Posted & filed under Industry Insights.

By Pat McNamara

There is a major shift happening in healthcare right now, which will divert the industry away from its current unsustainable path. Traditionally, the U.S. healthcare industry has relied on providers billing on a fee-for-service model. Meaning, they get paid based entirely on the amount of work they do; this means, the number of patients they see, the number of tests they order, and the number of procedures performed. Value based care is now taking over, sweeping through hospitals and doctors’ offices across the country. The value based care model is structured around providers being reimbursed based on the quality of care provided, rather than the amount of care provided. This is measured in part by things like speedy patient recovery time, infrequency of medical errors, and low readmission rates. For consumers, this hopefully will mean higher quality care, and less time spent getting unnecessary tests done. For industry professionals, it means making some pretty major adjustments and restructuring business models.

How and When?

Many providers have already started adapting to value-based care systems. Due to new value based payment strategies that are being applied to Medicare under The Affordable Care Act, even more providers will continue to follow suit. For example, under the ACA, “hospitals that fail to reduce their readmissions or infection rates will suffer a loss of up to 2.5-percent of the rate at which Medicare pays them.” Additionally, thanks to the ACA we will start seeing more “Accountable Care Organizations (ACOs), which are partnerships comprised of hospitals, physician practices and other providers that in theory get paid for the overall health status of their patients.”

In January of this year, the U.S. Health and Human Services Secretary Sylvia M. Burwell announced a strategic new timeline to move Medicare, and the overall healthcare system, in the direction of value based payment. “HHS has set a goal of tying 30 percent of traditional, or fee-for-service, Medicare payments to quality or value through alternative payment models, such as Accountable Care Organizations (ACOs) or bundled payment arrangements by the end of 2016, and tying 50 percent of payments to these models by the end of 2018.  HHS also set a goal of tying 85 percent of all traditional Medicare payments to quality or value by 2016 and 90 percent by 2018 through programs such as the Hospital Value Based Purchasing and the Hospital Readmissions Reduction Programs.”

What this means for Providers

 Not all providers are excited about this change. It means restructuring their entire business model, and adapting to a new healthcare culture. However, the change may be inevitable, and providers would be wise to start adapting sooner rather than later. Between August 2014 and February 2015, the percentage of hospitals reporting more than 10% income from value based payments nearly doubled from 22% to 42%. The expectation is that those numbers will continue to rise in the next 2 years. Industry insiders recommend making changes such as adding more preventative care strategies, and addressing better hiring practices and leadership strategies in order to effectively navigate these changes.

At Atlantic Associates, Inc. (AAI), we are experts in healthcare staffing, and strive to stay up to date on major industry trends. We are here to help your organization adapt to value based care by providing the most experienced and capable candidates to join your team. We would love to hear what you think about the change in healthcare payment strategies – tweet at us or leave a comment below with your thoughts!

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