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Don’t let inertia prevent your healthcare organization from implementing VBC

November 28, 2022
Business Affairs
Lynn Carroll
By Lynn Carroll

Healthcare has a well-deserved reputation for being slow to embrace change. This resistance is one of the major barriers to the adoption of value-based care (VBC) and alternative payment models. Fee-for-service (FFS) and pay-for-performance (P4P) have been widely in use for decades, along with the business processes and legacy systems that support them.

Fully realizing VBC’s value, however, requires healthcare organizations to overcome inertia by transforming their data infrastructures and processes. Unfortunately, “sunk” investments in business processes and internal systems create a commitment to the status quo.

That’s a problem because legacy healthcare IT systems are relatively linear, architected to enable FFS and/or P4P payment models in a one-to-one exchange of data. A simple example would be when a primary care physician (PCP) sees a patient, generates a claim, and submits it to the insurer for reimbursement.

A VBC ecosystem is anything but linear: It must enable hierarchical and far more complex relationships among providers, payers, community-based organizations (CBOs), social service networks and other stakeholders in the VBC network. This includes supporting social determinants of health (SDoH) data, quality reporting, and other use cases. 

VBC networks are comprised of many-to-many relationships and can involve participants who may be contractually engaged with entities across multiple networks. A mental health services organization, for example, may have contracts with healthcare providers in different VBC networks. Without an infrastructure that supports the hierarchies between these entities, this type of “network of networks” is unable to function. 

The inability of legacy systems and infrastructure to onboard and manage a complex multistakeholder care network, while supporting the event-driven and episodic requirements of reimbursement models that no longer are claim-centric, is a major obstacle to the effectiveness of a VBC network. Additionally, provider risk-bearing entities need to obtain timely data reporting in order to accurately forecast contract performance.

VBC network hierarchies are structured with sources of funding sitting at the top. In the middle are risk-bearing entities such as hospitals, accountable care organizations (ACOs), independent practice associations (IPAs), direct primary care (DPC), and specialty carve-out organizations. Participating providers reside at the bottom.

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