Fee for Service or Valued Based? The Shifting Dynamics in Healthcare

Added March 29, 2019

The Shifting Dynamics in Healthcare. Part 1

The most common payment method for healthcare in the United States is fee-for-service (FFS). Within this ‘unbundled’ model, physicians provide more doctors’ appointments, surgical procedures, and hospital treatments because payment is based on how many procedures are provided to the patient. This model gives incentives to physicians to provide more treatments for greater profits, but may negatively affect the quality of care and result in dissatisfied patients and physician burnout.

Value-based health (VBH) is considerably different. Within the Value-based model, physicians emphasize quality rather than quantity. Revenue is dependent upon the utilization of available resources, applicable treatment, and care given the patient and positive clinical outcomes. VBH focuses on improving care management strategies, reducing healthcare costs and above all, better service and care especially for those who struggle with chronic illness, and multimorbidity connected to psychiatric disorders.

The shift toward Value-based models means increased patient safety

In 2014 the U.S. Department of Health and Human Services released plans for transitioning the Medicare fee-for-service program to value-based models. This reform estimated that 50% of payments would begin to flow through accountable care organizations and bundled payment programs by the end of 2018 and because many major private payers and state Medicate programs are also coming aboard, it is expected that the healthcare system will tip the scales towards VBH.

This ‘tipping of the scale’ brings about bonus opportunities to improve the quality and safety of patient healthcare. Improving patient safety can be a path of financial survival for many providers who are in the process of transitioning to VBH. Under the bundled program, costs for treating injuries which came about as a result of medical errors consumed hospital margins. It makes sense that reducing preventable harm will benefit an organization’s net profits. The societal impact connected with preventable medical errors, manifests as missed days of work, loss of employment, lower workforce productivity, pain, suffering, and long-term disability.

“National estimates of the impact of preventable adverse events on hospital costs are in the range of $16 billion to $18 billion annually, with healthcare-acquired infections alone accounting for nearly $10 billion. Because of underreporting of adverse events, these estimates understate the actual costs.”

5 ways quality-based programs benefit patients and their providers

  1. Effective and Efficient

By providing services based on knowledge, healthcare organizations can deliver health treatment, custom tailored to all in the local community who would benefit from such services. Society’s healthcare improves all the while, costs for the treatment decrease, particularly in relation to the management of chronic and psychiatric diseases, costly hospitalizations, and medical emergencies. Quality care models can provide service that does not discriminate based upon personal characteristics such as gender, ethnicity, geographic location and socioeconomic status.

  1. Patient Centred

Healthcare administrators can give patients the incentive to identify and make use of quality healthcare organizations, thus promoting the service quality initiative of being respectful and responsive to individual preferences, needs, and values. This enlightened course of action inspires the whole community toward health and wellness.

  1. Timely

Providers can achieve a balance based on efficient patient care with fewer steps needed which are less labor intensive while bringing about a higher level of patient satisfaction. Other benefits include avoiding practitioner burnout, reducing waiting times to be seen and avoiding harmful delays for both those who receive and give care.

  1. Reduces Costs

Patients with chronic, multimorbidity and psychiatric disorders spend less money to achieve better health. Significant cost savings is one factor leading to a more practical and positive patient experience with longer lasting outcomes. When initiated, value-based models instigate a proactive approach to promoting service quality.

The moving force behind value-based purchasing is that patients have a right to hold care providers accountable for costs and quality outcomes. Value-based plans combine information regarding patient outcomes and medical cost data in a way that produces action, resulting in improved patient health care services, satisfaction with insurers, and a breed of care providers that can compete energetically in a competitive marketplace.

  1. Informs Patients and encourages them to take an active role

Improvement and success in treatment outcomes attract patients who share that hope for their own health. Organizations that adopt a value-based program, succeed in attracting selective patients. The key to becoming a successful care provider is to focus on delivering quality coordinated care with a patient-centered focus. The use of technology equips organizations to harvest the full potential of health care information, enabling them to take proactive steps towards the prevention of illnesses among certain patient populations and maximize the financial rewards earned from efficient service coordination.

Technological advances improve quality of care, connectivity, and growth

Roughly 9 out of 10 people own a cell phone or 95% of those in the U.S. are connected to the world of digital information while “on the go” via smartphones or other mobile devices. As we progress further into 2019, we can expect to see more patient engagement technology in an increased effort to meet Value-based care model challenges.

“Connectivity is an important step in helping quality in patient care,” says Sean Duffy, director of physician relations and recruitment. Geisinger Health System, PA.

“Health care systems are smart. We are looking at ways to partner with [high tech] technological companies to help improve the level of patient care. There are a lot of ideas out there.”

Technology can be used to elevate the care team and provide dynamic value-based care plans for multimorbidity psychiatric patients. This then frees up time for the primary care provider to focus on the patients with chronic illness.

Remote care management provides real-time patient feedback which enables care-team treatment coordination and efficiency. Using remote technology through the mobile App, patients are more engaged in their health and the data collected provides outcomes measurement and improves the quality of care.

There is much that can be done through technology toward the advancement of a better healthcare system. Many healthcare professionals are looking to get ahead through value-based models. These technological innovations provide patient engagement technology, increase efforts towards value-based care models, and give greater emphasis to community health partnerships while providing opportunities for more consumerism in healthcare going into the future.

As Healthcare providers lengthen their aims towards working in support of the most comorbid and psychiatric patients by providing remote technology-based care management through all aspects of the patient’s health and wellness journey, providers will enable a positive experience and will truly deliver on the promise of “better healthcare at a lower cost.”





New HHS Data Shows Major Strides Made in Patient Safety, Leading to Improved Care and Savings, May 7, 2014.

CareAdopt webinar Feb 2019 “Using quality improvements as a tool for volume growth”