3 Action Items to Thrive in Value-Based Care

November 11, 2016 Michael J. Alkire

While we wait for the dust to settle from the presidential election, there is much uncertainty. However, we believe the movement away from pay-for-volume to pay-for-value will continue, especially under the new clinician payment policy (MACRA). It’s important for healthcare leaders to continue to focus on the need to measurably improve performance, align with clinicians and achieve success under these new payment models.

I’d like to highlight a few key issues healthcare leaders identified as potential roadblocks in the transition toward value-based care, along with actions leaders can take to overcome them.

#1: The post-acute care conundrum

Providing high-quality, coordinated care is a priority for health systems, particularly as alternative payment models reward care that is delivered across the continuum. And our most recent Economic Outlook survey highlights this: 97 percent of C-suite executives believe creating post-acute care networks is important. However, partnerships between health systems and post-acute care institutions have been limited, in part due to the lack of incentive, as well as lack of access to cost, quality and patient safety data.

Action: Understand data to develop a preferred network of post-acute care providers.

The first step is to understand trends and patterns for local post-acute providers on key quality and consumption metrics, as well as the local providers’ capacity to care for patients. By starting a dialogue with post-acute providers within the community, gauging their interest in collaboration, then conducting interviews and assessments with interested institutions, health systems can access these data and lay the groundwork to partner with high-performing, post-acute providers.

#2: Managing costs on physician preference items

Standardization is critical when managing physician preference items (PPIs), which account for 60 percent of medical-surgical supply spend. Because bundled payments are tied to a fixed reimbursement throughout an episode of care and are contingent upon outcomes, providers are incented to align on PPI value rather than provider preference.

Health system C-suite executives are keen on tackling this issue, with 98 percent of respondents expecting to further standardize PPI purchases in the next three years. However, behavior change among clinicians requires intensive planning and education.

Action: Find supply chain opportunities in alternative payment programs.

Health care leaders have enormous opportunities to improve supply chain processes in a population health environment. Bundled payment, for instance, offers a unique opportunity to rein in costs associated with PPIs. Cutting costs by simply getting front-line clinicians to change their habits is easier said than done.

Comparative effectiveness research on PPIs creates a foundation for standardizing products that demonstrate the best value – best quality for the lowest cost – which yield better payments for the actual provision of care versus the supplies. A handful of health systems participating in a Premier-led initiative have saved more than $8 million in two years on cardiac stents and surgical mesh by following such an approach.

#3: Higher costs with increased use of specialty drugs

Rising drug costs, drug shortages and a growing number of high-cost specialty therapies have created a challenging environment for providers’ and pharmacists’ budgets.

Precision medicine, which uses the genome to determine the best course of treatment, may require health systems to carry a wide variety of drugs to treat multiple patients for the same illness, undermining efforts to standardize for scale and volume-based discounts. This can lead to financial ramifications for providers, as 94 percent believe pharmaceutical price increases pose a challenge for their organizations.

Action: Manage risk for specialty drugs.

High-touch pharmacy services ensure value in the case of high-cost drugs. These services can help patients find financial assistance for their medications, which is a major factor impacting whether a patient fills a prescription. This type of action can help lower costs of care and improve outcomes.

Learn more about insights from the 2016 Fall Economic Outlook here.

Author information

Michael J. Alkire

Michael J. Alkire

Chief operating officer at Premier, Inc.

I’m a healthcare executive from Ohio who helps healthcare organizations provide higher quality care at a better cost. When I’m not working you’ll find me spending time with my family, likely at one of my children’s sporting events.

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