Value-based payment and care has left a powerful and indelible footprint on the U.S. economy. Widescale provider and payer investment in IT infrastructure and personnel to support alternative payment models, an infusion of venture capital support into new technology-based third-party partners, and innovative employer arrangements with providers, are tangibly shifting the axis of healthcare spending and improving the lives of millions of Americans.
The Health Care Transformation Task Force has partnered with NEJM Catalyst to offer an unprecedented look at how value-based care has positively disrupted the U.S. health care economy. Below you’ll find a series of reports on how value has impacted patients, providers, payers, purchasers, and partner organizations.
Click on each of the links below to access the full text reports:
Click on each of the links below to access the summary and visit the NEJM Catalyst article:
Introduction
As the nation continues to face uncertainties on health care policy reform, concerns about the long-term sustainability of the sector are prompting some organizations to sound a note of caution on major investments. The prior administration’s “let a thousand flowers bloom” approach to novel payment and delivery models is being pruned and mandatory participation requirements relaxed. To an outside observer, these signs could point to a slowing of the movement toward value. But is that really the case? Value-based payment and care delivery is an imperative that should remain front and center in the push toward a better system. One major driver is the Medicare Quality Payment Program (QPP), authorized under the 2015 MACRA legislation, which adjusts how doctors are reimbursed for services based on quality and cost. The QPP program went into effect in 2017 and encourages providers to pursue alternative payment models that require them to assume financial risk over care for their patient populations. Commercial payers will also continue to push for better value from providers through risk-based payment structures. Value-based payment and care delivery have already left an indelible footprint on the US economy. Many providers have made major investments in infrastructure to support alternative payment models and better care delivery, including wide-scale implementation of electronic health records and workforce retooling to support care integration. Commercial insurers continue to roll out new value-based contracts and join forces with providers through accountable care arrangements and joint venture partnerships; they have also made internal investments in staff and IT to measure and support value efforts. Employers, or purchasers, are investing in creative alternatives to traditional health plan contracting and finding new ways to control spending that saves millions, such as establishing “centers of excellence” for routine elective surgeries. Finally, a host of new technology-based third-party partners are emerging through venture capital channels, drawing billions of investment dollars and spawning dramatic population health innovations. These industry-wide initiatives have tangibly impacted patient lives. Providers and payers are succeeding in reducing deaths, avoiding hospitalizations and readmissions, and improving quality of care. Employers are better meeting the needs of employees with complex health conditions, and incentivizing individuals to stay healthy. Partner organizations are helping health systems make the changes they need to deliver care more efficiently and effectively, and to provide much-needed coordination for patients, providers, and caregivers. The Health Care Transformation Task Force (HCTTF) has developed a series of reports that illustrate the widespread impact of value-based payment and care delivery on the US economy. These reports make the case for the critical importance of continuing these efforts in an era of uncertainty and concern, and individually highlight the economic impact of value through providers, payers, purchasers, and partners. HCTTF members believe that while the current political and policy environment is focused on the next generation of health reform, the marketplace continues to see meaningful strides forward in pursuit of value-based care. That forward momentum should continue to produce patient-centered, high quality care at a lower cost.
Patients
In the vastly complex and increasingly politicized U.S. health care environment, the patient voice is often overlooked or given only superficial consideration. National economic debate on the rising cost of care, combined with a narrative focused on the changing health care business environment, often neglect to include consumers. Yet, patients form the beating heart of the health care system, generating demand that directly impacts how organizations deliver and pay for care. Understanding the patient impact is imperative to understanding the broader economic forces shaping the industry, and highlights the very personal importance of improving value in health care. The cost-quality disconnect As total health care expenditures in the U.S. continue to rise, so do patient out-of-pocket costs. Average annual health care costs for an individual reached $10,372 in 2016; adjusted for inflation, that equates to an approximately nine-fold increase since 1960.[1],[2] Rising patient costs are also reflected at the national level. Total national health expenditures were projected to reach $3.4 trillion in 2016, an increase of 4.8 percent from 2015.[3] Although the U.S. health care expenditures are a little above two and a half times that of other OECD countries with similar incomes, U.S. patients have decidedly worse outcomes than their international peers.[4] While high health care costs may be partially attributed to various uncontrollable factors such as aging of the population, other factors such as cost and quality of services contribute to higher health care spend and lower life expectancy. Between 2011 and 2014, Americans had a 17 percent readmission rate for heart attacks and pneumonia.[5] A recent study from researchers at Johns Hopkins estimated that more than 250,000 Americans die from medical errors, ranking third in overall deaths behind heart disease and cancer.[6] The Importance of Value Though the U.S. health care system remains strongly rooted in volume-driven fee-for-service payments, value initiatives are becoming increasingly prevalent and important as patient costs continue to rise, access to affordable care is threatened, and life expectancy remains low relative to other developed countries. Now more than ever, efforts that focus on increasing value in health care will prove to be the best hope for improving patient and consumer lives. Early initiatives have shown promising results to save lives and control costs. For example, a government-led initiative to reduce hospital acquired conditions resulted in 87,000 lives saved and $19.8 billion in financial savings between 2010 and 2014.[7] Value-based programs that improve care coordination, strengthen the doctor-patient relationship, and hold providers accountable for the quality and cost of the care they deliver will be critical to improving patient lives. Though many different types of value-based care and payment models are currently being tested, not all have resulted in dramatic improvements. Both government and the private sector must continue to drive toward value for the benefit of patients and the broader U.S. economy. Taking the foot off the gas pedal and allowing the value momentum to wither from benign neglect would threaten the sustainability of the U.S. health care system and harm the patients who depend upon it.
