growth Partners for DataGen.

Other reasons why value-based payment is unlikely to replace fee-for-service included:

• Clinical staff resistance to value-based payment
• Low incentives
• Lack of resources and knowledge to assume risk
• Volatility of the healthcare industry, especially in the face of change

Aligning businesses with value-based payment will require a hefty lift from provider organizations. These organizations must not only have the budget – which was the number one reason why some providers are not investing in value-based payment – but also the right culture, vendor partners, staff, and leadership, the survey of over 100 executives found.

Additionally, many healthcare organizations are not seeing the financial benefit of participating in value-based payment models. The majority of respondents said quality is improving under the models, but only 45 percent said financials had improved moderately or significantly.

Despite these challenges, half of executives still think value-based payment will be the dominant revenue model in the next five years, the survey found. The remaining respondents were unsure.

Overall, the majority of executives (over 60 percent) plan to enter or expand value-based payment participation in the next year or two. On average, the organizations already have a quarter of their revenue tied to value-based payments.

Accountable care organizations (ACOs) and bundled payment models are the most popular value-based payment arrangements and will likely continue to top the list in terms of participation.

In the survey, 62 percent of executives said their organization participates in an ACO, while 51 percent are in bundled payment models, 35 percent in patient-centered medical homes, 29 percent in capitation, 25 percent in commercial bundled payment models, and 11 percent in all-payer models.

When asked which value-based payment models their organizations plan to enter or expand in the next one to two years, commercial bundled payment models and ACOs tied for first with 32 percent each. Medicare’s Bundled Payments for Care Improved Advanced (23 percent) and capitation (20 percent) were also popular selections.

But healthcare organizations will need to invest in people and technology to expand their value-based payment participation, the survey found.

Real-time analytics (i.e., clinical decision support and social determinants of health) and predictive analytics (i.e., risk stratification and financial) are the top tools executives said their organizations use for value-based payment participation.

Traditional analytics, however, remains a popular choice, the survey noted.

In the survey, 42 executives said their organization still uses traditional analytics, such as review of historical data. This is not surprising considering that the type of data used in traditional analytics is easily accessible for providers, researchers stated.

But healthcare organizations are ready to invest in more advanced technologies to support value-based payment models. Nearly 60 percent of executives in the survey expect to invest in new technologies in the short term. Those technologies may include reporting dashboards, decision support, and population health management technology.

“Healthcare organizations are feeling pinched financially as margins continue to shrink,” stated Mike Ilnicki, DataGen's president. “Expanding and entering into VBP models will require significant data analysis, planning, and a keen understanding of VBP opportunities as healthcare organizations look to succeed in the future."