Providers slow to adopt value-based pay

About one-quarter of 700 health executives polled in a new survey said they had no value-based reimbursement initiatives planned for 2017.

Health systems are transitioning from a model that emphasizes volume to value, albeit slowly. The escalating cost of care, a lack of standardization in how quality is defined, a disengaged workforce that leads to more medical errors, and a lack of trust and transparency between providers, payers and regulators have impeded their transition, according to a survey global consulting firm EY released Thursday.

Smaller organizations were far more reticent to pursue value-based reimbursement initiatives, some of which include the Medicare shared savings program and variations of accountable care organizations, than larger organizations. Around two-thirds of the organizations that reported between $100 million and $1 billion in annual revenue were not pursuing value-based initiatives in 2017, while the vast majority of larger firms that have the resources needed to integrate these models into clinical operations had some form of value-based models in place.

"This creates a competitive disadvantage for smaller hospitals, and quite frankly, puts their financial futures, sustainability and corporate existence in jeopardy," Dr. Yele Aluko, an executive director in the advisory health practice at EY, said in an accompanying report. "Many smaller hospitals and health systems lack the strategic management processes, corporate resources and capabilities to remain competitive in the short term or relevant in the long term."

Transparency, coordination and communication are essential attributes for any organization striving to transform culture and achieve value-driven care, said Dana Alexander, an executive director in the advisory health practice at EY.

"The industry is beginning to grasp the concept that quality is a driver to reducing costs and that the cost-cutting measures of yesterday were short-term band-aid approaches that did not achieve a sustainable balance of cost and quality," she said.

Providers are pursuing measures to help reduce medical errors and increase reliability. Morale among the front-line staff must improve to ensure the endeavor to reduce errors is a sustainable one, Aluko said.

"Otherwise, avoidable medical errors will exponentially place patient lives at risk and transformation toward value-driven healthcare will remain nothing but a theoretical conversation," he said.

The next highest cost-control measures included decreasing unnecessary variation and utilization, increasing patient access to primary and specialist care, and reducing hospital and emergency department use for high-cost patients.

A holistic, cultural shift is needed to fully embrace value-driven care, researchers said. That involves delivering effective care that produces measurable results, increasing transparency to reduce medical waste and redundancy, gauging and improving patient experience—an endeavor 93% of respondents said they are currently undertaking—and making sure employees are engaged and satisfied, they said.

As to improving quality, 49% of respondents have initiated quality audits, 31% had implemented physician performance scorecards that include a quality measure and 38% plan to institute facility scorecards.

While it can be costly, providers can better leverage new technologies to improve outcomes and patient experience, researchers said. Only 26% of respondents ranked new technologies as one of their top three priorities for 2017 and only 8% are using patient-centric analytics to improve patient experience.