Providers
Many providers have and continue to actively embrace value-based payment and care delivery reform, even amidst political and market uncertainties. Major investments in infrastructure to support accountable care organizations, episodes of care, and other value initiatives are reflected in areas such as new IT/data analytics infrastructure and expanded workforces. The Task Force examines the broader economic impact of these investments in the first part of a new series, produced in partnership with NEJM Catalyst. Read the full article at NEJM Catalyst.
Payers
Many private health insurers, often following the lead of CMS in its push toward alternative payment models, have already invested broadly in value-based payment programs. Now payers are streamlining their efforts, positioning their businesses on value-based arrangements that have shown success in reducing costs and improving outcomes. In the second part of its collaboration with NEJM Catalyst, the Task Force identifies significant shifts to value by insurers and highlights tangible impacts on cost and the patient experience. Read the full article at NEJM Catalyst.
Purchasers
Employers are approaching value in increasingly creative and collaborative ways to pursue population health management and care delivery. Rising health care costs, political instability, and looming health plan taxes continue to elevate the importance of value-based care and payment; employers continue to pursue innovative channels such as centers of excellence, high-performance networks, and bundled payments, among others, to tamp down costs and improve employee health. In the third part of its collaboration with NEJM Catalyst, the Task Force analyzes the impact of these initiatives on the broader US economic landscape. Read the full article at NEJM Catalyst.
Partners
Over the past seven years, the health care industry has witnessed monumental change in the way care is paid for and delivered. Spurred by wider availability of federal and commercial payment and care delivery models, new contracting approaches, and a large wave of newly insured consumers, health care organizations are joining forces with savvy entrepreneurs to accelerate the pace of transformation and modernization. While these entrepreneurial partners offer services that vary greatly in scope and breadth, they share the same common goals to improve quality and access while lowering costs and removing other barriers to effective care, most often with an underlying innovative technology platform. Some partners provide data analytics and decision support tools, while others offer a full suite of digital health and care management services, including personnel with special training and skills, to help organizations overhaul their delivery systems. The rapid growth of these new partners has engendered widespread interest from the financial community, resulting in billions of investment dollars and millions of impacted health care consumers. Though the long-term effectiveness of the new programs developed and implemented by these organizations remains to be seen, large-scale economic investments and early results provide a compelling case for the importance of continued focus on value. Investments in health care partners Investments in health care start-ups and partner organizations has grown dramatically in less than a decade, reflecting an unprecedented focus on overhauling the health sector: • According to incubator Rock Health, from 2011 to 2016 venture funding in digital health saw a compound annual growth rate of 30 percent. In 2016 alone, total investments in digital health reached $4.2 billion. Analytics and big data, including data aggregations and analysis used to support health care cases, garnered a large chunk of the total funding for the year at $341 million. Not far behind it were telemedicine and population health management, at $287 million and $198 million, respectively.[8] • As care moves beyond the four walls of the hospital, large investments are being made in companies and technologies that support patients in their social and medical needs. In 2016, almost $8 billion in venture capital was invested in companies that supported individuals in their daily essential activities, with ride-sharing company Uber a notable example. Care coordination raised over $800 million, with 50 separate contractual arrangements. Transition support garnered $168 million in venture funding and 28 deals.[9] • The population health market is expected to continue its explosive growth over the next several years. Research firm MarketsandMarkets estimates that the population health market will reach $42.5 billion by 2020, with a compound annual growth rate of 25.2 percent. While these numbers reflect the global market, North America (primarily the U.S.) will account for the largest market share.[10] • A recent survey of health care entrepreneurs from venture capital firm Venrock indicated that 45 percent believe analytics and big data will experience the highest growth over the next year, compared to other health care IT sub-sectors.[11] Understanding the impact As options for health care technologies and services abound, and as providers face increasing pressure from federal and commercial payers to modernize their care delivery systems, many organizations are increasingly engaging with partners. Though many of these companies are still early in their product development and roll-out, evidence points to their positive impacts: • Organizations employing population health initiatives grew from 67 percent in 2015 to 76 percent in 2016.[12] • Advanced electronic health technology implementation has been associated with fewer patients with prolonged length of hospital stay and seven-day readmissions.[13] • IBM Watson Health, which offers a variety of population health management solutions to its clients, reported a 250 percent improvement in care management efficiency among one of its clients.[14] • Remedy Partners, a technology firm focused on episodes of care and employed across 671 acute care hospitals, has generated $500 million in annual savings, along with a 6.1 percent reduction in hospital readmissions for its clients.[15] • Technology and population health services firm Evolent Health, which serves over 30 markets across the U.S. and manages over 2 million lives, has helped drive millions in clinical and pharmacy savings for its provider clients.[16] Many more examples of successful disruptive entrepreneurs exist; as these organizations continue to mature, collect additional data on outcomes and ROI, and refine their strategies to best meet the needs of health care organizations and consumers, their value in transforming the sector will become increasingly apparent. Conclusion Despite uncertainty over the future of U.S. health reform, a broad movement toward value-based care models continues and investments in data-driven, value-based health care solutions are essential to that evolution. Third-party partners are critical to help drive industry transformation because they enable smarter data use, encourage new methods of reaching consumers, and serve as external change agents for health systems and plans that do not have the internal technology or ability to transform on their own. These partners have already had a significant impact on the U.S. financial landscape, and are poised to continue their expansion and influence over the next decade.
