3 Factors Driving Healthcare’s Transition from Volume to Value

Tuesday, December 9th, 2014
This post was written by Patricia Donovan

Long term, the healthcare industry’s well-documented transition from a value-based system to one that rewards value will ultimately promote consolidation in the industry, putting some companies out of business while making consumers more accountable for their care, predicted Steven Valentine, president of The Camden Group, during HIN’s eleventh annual healthcare trends forecast.

But how rapidly will the market complete this transformation? Valentine shares three factors that will impact the change.

People always say how fast our market will change. There are three factors to consider as the market transitions from volume to value.

The first is the time frame for the transition. Driving the time frame are concerns such as competitors’ activities, payor payment models (capitation, shared savings, case rates). What is going on in payor models that will help move the market? Another driver is managed care penetration. Some parts across the country have little to no managed care penetration. Those will be areas with lower change in terms of that market.

The second factor is the delivery system change. Impacting this is the physician-hospital economic alignment. We look for contiguous geography. A hopscotch strategy doesn’t work very well for transitioning the market. We look at the integration along the continuum, starting with doctors through a minimum, then the ambulatory and acute area. Our belief is that this year, post-acute begins to show up. We see most of the money that can be made in bundled payment really comes from a longer period of time to be at risk: 90 to 120 days. We find it in the post-acute care arena to save the money. Other drivers for change in the delivery system include the use of population health tools (PCMH, ACOs and chronic care centers), as well as clinical integration.

Finally, we look at the payment system—incentives, pay for performance, shared savings—any value-based purchasing programs put in place. You will need to take risks. Organizations that take risks, especially well organized medical groups, will help to drive a market and the transition to value much more quickly.

healthcare trends 2015
Steven T. Valentine, MPA, is president of The Camden Group, a national healthcare management consulting company. With more than 35 years of healthcare consulting experience, he has considerable expertise in the areas of strategic planning, business transactions, mergers, hospital-physician relationships, and financial analysis.

Source: Healthcare Trends & Forecasts in 2015: Performance Expectations for the Healthcare Industry

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