Q&A: Addressing financial and operational challenges in value-based models

Q: How can we improve our contracting process when entering into value-based contracts?

A: Numerous financial and operational considerations exist for healthcare providers entering value-based care, including capital requirements, unit costing and tracking, financial assessment and planning, and contracting capabilities—specifically, the strength of the providers' contracting relationships. A strong data infrastructure and expertise in value-based operations is also required for providers to meet quality targets and proactively, effectively, and efficiently manage the care of a specific patient population under a value-based contract. For a better idea of how this may affect operations, consider how the fee-for-service model works today. Doctors and other caregivers focus on treating each patient clinically, while financial services staff members handle revenue concerns, such as eligibility, authorization, and payment. Care delivery and revenue management may occur in distinct, separate episodes that involve limited coordination and collaboration between different providers. However, under a value-based care model, emphasis is placed on the entirety of the patient’s medical care, because the payment is based no longer on the number of services provided but the overall quality of services and, ultimately, the patient's sustained health. This will require a much more coordinated vision of care for the patient with common clinical goals and objectives as well as financial strategies. Healthcare organizations must dramatically transform coordinated care models, improve physician engagement and alignment, and build the technology infrastructure for sophisticated data analytics and financial modeling to effectively manage the new clinical and financial risks associated with value-based contracting.

For more information see The Essential Guide to Healthcare Payer Contracting.