We expect that the VBC reimbursement model will take over the traditional fee-for-service model by 2025
DALLAS (PRWEB) October 17, 2017
After enduring a slump in recent years, demand in the healthcare provider IT market is rebounding, driven primarily by value-based care (VBC) initiatives. In fact, according to Everest Group, growth of the overall healthcare provider IT spend over the next eight years will be completely driven by VBC initiatives, and by the year 2025, VBC will account for more than 50 percent of all healthcare provider IT spending.
VBC refers to efforts to align physician and hospital rewards with cost, quality and outcomes measures rather than quantity of services provided.
More than 75 percent of provider organizations have either adopted or are looking to adopt VBC in the near future, a trend that will drive the next wave of IT investments among healthcare providers.
“We expect that the VBC reimbursement model will take over the traditional fee-for-service model by 2025,” said Abhishek Singh, practice director at Everest Group. “Between now and then, healthcare providers make their most significant IT investments in the areas of patient engagement and compliance. In fact, in the next eight years, we forecast that an additional $5.8 billion will be spent on VBC-driven initiatives. Of that, $2.1 billion will be tied to patient engagement initiatives, and $3.3 billion will be tied to compliance initiatives.”
Other VBC-driven IT investments will fall into one of two general categories: diagnostics, treatment and monitoring; and financials and network management.
These findings and more are discussed in a recently published Everest Group report, “Healthcare Provider Annual Report 2017: Will the Real Value-Based Care (VBC) Please Stand Up?”
This report describes the current state of value-based care and provides an evaluation of the 40 largest health systems with respect to their VBC and financial performance. The report also recommends a framework that health systems can use to accelerate their value-based care initiatives and describes the expertise and service capabilities required for service providers to serve the needs of the market.
The State of VBC Adoption: Key Takeaways
- Over a third of healthcare providers have undertaken VBC to some extent
- Despite the progress, there is significant work to be done to meet goals of the Centers for Medicare & Medicaid Services (CMS)
- Providers see a greater financial risk as compared to payers, thereby hampering progress
- VBC adoption has a strong dependence on the nature of risk undertaken
- Health systems tend to be better than hospitals in terms of VBC performance
Background on VBC
In the past, the U.S. healthcare system operated primarily on a fee-for-service model, which rewards healthcare providers for the volume of services delivered; for example, a physician is paid for every visit or procedure, regardless of patient outcome, the provider’s operational efficiency or the quality of the providers’ service delivery.
In contrast, in a VBC model, healthcare providers are reimbursed and incentivized based on quality of care rather than quantity. Although there are many different models and approaches to VBC, the objectives are to provide better care for individuals, improve population health management strategies (that is, how providers coordinate to provide the best care for patients), and reduce healthcare costs.
The relative success of VBC initiatives can be measured in many ways. Common patient care objectives include lowering readmission rates, mortality rates, and Medicare spending per beneficiary (MSPB); increasing patient satisfaction; reducing the number of hospital acquired conditions (HACs); and minimizing the time between check-in and check-out at the Emergency Department.
About Everest Group
Everest Group is a consulting and research firm focused on strategic IT, business services, and sourcing. We are trusted advisors to senior executives of leading enterprises, providers, and investors. Our firm helps clients improve operational and financial performance through a hands-on process that supports them in making well-informed decisions that deliver high-impact results and achieve sustained value. Our insight and guidance empower clients to improve organizational efficiency, effectiveness, agility and responsiveness. What sets Everest Group apart is the integration of deep sourcing knowledge, problem-solving skills and original research. Details and in-depth content are available at http://www.everestgrp.com.
Andrea M. Riffle, Everest Group
Jennifer Fowler, Cathey Communications for Everest Group