Will 2024 Be The Tipping Point For Value-Based Care?

It has long been widely reported that relative to the healthcare systems of our peer countries, the US healthcare system doesn’t get much bang for its buck, with annual health expenditures in the US now exceeding $4 trillion dollars, 90% of which supports patients who have either mental health problems or other chronic conditions. 

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Given this environment, there’s been a growing awareness that the current fee-for-service (FFS) model that serves as the underlying structure of our current healthcare system is in need of an update, and Value-based Care (VBC) has long been touted as the next evolution of US healthcare. That said, the scale of overhaul required is much more easily imagined than accomplished.

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On the government-side of the equation, VBC is making significant inroads already, with the Centers for Medicare and Medicaid Services setting the year 2030 as the target date for getting nearly all Medicare and Medicaid patients enrolled in value-based care programs. 

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The problem of rising healthcare costs isn’t an issue limited to the public sector, of course, with healthcare expenditures expected to climb by 8.5% - or $15 thousand per employee - in 2024. 

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Further, US employers are the source of health insurance for nearly 6 out of 10 (59%) Americans under the age of 65 - more than half of which through self-insurance programs - which means that transitioning the entire US healthcare system to value-based care will require significant leadership and participation from employers nationwide.

Why Employers Should Help Facilitate The Transition To Value-Based Care

• Cost Savings: McKinsey estimates that companies who adopt a value-based care approach can save between 3% and 20% on healthcare spending. On the public side, value-based care programs have saved Medicare billions -including $1.8 billion in 2022 -which was the 6th year in a row that VBC has resulted in a net reduction in Medicare expenses, including fewer hospital admissions and readmissions. 
• Improved Care: 59% of employers reported improved outcomes as among the results achieved via utilizing a value-based care model, and 96% of payers agree that value-based care will lead to better outcomes for patients.
• Higher Satisfaction: Given that the quality of healthcare an employee receives is often seen as a reflection of the quality of the employee benefits offerings and the employment opportunity more generally, higher rates of satisfaction - via better chronic illness management, for example - can have meaningful impacts on both employee productivity and retention. 

It’s also important to note that, in order to achieve the desired results that can be expected as a result of utilizing value-based care, adopting an alternative payment model alone is insufficient without the accompanying patient-centric focus and collaborative approach that emphasizes preventative care and outcome-linked provider pay/accountability.

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Currently, more than half (54%) of all healthcare spending in the private sector continues to operate under increasingly antiquated fee-for-service models, but that number is likely to shrink quickly as the consensus on the benefits of value-based care continues to grow. 

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You can read more about value-based care here.