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Adopting and Succeeding With Value-based Competition Model
Orlando, FL—Changes in the health care delivery system are placing demands on hospitals and physicians to become more competitive in a marketplace that is moving from fee-for-service payment models and pay-for-performance models to value-based models in which hospitals and physicians compete on the overall cost and quality of care.
“Several market changes have broken down traditional barriers to competition, leading to more competition to deliver lower cost and higher quality care,” said John M. Harris, director, Veralon Partners, during a session at the NAMCP Forum. “Traditional providers, like hospitals and many physicians, need to consider how value-based competition could challenge market positions that were once secure.”
Mr Harris cited a number of factors that are leading to value-based competition models, including the emergence of insurance exchanges that reward lower-cost insurance products; use of tiers of copayments to steer patients to low-cost providers; high deductible plans that lead consumers to choose lower-cost providers; non-traditional competitors such as telemedicine providers and mobile apps that may guide patients’ choices; and physician networks that partner with health plans choosing lower-cost hospitals and specialists.
In addition, Mr Harris said, providers that succeed in delivering high-quality and low-cost care are rewarded through a variety of value-based payment models such as shared savings/accountable care, bundled payments, risk contract- ing, and some pay-for-performance arrangements.
In his presentation, Mr Harris described 3 key strategies that hospitals can pursue to succeed at value-based competition: (1) managing population health costs; (2) partnering with physician organizations that manage costs; and (3) reducing costs and the price of their services (Table). Mr Harris high- lighted that undertaking all 3 strategies can be mutually reinforcing.
Finally, Mr Harris discussed the implications of value-based competition for hospital leaders, emphasizing the need to understand the market players, ensure physicians have a strong leadership role, develop a payer strategy, keep operational costs under control, and to identify innovators to partner with. The larger question, Mr Harris said, may become whether or not to merge or affiliate with a larger entity in order to succeed.—Mary Beth Nierengarten
