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Value-based Care

The market meets medicine

Pages 26 – 27

By Manny Lopez

Despite all the changes in health care, a few things remain constant: Doctors want to deliver exceptional services to make people feel better, and patients want to get the best treatment available.

The advent of value-based care programs in hospitals and hospital systems in Michigan is ensuring that everyone involved not only provides and receives the best care, but also does so at reduced costs and in a more efficient manner.

“This is absolutely a good thing,” said Rob Casalou, president and CEO of St. Joseph Mercy Health System, adding that the switch from volume health care services to value is being driven by economics. Physicians, hospitals and health systems no longer are incentivized to order test upon test to boost the bottom line as traditional fee-for-service plans operate. Instead, value-based programs focus on the quality and value of care, and require that physicians, hospitals and health systems work with insurers to create systems that eliminate repetitive and unnecessary tests or services.

It is a switch from quantity services to quality-specific services, and the result is shared financial rewards for doctors and hospitals, and savings and better care for customers. The value-based reimbursement model requires hospitals and provider partners to create an infrastructure plan that includes an all-patient registry system, according to Blue Cross Blue Shield of Michigan. Doctors and nurses can then better access health records and better track a patient’s progress and needs.

“As more hospitals engage in these arrangements, momentum continues to build behind hospitals and providers, encouraging each to re-evaluate their current care models and begin to make investments that will enable success for their organizations and patients,” said Stephen Anderson, vice president of provider contracting and network administration at Blue Cross Blue Shield of Michigan, which is driving much of the change toward value-based programs.

To date, 18 Michigan hospital systems, which includes 71 hospitals across the state, have value-based contracts with BCBSM. Given that health care costs now account for 20 percent of the nation’s gross domestic product, it is in the best interests of everyone to improve the health care delivery system.

“If the cost of health care doesn’t go down, we will have bigger problems,” Casalou said. “We are now a consumer product. We compete with food, clothes (for people’s dollars).”

That’s a good thing, Casalou said, because it forces more accountability on costs. When people’s wallets are affected, they take notice and their actions change. It is not uncommon for someone who needs an MRI to call around town for the best deal.

“You can be a very educated consumer if you choose,” he added. Some hospital systems now allow patients to access their medical records online. With better access to records, patients are aware of the care they have received and physicians are less likely to request repeat tests. They can identify problems before they become critical, and the access can reduce the need or frequency of hospitalizations.

“In this evolving health care market, success will not be achieved through isolated efforts,” Anderson said. “To encourage and facilitate this collaboration, value-based agreements provide a powerful shared savings incentive for those hospitals and physicians that are able to better collaborate and coordinate care to reduce the overall cost experience for their patients.”

In some cases, Blue Cross Blue Shield of Michigan financially supports hospitals that are developing value-based programs, and it rewards physicians and hospitals that succeed in delivering quality service at lower costs by sharing in the savings, according to a BCBSM press release.

The University of Michigan Health System signed a three-year contract with BCBSM in December to provide value-based care to its patients.

“Though we have a decade’s worth of experience, this new contract will push us to innovate even further, to build on efforts to offer care coordination, communicate directly with referring physicians, and ensure we provide the most appropriate care for each patient,” said Dr. David Spahlinger, a leader of the University of Michigan Health System population health efforts.

The need is not going away. Changing state regulations and the federal Affordable Care Act have altered the entire health care landscape. Add in an aging population that is moving to Medicare and an increasing number of people being shifted to Medicaid, more will need to be done to control costs.

St. Joseph Mercy’s Casalou said the market model will solve that problem. More consolidation in physician practices and health systems will hit the market and allow for economies of scale and the lowering of fixed costs, he said. But value-based systems will evolve as well. Eventually savings will be achieved based on health outcomes rather than simply the lowering of costs of services.

“Another evolution of value-based care is coming because shared savings is a terminal illness,” Casalou said. “You get savings early, but once you are three to four years down the road, it’s harder to get savings, so (health) outcomes will need to be the focus.”