Each fall I teach a class where my students are challenged to make a decision about whether to fund a community health worker in a busy urban emergency room. That position would help ensure patients have their care well coordinated, avoid future visits to the emergency room and, in some cases, prevent a hospital admission. The challenge is that the costs of funding the health worker are not reimbursed. Furthermore, a successful program would result in fewer admissions and thus less revenue to the hospital.
In a system geared toward volume, the traditional fee-for-service “churn and earn” scenario, where the number of patients directly correlates to dollars earned, this is a disaster. But under a value-based payment model, where keeping patients out of the hospital can be rewarded through shared savings — the investment in the health worker is well worth it. The problem is that our health care system is currently in the transition between these two worlds.
Like my students, many leaders of health care organizations are confused about what to do. As our nation moves from volume to value for health care payment, there is a clear disruption in financial incentives for hospitals and physicians. Evidence shows that patients benefit from nontraditional services such as transportation, nutritional assistance, and housing security. These are considered essential social services in most other developed countries, which provide them routinely. Unfortunately providing such services that are not directly paid for under current medical reimbursement models only increases financial pressures on providers.
Paying providers for the value of the care they provide rather than the volume provides a potential solution. Under such a scenario, keeping patients healthy is rewarded and investments in services such as the community health worker make sense. Programs such as Medicare’s Shared Savings Program, the Medicare Advantage managed-care program, and MassHealth’s recent work on accountable care all serve as potential models.
During the prolonged transition between volume and value, providers are caught in a money-losing situation. For value-based care to be successful, providers must invest in integrating services, providing seamless and frictionless care to the populations they serve, and begin to address social determinants of health, such as housing and food insecurity or even transportation to medical appointments. However, those investments are not being rewarded during this transition — spending more to make less is always a difficult proposition. As an alternative, some providers choose to sign risky contracts with insurers in the hope that they will earn enough through shared savings to invest in such programs without first having the programs in place to assure success. In either case, investing upfront in integration or taking on risk in the hope that funds are generated to support it, the chance for providers to lose money is high.
What could remedy this situation? To start, we need to move faster on the transition. The bumps on the journey from volume to value may be smoothed out with a little acceleration. This would mean a new degree of collaboration between those who pay for care, such as employers and insurers, and those who provide it. Eliminating the boundaries between the two by creating “payviders" — provider-owned and managed health insurance, accountable for improving care, reducing costs, and removing administrative burden from overwhelmed clinicians — would be a start. Sharing regulatory required risk-based capital, (the amount of capital and surplus that must be held and available to cover potential losses) could help absorb some of the costs of the transition.
We also need to engage all sectors of our health care economy. Pharmaceutical companies creating life-saving therapies at unbearable costs also need to be pushed along on the volume-to-value path. New models to pay for innovative therapies, including milestone payments from insurers to pharmaceutical companies when patients achieve certain outcomes over various time periods, guarantees only successful outcomes result in payment, and mortgage-like arrangements all should be included in experiments. Employers can contribute by ensuring their benefits plans encourage access to proven preventive care and behavioral health services, but also have disincentives for over-consumption of health care services. The public sector can also do their part.
Innovative programs such as the Flexible Services Program, which provides funding to address health-related social needs, as well as community partners as implemented through the MassHealth ACO, are a step in the right direction. Although funding for such programs is modest, they create incentives to address the underlying social issues that are such a powerful influence on our health. If those experiments are successful, they should be replicated and scaled.
There are also potential obstacles. Detours to be avoided include the re-fragmentation of care in the era when we have an app for everything. Piecemeal interventions that are not tied into an overall focus on integrated health may create less value in terms of patient outcomes and experience — and at a higher cost. Tailored solutions available only to those who can afford them, such as so-called “concierge care,”where a patient pays an additional membership based premium for personalized high touch health care services are also potential distractions.
Perhaps with these changes the answer for my students will be far more obvious, and I can spend my time with them brainstorming new ways to redesign care in a value-based health care delivery system.
Bonnie B. Blanchfield is assistant professor in the Department of Health Policy & Management at the Harvard T.H. Chan School of Public Health and an assistant professor at Harvard Medical School.