Better outcomes at a lower cost. That’s the goal for many employers who provide health care benefits, and it seems that the industry is constantly searching for ways to balance cost and quality at the same time. One promising strategy for reaching this goal is value-based care—and employers are taking notice.
Value-based care (VBC) measures patient outcomes against the cost of delivering those results. Providers are rewarded for efficiency and effectiveness in helping patients improve and maintain their health, which leads to lower health care costs. Compare that to traditional fee-for-service arrangements where providers charge for every service they provide, regardless of outcome. The efficient and outcomes-focused approval of VBC can lead to medical cost savings of 3-20%, according to McKinsey & Company estimates.
But what does VBC look like for employers and their employees? Here are a few ways health plans are prioritizing a value-based strategy for health care:
- Partnerships with PCPs. VBC engages perhaps the most important influencer of health care costs: primary care physicians (PCPs). Even though primary care makes up only a small fraction of the total cost of care, PCPs direct up to 90% of total health care costs through referrals, tests, procedures and hospital admissions. With VBC, PCPs are encouraged and rewarded as they quarterback the delivery of high-quality care while also acting as good stewards of health care resources.
- Bundled care programs. The VBC approach is particularly effective in coordinating complex care, “bundling” and managing all the services needed for some of the most common and costly medical conditions and procedures, such as maternity, orthopedic and cardiac care. It has been proven to reduce costly complications, rehospitalizations and ER visits while speeding recovery and improving patient satisfaction. Patient navigators in Vanderbilt’s MyHealth Bundles program help manage the process for patients, providing regular communications, booking appointments, coordinating resources and answering non-clinical questions, all to help them receive appropriate care before, during and after a procedure.
- Corporate wellness programs. These initiatives, which can include biometrics, test results, physical activity, daily nutrition management and more, can play an important role in value-based care, focusing on improving employee health while preventing costly illnesses and other conditions.
Advantages to Employees and Employers
VBC brings significant benefits to both employees and employers. Employee health improves through chronic disease prevention and quicker recovery from accidents and illness. They receive more personalized and coordinated care, enhancing their overall health care experience and satisfaction. Because they are encouraged to track health measures like blood sugar levels, weight and physical activity, they are more engaged in their own health management. And they spend less money on unnecessary doctor and ER visits, tests, procedures, drugs and insurance premiums.
Employers benefit not only from lower heath care costs and more predictable health care spending, but also from a healthier and happier workforce, which boosts both productivity and morale. And VBC contributes to a high-value benefits program that is an important tool to attract and retain top talent.
About a third of employers are integrating VBC into their employer-sponsored insurance, according to a new survey by the Milken Institute and Morgan Health, and another third are considering it. Plus, VBC has been broadly adopted by Medicare and Medicaid as part of its cost-saving efforts.
One reason for its growing popularity: Risk is more effectively managed and shared between the provider and employer, reducing the financial burden on the employer if health care costs exceed projections.
VBC relies on robust data collection and analysis, which employers can use to create or adjust wellness and health programs tailored to their workforce's specific needs, further driving down costs and improving employee health.
Documented Results
VBC has already achieved encouraging results. For example, Walmart reported that employees with diabetes saw a 24% reduction on average in HbA1c levels and an 11% reduction in total cost of care. Preliminary data at Boeing found that spending for participants has decreased by 14%, and ER utilization is down by 11%. And Milliman and Premise Health reported that employers who have introduced VBC save an average of 25% on their employees’ total cost of care. For more information on VBC, listen to miniVHAN podcast Episode 38, “Beyond the Bottom Line,” featuring Michael Kobernick, MD, discussing the employers’ role in care transformation and value-based care.