New research from Sage Growth Partners notes that “a more substantive transition to value-based care” could be coming — but it has competition.
Value-based care isn’t the only priority highlighted in The New Healthcare C-Suite Agenda: 2024-2025 Market Report. It’s just the only one where providers identified payers as part of both the solution and the problem.
The new report from Sage Growth Partners is based on annual survey responses from more than 100 hospital and health system C-Suite executives and “reveals a new prioritization on growing revenue, fortifying the workforce, reducing costs, [and] transitioning more revenue into value-based care arrangements.”
There’s no time like the present to meet these goals. Per the Sage report, 65% of survey respondents say patient health is worse than pre-pandemic with only 5% are confident that patients have caught up on delayed care.
How do you provide more care and protect the bottom line? Is VBC the answer? And in 2025, how do provider executives feel about the payer role in that equation?
VBC as obstacle and opportunity
Value-based care – in addition to delayed care and staffing — was one of three significant operational obstacles that hospital and health system executives named in the HHS executive survey. Among many topics, Sage examined VBC growth and success through the lens of provider participation, revenue and contract types.
Level of participation
While 52% of execs plan to participate in VBC at current levels, 29% are aggressively adding contracts while another 12% may put their plans on hold.
Revenue from VBC contracts
Sage reports that 44% of HHS providers have more than one-fifth of their revenue in VBC arrangements.
Nearly half of hospitals and health systems is progress but raises questions about the other 56%. Among this group, nearly one in five HHS providers (21%) earn between 40-100% of their revenue from VBC contracts. Whether that gives these providers more market power or makes them more vulnerable depends on the success of these contracts — and their many competing models and priorities.
Types of VBC
As the Sage report notes, healthcare’s shift from fee-for-service to VBC “continues to be convoluted.” 26%—Navigating the transition from fee-for-service and 29%—Identifying appropriate VBC models for the organization
There are seven VBC arrangements that HHS provider executives are either implementing or considering:
- P4P based on quality — 60%
- P4P based on quality and value — 55%
- ACOs with shared savings/risk — 53%
- Bundled payments for a specific episode of care — 46%
- Fixed payment per patient (capitation) — 26%
- Episode of care payment for specific conditions or procedures — 22%
- Hospital at home/Medical home models — 14%
The Sage report adds that “while hospitals and health systems have larger percentages of revenue at risk, the payment models appear to remain heavily-focused on quality.”
Is this a bad thing? On one hand, any progress is positive. On the other, VBC cannot simply be another iteration of P4P.
Can VBC help providers meet their top priorities — and with payer help?
In the Sage survey, HHS provider execs cite better patient outcomes and care quality as the top reason (41%) to participate in VBC but growing revenue as their top strategic initiative (57%). This mix of patient health and business health priorities permeates both VBC participation and provider strategy drivers.
|
Top Drivers for VBC Participation
|
Top 5 Strategic Initiatives (Next 2 Years) |
|
Improving patient outcomes and care quality — 41% |
Growing revenue — 57% |
|
Financial sustainability and revenue predictability — 38% |
Staff recruitment and retention — 55% |
|
Ensuring long-term viability in changing market conditions — 34% |
Reducing costs — 46% |
|
Strengthening care coordination and integration — 32% |
Patient and consumer experience — 25% |
|
Focusing on population health management — 30% |
Patient safety — 25% |
If value-based care is the key to healthcare reform, then its drivers should align with priorities shared amongst stakeholders.
The Institute for Healthcare Improvement (IHI) notes: “Value can be conceptualized as the optimization of the Triple Aim” — cost, outcomes and experience — with equity and workforce well-being now added to that equation. The IHI also adds that “different stakeholders may give different weights” to these dimensions.
Sage reports that “building closer relationships with payers” is one reason why the provider C-suite is moving toward value-based care. HHS provider executives also cite payer partnerships (26%) and payer resistance (21%) among their VBC challenges.
The perennial question is whether providers and payers can come together.
Laura Beerman is a freelance writer for HealthLeaders.
KEY TAKEAWAYS
Payers, pay attention: Hospitals and health system executives have set their agendas for 2025. Value-based care (VBC) is a priority and they need your help.
But VBC isn’t the only priority, for providers or any stakeholder.
Should it be — and how can it with other challenges and a possible recession looming?