Skip to main content
Sister Publication Links
  • ESG: THE NEW IMPERATIVE
Subscribe
  • My Account
  • Login
  • Subscribe
  • News
    • Current News
    • COVID-19
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • Transformation
    • People
    • Regional News
    • Digital Edition (Web Version)
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Midwest
    • Northeast
    • South
    • West
  • Digital Health
  • Insights
    • ACA 10 Years After
    • Best Practices
    • Special Reports
    • Innovations
  • Data/Lists
    • Rankings/Lists
    • Interactive Databases
    • Data Points
  • Op-Ed
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
  • Awards
    • Nominate/Eligibility
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Excellence in Governance
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top 25 Innovators
    • Diversity in Healthcare
    • Women in Healthcare
    • - Luminaries
    • - Top 25 Diversity Leaders
    • - Leaders to Watch
    • - Luminaries
    • - Top 25 Women Leaders
    • - Women to Watch
  • Events
    • Conferences
    • Galas
    • Virtual Briefings
    • Webinars
    • Transformation Summit
    • Women Leaders in Healthcare Conference
    • Social Determinants of Health Symposium
    • Leadership Symposium
    • Health Care Hall of Fame Gala
    • Top 25 Women Leaders Gala
    • Best Places to Work Awards Gala
    • Top 25 Diversity Leaders Gala
    • - Hospital of the Future
    • - Value Based Care
    • - Supply Chain Revenue Cycle
    • - Hospital at Home
    • - Workplace of the Future
    • - Strategic Marketing
    • - Virtual Health
  • Listen
    • Podcast - Next Up
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Video Series - The Check Up
    • Sponsored Video Series - One on One
  • MORE +
    • Advertise
    • Media Kit
    • Newsletters
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Providers
December 27, 2021 06:01 AM

Value-based care evolution might take a back seat in 2022

Tara Bannow
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    covid decline_i_i_i.jpg
    MH Illustration

    Healthcare finance experts warn the industry's sluggish evolution toward paying to keep people healthy may slip next year as providers fight to keep their heads above water.

    Medical services are still overwhelmingly paid for on a fee-for-service basis, a setup that's widely blamed for out-of-control costs. The need for value-based reimbursement has long been recognized but it's happening at a glacial pace.

    The COVID-19 pandemic is bound to make the situation worse because providers are so laser-focused on survival that entering a value-based contract may seem trivial. Not only that, the ebbs and flows of COVID-19 cases makes predicting care expenses difficult, and understanding costs is a crucial prerequisite to value-based arrangements.

    "This is going to hit pause on that movement just because of the financial risk that's involved and the uncertainty that's involved with the financial performance," said Rob DeMichiei, a strategic advisor for Health Catalyst and former finance chief at Pittsburgh-based UPMC.

    The issues facing health systems today are acute. Travel nurses can cost $200 per hour, but they've become a necessity as coronavirus cases continue to rise and available nurses become increasingly scarce, said Rick Kes, healthcare industry senior analyst at RSM.

    Chief financial officers are more concerned about nursing workforce costs than any other monetary issue, Kes said. Moody's Investors Service predicts the nurse shortage will "erode financial performance for both not-for-profit and for-profit hospitals into 2022."

    Ballooning labor costs won't abate next year, Kes said. Health systems in good financial shape should be able to weather the storm for a few years, but not indefinitely. "My concern long-term is: How far will this push out that move to value because CFOs are concerned about the immediate impact of this increased cost of staffing?" he said.

    The threat of financial loss was the top reason senior executives didn't move further toward value-based payment models focused on population health this year, according to survey results the consultancy Numerof & Associates published in August.

    There is a range of definitions for value-based care, but in its most meaningful form, it refers to some or all of a system's revenue being contingent on meeting specific cost or quality goals. The proportion of health systems' revenue that's currently "at risk" under such arrangements is small.

