The cost and quality of health care are top policy concerns as significant drivers of the growing national debt.
With national health care expenditures in 2021 accounting for approximately 18% of the gross domestic product, the U.S. is capable of producing advanced treatments and remarkable outcomes for a portion of the population. In contrast, the U.S. performs significantly worse than other wealthy countries in common metrics like access to care, maternal and infant mortality, control of chronic diseases, and life expectancy.
Public and Private Payers Are Embracing Value-Based Care
With bipartisan support, the federal government has taken the lead in advancing the concept of value-based care by designing alternative payment models (APMs) that create financial incentives and disincentives for meeting specific performance measures in quality, equity, and cost of care. These programs aim to hold all physicians and providers more accountable for improving patient outcomes while giving them greater flexibility to deliver the right care at the right time.
On the private payer side, many employers support value-based care efforts as they struggle with the burdensome cost of health care benefits for employees. Moreover, individuals are learning that they too have a big stake in managing the costs of their own care, given the increased premiums and cost shifting that result in higher copays and deductibles.
Currently, there are three main types of APMs for physician practices – capitation, shared savings, and episodic payments (bundles). While each of these APMs has unique characteristics, the keys to success shared across models include care coordination, data analytic capabilities, and operational efficiencies. The Physicians Foundation details potential benefits or drawbacks of participation.
Transformation Is Progressing … Slowly
Studies of value-based care programs so far suggest they can reduce costs and improve quality of care, although results have often been mixed and the impact modest. While participation in alternative payment models is on the rise in the U.S., many physicians are still not in one. In its 2022 survey of U.S. physicians, the Deloitte Center for Health Solutions found that almost all physicians (97%) still rely predominantly on fee-for-service payments, with just one in four receiving meaningful value-based payments.
The value-based care movement and its goals for the health care delivery system are aspirational concepts that have been discussed for more than 40 years, driven by the cost/quality conundrum. In some U.S. geographic areas, this concept has moved from theory to practice with good outcomes. The underlying concept is that physicians (and providers such as hospitals) should be rewarded for improved quality outcomes and reduced overall cost. In its ideal manifestation, physicians will have more control of the health care dollar and less bureaucracy to contend with, and be empowered to improve the efficiency of care delivery.