Berkeley Research Group, LLC (BRG), a global consulting firm, released a report that details the costs of value-based care (VBC). The report, called “Transitioning to Value-Based Care: Financial Implications for Providers and Policymakers,” was released November 15, 2023 and was prepared by Managing Director John Barkett.
The idea behind VBC is straightforward: “hold providers accountable for the total cost and quality of their patients’ care, and providers will redesign their practices in ways that eliminate waste and improve the health of their patients.”
While the idea is fairly simple, there are, of course, snags and financial aspects to consider. In the report, the costs of VBC are outlined with several key points: the costs of transitioning; the cost of care delivery; start-up administrative costs; and overall financial costs.
To better understand the financial costs, interviews were conducted with two large health systems and six VBC-enabled companies in September and October 2023. Combined, the companies care for more than seven million patients under VBC arrangements.
The report also discussed solutions for the costs, such as clinical solutions that address staffing and also technological solutions for data integration. “At its core, VBC delivery focuses on clinical solutions that improve care for patients most likely to incur the highest avoidable costs. Technology solutions help providers identify who those patients are and what types of interventions should be introduced.”
In the final two sections, the report addresses implications for providers and policymakers.
For providers, there are three options: build, buy or partner. While no option is free from downsides, certain choices will be better suited for some providers over others.
For policymakers, BRG says, “Policymakers recognize that fee-for-service reimbursement has contributed to higher spending and suboptimal patient outcomes. As they strive to promote VBC to lower costs and improve patients’ experience with the health care system, policymakers should bear in mind that successful participation in VBC arrangements is technically challenging and financially risky for all providers, especially those with less VBC experience or access to capital.”
The driving point of the report is the fact that transitioning to VBC not only takes time but is costly, and should only be done if the provider is confident that the investment will benefit patients. “Ultimately providers will ask the same questions: will VBC make my organization better off and allow us to provide better care to our patients? As providers will be making these calculations, policymakers should continue to balance the risks and rewards of VBC participation and its alternatives in their efforts to lower costs and improve care.”
To read the full report, visit: Transitioning to Value-Based Care
