Smile CDR stands with black people as they oppose anti-black racism. We strive to continuously learn about how we can work towards a more equitable world. Learn More >>

×

Value-Based Care, Digital Capabilities and COVID-19 | Smile CDR

The COVID-19 pandemic has called the future of value-based care (VBC) into question. According to a report released in April 2020, almost 80% of accountable care organizations were very concerned about the financial losses resulting from increased hospitalizations due to COVID-19. By January 2021, participation in the Medicare Shared Savings Program, a program that served 11.2 million seniors and saved Medicare $2.6 billion in 2019, hit a four-year low

But the pandemic has hit providers in different ways depending on their business model and how prepared they were to pivot to digital initiatives. While providers who relied heavily on a fee-for-service model generally saw steep declines in revenue (due to the drop off in elective procedures), those with value-based arrangements continued to receive regular payments. A report from PwC’s Health Research Institute states that, “Hospitals and health systems that have mostly recovered from the initial hit of the pandemic had invested before the crisis in areas such as hospital-at-home services and digital capabilities that allowed rapid expansion into virtual care and remote patient management.” 

While the COVID-19 crisis has created a massive disruption with mixed short-term financial impacts, in the long term it has accelerated the shift toward VBC. The pandemic has already changed consumer behaviors, made providers more conscious of cost, highlighted technological gaps, and created the opportunity to break free from the status quo and do things differently. In short, it’s made the aim of VBC, to deliver better quality care and better patient experiences at a lower cost to all, more pressing than ever. 

The Surge of Telehealth and Virtual Care 

In the wake of the pandemic, many physicians are doing 50 to 175 times more virtual appointments, largely replacing in-person visits. McKinsey estimates that consumer adoption of telehealth soared from 11% in 2019 to 46% in a matter of months, and that moving forward the telehealth market has the potential to grow from $3 billion to $250 billion. 

Though this shift has largely happened out of necessity, it’s also highlighted the potential to provide care faster, more proactively and in lower-cost settings. With remote monitoring through apps and connected devices, doctors can monitor patients’ health status and provide guidance before an in-person appointment or emergency room visit is necessary. With broader adoption, patients will no longer be limited by geography when selecting a specialist and may be able to avoid the costly and time-consuming travel that used to be required. 

The Urgent Need to Reduce Costs 

The increased adoption of telehealth has also underscored the central role digital health initiatives can play in reducing healthcare costs. And the need to reduce those costs has never been greater. According to Crowe, an accounting and consulting firm, hospitals have been collectively losing $1.4 billion in revenue every day due to drops in volume. 

As a result, providers are paying particularly close attention to the second part of the value equation—better outcomes, lower costs—and identifying opportunities to further extend their digital health capabilities in ways that reduce their operating expenses.

The Kaiser Permanente Example

Kaiser Permanente is an excellent example of a provider that’s managed to ramp up their virtual care, while stabilizing revenue, thanks in large part to their previous investments in technology. 

Kaiser provided over 31 million telehealth visits in 2020 and had members visit their portal and mobile app to check messages, view lab results and fill prescriptions over 423 million times. At one point, 80% of outpatient care was being conducted by phone and video, with physicians performing as many video visits per day as they did on an average month in 2019. 

As a result of their success with digital initiatives, Kaiser reported strong operating revenue of $88.7 billion, compared to $84.5 billion in 2019. with an operating net income of $2.2 billion. 

The Demand for Better, Real-Time, Standardized Data 

Transitioning to value-based contracts, providing virtual care and remote monitoring, and reducing healthcare costs all depend on better data. The move toward standardizing healthcare data, and access to that data with SMART on FHIR, underpin the entire industry transformation. 

For too long, health data has been locked away in proprietary data silos, largely inaccessible to even patients themselves. Digital health initiatives and VBC depend on the free movement of this data, between doctors and patients and between providers and payers. Providers are recognizing the need to extend their systems and IT infrastructure beyond their EHR and beyond the walls of their hospitals and clinics. 

Improving the patient experience and the quality of care depends on collecting real-time health data, harmonizing data from a variety of sources to create a more complete picture of patient health, and integrating that data with clinician workflows and decision support tools. This will not only assist practitioners in making better decisions, but will help data to flow freely to payers (for settling value-based contracts) and to patients (to empower them to make more informed decisions). 

At Smile CDR CTA 4560px

While some providers were well-prepared to pivot to virtual and remote care, many found themselves challenged by the new circumstances, without the IT infrastructure necessary to make these arrangements quickly, conveniently and compliantly. As providers look toward the future, many are investing in the IT infrastructure necessary to provide better patient experiences, reduce long-term IT costs, and collect the data required to execute on VBC. 

COVID-19 has accelerated the trend toward VBC. 

COVID-19 has highlighted the importance of predictable revenue for providers. At the same time, it has increased the acceptance and adoption of telemedicine, provided an impetus to reduce costs, and highlighted the need to create a standardized and interoperable data layer to facilitate value-based contracts and provide better virtual care. 

Between aligning incentives, encouraging cooperation between various stakeholders, and accurately measuring outcomes, great challenges still remain for VBC to become the norm. But make no mistake, in large part due to COVID-19, that future is closer and more certain than ever before.