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Healthcare's Future: How Value-Based Care is Transforming Population Health

Siel Ju
June 10, 2024
June 10, 2024

The following blog post is part two of our series on population health. Read part one: Why Population Health Matters: Beyond Individual Care to Healthier Communities.

Healthcare is transforming. Instead of waiting to treat individuals until after they get sick, we're moving toward population health — a more proactive approach that looks at the health of entire communities. We’re thinking beyond medical interventions to consider other critical factors like access to healthy food, safe housing, and good jobs — all of which can help build healthier communities from the ground up.

But we have a big challenge ahead: How can we make population health the norm? Value-based care is a big part of the answer. Defined by the Centers for Medicare & Medicaid Services (CMS) as “health care that is designed to focus on quality of care, provider performance and the patient experience,” value-based care puts its attention on overall health and on preventing problems before they happen. Instead of paying doctors and health systems for every test and procedure, value-based care rewards them for keeping people healthy in the first place. 

Value-based care is a rapidly growing sector of the healthcare industry and has attracted significant investment due to its potential to improve quality and control costs. According to a recent report from McKinsey, continued growth could result in a market valuation of $1 trillion in enterprise value for payers, providers, and investors.

This shift towards paying for healthy outcomes fits perfectly with the goals of population health. Implementing value-based care helps us move towards a healthcare system that prioritizes proactive, preventive care for the entire community.

Understanding Value-Based Care

Imagine a patient with diabetes. In a traditional, fee-for-service system, every blood sugar test, medication refill, and doctor's appointment adds to the bill, even if the patient's health isn't improving. 

But in value-based care, the focus shifts. Providers are rewarded for achieving specific goals, such as keeping the patient's blood sugar under control, whether it’s through personalized care pathways, lifestyle coaching, remote patient monitoring that allows for real-time tracking of blood glucose levels, or other strategies. 

While both fee-for-service and value-based care models exist within the same healthcare system, they have fundamentally different approaches. Key features of value-based care are:

  • Accountable Care Organizations (ACOs): In a value-based care system, networks of doctors, hospitals, and other healthcare providers voluntarily collaborate to provide coordinated care to a specific group of patients. This coordination helps to avoid unnecessary hospitalizations, reduce duplicative tests, and improve overall health outcomes.
  • Payment incentives for outcomes: Value-based care models reward providers for achieving specific health goals — such as reducing hospital readmissions or increasing vaccination rates — rather than for the number of services they provide. 
  • Focus on preventive care: Value-based care prioritizes preventive services like vaccinations and screenings. Providers are rewarded for pinpointing patients at risk for developing certain conditions and intervening early. 
  • Data-driven decision-making: By analyzing electronic health records, claims data, and other sources of information, value-based care models empower providers with insights into patient populations. Identifying those who would benefit from additional attention and providing them with this support leads to more targeted and effective care.

Ultimately, value-based care offers a more comprehensive approach, which not only prevents complications and improves the patient's quality of life but also reduces the need for costly hospitalizations, benefiting both the patient and the healthcare system as a whole.

How Value-Based Care Supports Population Health

Value-based care models are emerging as a powerful tool for improving population health. The Center for Medicare and Medicaid (CMS) Innovation Center emphasizes this shift towards value-based care in their 2021 Strategy Refresh report. This report highlights the importance of addressing social determinants of health, like socioeconomic status and access to resources, alongside improving care coordination and patient engagement. 

By doing so, CMS believes we can achieve better health outcomes for entire communities and move towards a more equitable and effective healthcare system. Value-based care models  drive positive change by:

  • Promoting Health Equity: Providers are incentivized to address the social factors that influence health and provide culturally competent care that respects the unique needs of patients from different backgrounds.
  • Addressing Community Health Needs: Providers are encouraged to collaborate with community organizations to tackle issues like food insecurity, lack of transportation, and safe housing.
  • Improving Care Coordination: ACOs and other models improve communication and coordination among providers, reducing duplication of services and preventing medical errors.
  • Encouraging Patient Engagement: Patients can take a more active role in their health through education and shared decision-making.

Value-based care is not merely a passing trend, but a fundamental shift in how we envision healthcare delivery and a catalyst for achieving the goals of population health. As value-based care continues to gain momentum, we can anticipate a future where healthcare is not just about treating illness, but about fostering health and well-being for everyone.

Further reading: Leading vs. Lagging Indicators: Driving Success in Value-Based Healthcare

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