What’s driving the shift to value-based care?
The transition from fee-for-service to value-based care in healthcare is affecting everyone, from payors to patients to employers. Fee-for-service is now an outdated model of patient care that bases physician payments on the number of office visits or medical procedures that they perform. Value-based care reimburses physicians and healthcare providers for the quality of patient service that they provide.
What’s driving the shift to value-based care? Two things: the rising cost of healthcare and the unequal quality of care between patients.
How much does healthcare cost? The U.S. spends more on healthcare than any other country – about 18 percent of its gross domestic product (GDP). At the current rate that healthcare spending is increasing, the U.S. could be spending 34 percent of GDP on healthcare by 2040.
Why does this matter, and why do we need value-based care? Because everyone deserves equal access to quality, low-cost healthcare, and if we don’t reduce the increasing cost of healthcare we risk reducing the amount of take-home pay for all Americans, which would impact the continued economic viability of the U.S.
Competition under the fee-based service model has unfortunately encouraged U.S. healthcare providers to shift costs, accumulate buying power and restrict services. In their must-read book called Redefining Health Care: Creating Value-Based Competition on Results published in 2006, Michael E. Porter and Elizabeth Olmsted Teisberg argue that new benchmarks in the healthcare industry can be created by shifting to a new model based on competition to deliver the highest quality of care for patients at the lowest cost.
Today, the sea change in healthcare delivery that was recommended by Drs. Porter, Teisberg and many others is well underway. Major changes in U.S. policy have been enacted that are affecting the way payors, providers and physicians are delivering care. This, in turn, is creating new opportunities in the Silicon Valley and beyond for new technology and tech-enabled solutions to solve healthcare problems.