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Healthcare Providers Much More Optimistic About Value-based Care

Analysis  |  By Gregory A. Freeman  
   July 02, 2018

Confidence in profitability with value-based contracts doubles over two years.

Hospitals and other healthcare providers have been skeptical about the effect of value-based care on profits, but a recent poll suggests they are much more willing to gamble on the idea.

The percentage of healthcare organizations that say value-based contracts improve profitability jumped to 46% in a recent poll by KPMG LLP, the U.S. audit, tax, and advisory firm—double the 23% found in the same poll two years ago. The poll was conducted as part of a webcast on value-based care.

These are additional findings from the poll:

  • Only 20% expect lower profitability from value-based contracts. That is a sharp decrease from the 2016 results in which 35% of respondents saw value-based contracts hurting profitability and the 52% who said so in 2014.
  • Healthcare providers still largely get paid by the fee-for-service model that links reimbursement to activity. Only 10% of respondents said they had a majority of their contracts tied to value-based reimbursement, such as shared savings, bundled payments, or capitation.
  • Approximately 49% of respondents said their value-based contracts represented a small percentage (less than 10%) of their contracts.
  • Respondents said the biggest challenges to reporting healthcare quality in a value-based program were technological challenges of converting EHR data to reports, lack of monitoring controls/dashboards, training/adoption by staff, and poor governance/oversight/procedures.
  • CMS was cited as the most in influential resource for healthcare organizations creating their definitions for quality reporting, cited by 32% of respondents. The other influential resources were the Healthcare Effectiveness Data and Information Set (HEDIS), the National Committee for Quality Assurance (NCQA), commercial programs and VBC arrangements, and the Consumer Assessment of Healthcare Providers & Systems (CAHPS) patient experience surveys.

Performance- based payment models are beginning to replace traditional fee-for-service models as healthcare organizations become more optimistic about profitability, says Matt Snyder, KPMG advisory principal.

"The need to shift from volume to value is shared by payers, providers, and ultimately patients.  "It is key to generate, assemble, and share data in a reportable manner to help reap the benefits of value-based reimbursement," Snyder says. "In addition to other reporting requirements, payers are increasingly playing the role of 'data service platform' to healthcare providers in order to help them manage patient care."

Gregory A. Freeman is a contributing writer for HealthLeaders.

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