The pandemic has certainly increased providers’ appetites for value-based contracting. Three-quarters of survey respondents said they plan to take on more value-based contracts as a result of the crisis.
Early on in the pandemic, it became clear that health plans offered a financial buffer for health systems because they generated steady income from premiums even as revenue from surgeries and other patient-care services plummeted. Moreover, value-based contracts, which take many forms but effectively pay providers to keep patients healthy rather than based on the number of services they provide, emerged as sensible solutions during times of uncertainty.
Atlantic Health’s value-based strategy was its “saving grace” during the pandemic, Gragnolati said. The health system’s contract with Horizon Blue Cross and Blue Shield of New Jersey features downside risk, which requires having the ability to marry claims and clinical data.
“That gives you a base of data analytics that’s spectacular,” he said.
Atlantic Health even used that data to study how flu normally migrates in its communities to predict how COVID would spread. Gragnolati said the predictions were “spot on.”
While very few payers in Baylor Scott & White’s market offer capitated contracts, Hinton said the pandemic has certainly accelerated the movement toward value-based care. That’s because the federal government is responsible for more patients’ care under public programs like Medicare and employers are looking to drive their healthcare costs down.
“All those roads lead to a continued reduction of open-ended, fee-for-service reimbursement and more experimentation in the realm of value-based care,” he said.
The crisis has also spurred more investment in outpatient facilities as some patients continue to shy away from hospitals. Half of respondents to the survey said the pandemic has prompted them to add more outpatient facilities such as ambulatory surgery centers, urgent-care clinics and free-standing emergency departments.
Health systems have invested heavily in ASCs in recent years as both insurers and patients push for less expensive options, a recent Modern Healthcare analysis found.
Froedtert, for example, has always been light on hospitals for its size and conscious of pushing care into outpatient settings.
“COVID has fundamentally shifted the way patients are going to access some modes of care and we think we’re well-positioned for that,” Jacobson said.
While Carilion’s Agee said her system also plans to invest in more outpatient facilities, she said that’s balanced with the fact that the system still needs to get paid. Outpatient facilities receive lower reimbursement from insurers, but it doesn’t necessarily cost less money to provide services at those sites compared with at a hospital, she said.
“What we’re trying to learn as we’re migrating to ambulatory services is how to perform those services less expensively,” Agee said.