For long, the US Healthcare system has been predominantly based on the fee-for-service model wherein the patient receives quality care and the medical bill payment will be done by either the patient or a third party payer. This system has been the basic financial foundation on which all hospitals, physicians and healthcare organizations run their businesses. For the past 25 years, the healthcare spend per capita in the US has more than quadrupled. It has recorded a rise from $ 2,000 per person per year in 1988 to about $ 8,000 per person in the year 2013.
Increasing healthcare costs affect the nation on multiple fronts. For those families and senior citizens, the soaring medical cost means less money in their pockets. It becomes extremely difficult for small businesses and Fortune 500 employers to retain the employee retiree coverage. Rising healthcare costs lead to higher Medicare and Medicaid costs for federal and state governments.
Multiple reasons can be accounted for the increasing healthcare costs and spending in the US such as provider consolidation, paying for volume than value, new innovations in technologies and treatments (without considering their effectiveness), lack of transparency of information related to prices and quality, higher prices for medical services, defensive medicine and fraudulent medical billing. The common types of medical billing fraud include phantom billing, up coding, self referrals, double billing, cloning, inflated hospital bills and service unbundling.
Transition from Fee-for-service to Value-based Care Model
Research suggests that despite the extra money spent, the health outcomes in the US are not actually better than in other countries. While measuring the quality aspect, the life expectancy rates in the US are lower although our costs are literally high when compared to other developed nations.
Healthcare organizations and providers have now realized the importance of developing a unique method to provide services for the specific communities they serve at the same time covering their extra costs. “Population Health Management or Value-based Care” is a unique way of giving patients the adequate care they want and need. It is referred as “the value equation” – Quality over Cost over Time.
Value-based healthcare (often referred to as the value equation) is a healthcare management strategy focusing on Quality over Cost over Outcomes. Its main goal is to create a culture of health within the organization by eliminating all possible barriers and encouraging participants to lead a healthy lifestyle that eventually promote a healthy workforce. It helps to enhance patient experience and reduce preventable hospital admissions and emergency visits.
The transition from fee-for service to value-based care involves numerous changes for both patients and healthcare providers. For patients, value-based care means safe, proper and effective care at an affordable cost. For healthcare providers, this approach requires employing evidence-based medicine along with proven techniques and treatments that consider the patients’ preferences. With a shift to value-based system, any patient planning to undergo any specific procedure will be able to know key information from the physician about the total cost and the expected results of the procedure.