How to Financially Optimize Value-Based Care (Part 1)

Value-based care goes far beyond other ways of managing cash flow.

As healthcare increasingly shifts toward value-based care (VBC), CFOs face both challenges and opportunities.

Value-based care focuses on improving patient outcomes while controlling costs, which is easier said than done. The transition requires CFOs to rethink their financial strategies to not only ensure the sustainability of the healthcare system but also strengthen its role as an important community partner.

HealthLeaders spoke with Rick Gundling, HFMA’s senior vice president for content and professional practice guidance, to gain insight into what’s involved in value-based care finance and what CFOs need to focus on.

Be a community partner

The success of value-based care is based, in part, on being a successful community partner. Through VBC, CFOs can help health systems invest in community-based interventions that eliminate health disparities and improve the well-being of underserved populations. This may include partnerships with local organizations that provide resources for social services, transportation, mental health support, and prevention initiatives.

These efforts not only benefit the community, but can also result in long-term financial benefits by reducing overall demand for acute care services and improving population health metrics.

Additionally, health systems, as good stewards of public health, promote trust within the community. This trust can lead to stronger relationships with patients and better patient retention.

Involved community partners not only provide timely basic care, but also preventative care. CFOs can support this strategy by funding health and wellness initiatives, such as: B. Health tracking apps and programs that encourage patients to take more control of their own health. The argument for supporting funding for these initiatives cites lower costs for urgent care, urgent care and chronic long-term care.

Payers, Claims, and Population Health

To be successful in VBC, health systems must build strong partnerships with insurance companies and other payers. CFOs should work with payers to create contracts that incentivize high-quality care that balances the goals of both parties. Examples include sharing data, setting transparent performance goals, and participating in community initiatives to improve population health management.

However, it is important to note that not every patient meets a health system’s VBC cost projections.

“The reality is that when you’re managing a population, there are going to be some patients who are outliers who are simply high costs,” Gundling says.

This is where reinsurance can come into play, says Gundling. This can give providers a certain level of security when dealing with consistently high demands.

Reinsurance can help CFOs manage the financial burden of catastrophic or high-cost patient cases, such as those requiring complex surgeries, long-term care or rare diseases. By purchasing reinsurance, a hospital can transfer some of the financial risk of these costly cases to a reinsurer. Through reinsurance, CFOs can stabilize their finances and avoid budgetary burdens caused by unforeseeable major losses.

“You have this reassurance for that 3% of the population, but then you focus your efforts on managing care for that 97% of the population,” Gundling says.

Rick Gundling, HFMA senior vice president of content and professional practice advice

Align financial incentives

Under VBC, providers are typically rewarded for achieving certain quality and outcome metrics, such as reducing hospital readmissions or improving chronic disease management.

CFOs should work with payers to ensure financial incentives are structured appropriately. Consider detailed risk-sharing arrangements in which health systems are paid based on their ability to reduce costs while maintaining high-quality care.

CFOs should also focus on aligning physician compensation with quality performance to encourage desired behaviors across the organization. And they can work with CMOs to drive physician initiatives to adapt to new care models.

If value-based care is designed right and focuses on aligning financial incentives and population health, everyone can win, says Gundling.

Stay tuned for Part 2 to learn how CFOs can focus on the essence of value-based care and what other tools and strategies can make a system successful.