    Forty-four percent of health systems derived 10% or less of their revenue from risk-based contracts this, which is far less than respondents had predicted, according to Numerof & Associates research.

    While the COVID-19 pandemic increased providers' use of telehealth and home health, it didn't promote a desire to risk more revenue under value-based payment, the survey found. Only about one in three respondents plan to significantly increase revenues subject to at-risk contracts after the pandemic.

    "Despite federal relief funds, the pandemic left the balance sheets of many organizations badly damaged, and even more wary than before of taking a financial risk," Michael Abrams, a managing partner with Numerof & Associates, said in a statement.

    Nonetheless, health systems that previously were committed to value-based care prior to the pandemic will continue to expand on those efforts, Abrams said. Those that that have viewed the evolution as "marginal experiments" will continue to do so absent decisive action from the Centers for Medicare and Medicaid Services, he said.

    This could all mean that healthcare providers will fall behind in the battle for patients against health insurance companies. Just as providers are slowing their risk-based growth, insurers are expanding their forays into providing care DeMichiei said. Insurers—or "payviders," as they're called in this context—already have experience managing risk, which helps them be successful in the provider business.

    "This sort of competition between the two as to who is going to win the future of healthcare, insurers are going to continue to move forward and gain ground in this competition," DeMichiei said.

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    CN_2021122p35_Smallhold Royal Trumpet Mushrooms 9.85_Buck Ennis_i.jpg
    Psychedelic therapy providers get creative as costs trip up patients
    Shafer Dr. David Shafer Clinic Botox cropped9.49.jpg
    A Botox boom for back-to-work
    Sponsored Content
    Modern Healthcare A.M. Newsletter: Sign up to receive a comprehensive weekday morning newsletter designed for busy healthcare executives who need the latest and most important healthcare news and analysis.
    Get Newsletters

    Sign up for enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today
    MH Magazine Cover

    MH magazine offers content that sheds light on healthcare leaders’ complex choices and touch points—from strategy, governance, leadership development and finance to operations, clinical care, and marketing.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS

    Our Mission

    Modern Healthcare empowers industry leaders to succeed by providing unbiased reporting of the news, insights, analysis and data.

    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • News
      • Current News
      • COVID-19
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • Transformation
        • Patients
        • Operations
        • Care Delivery
        • Payment
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition (Web Version)
    • Digital Health
    • Insights
      • ACA 10 Years After
      • Best Practices
      • Special Reports
      • Innovations
    • Data/Lists
      • Rankings/Lists
      • Interactive Databases
      • Data Points
    • Op-Ed
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Awards
      • Nominate/Eligibility
      • 100 Most Influential People
      • 50 Most Influential Clinical Executives
      • Best Places to Work in Healthcare
      • Excellence in Governance
      • Health Care Hall of Fame
      • Healthcare Marketing Impact Awards
      • Top 25 Emerging Leaders
      • Top 25 Innovators
      • Diversity in Healthcare
        • - Luminaries
        • - Top 25 Diversity Leaders
        • - Leaders to Watch
      • Women in Healthcare
        • - Luminaries
        • - Top 25 Women Leaders
        • - Women to Watch
    • Events
      • Conferences
        • Transformation Summit
        • Women Leaders in Healthcare Conference
        • Social Determinants of Health Symposium
        • Leadership Symposium
      • Galas
        • Health Care Hall of Fame Gala
        • Top 25 Women Leaders Gala
        • Best Places to Work Awards Gala
        • Top 25 Diversity Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Supply Chain Revenue Cycle
        • - Hospital at Home
        • - Workplace of the Future
        • - Strategic Marketing
        • - Virtual Health
      • Webinars
    • Listen
      • Podcast - Next Up
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Video Series - The Check Up
      • Sponsored Video Series - One on One
    • MORE +
      • Advertise
      • Media Kit
      • Newsletters
      • Jobs
      • People on the Move
      • Reprints & Licensing