The Importance of Alignment in Value-Based Reimbursement

In recent years, the soaring costs of healthcare in the US and other countries have been shoved into the spotlight. One of the many fixes that has since been suggested is transitioning to value-based reimbursement (VBR) models. Patients, payers, and providers all hoped this idea could be a silver bullet.

A few years later, however, not many provider organizations have attained measurable success through VBR programs. It’s no wonder that many organizations that haven’t adopted a VBR program are afraid to try. Taking on meaningful risk is . . . well, risky.

Why is it so hard to get positive outcomes in VBR? Allow me to answer with a personal story.

The Unaligned Tire

Not too long ago, I saw that the tread on the outside edge of one of my tires had worn off. Bemused, I had a mechanic take a look. The diagnosis? My car’s alignment was off. As a result, the outside of the poor tire was holding far too much of my car’s weight.

Many healthcare organizations have a similar problem. When provider and payer leaders (we’ll have to save the vendor’s role for another post) fail to properly align their goals and metrics, clinicians bear undue stress and begin to wear thin. This can cause the organizations to lose time, employees, and even the money they hoped to save in the first place.  

A Call for Solutions

Healthcare stakeholders and KLAS have been concerned about the slow progress in VBR for some time. KLAS finally decided to use one of our favorite tricks: gathering the experts together to brainstorm some helpful ideas. This culminated in the 2018 KLAS Cornerstone Summit on Population Health Management (PHM).

Attendees of the summit included executives from provider, payer, and vendor organizations. Their goal was to identify strategic and operational barriers to success in value-based reimbursement (VBR) and potential solutions for achieving value-based outcomes.

You won’t be surprised that a lack of alignment was the top barrier listed by these key stakeholders. Similarly, the top three solutions on their list all included the idea of alignment. Here are some insights from our expert friends on those top three solutions.

Align Contract Incentives

Payers and provider organizations too often see each other as enemies instead of teammates. One reason for this is that many of their contract incentives don’t encourage collaboration. As the two sides deal with the resulting conflicts of interest, mutual trust fades or even dies.

Our expert friends at the summit suggested that providers and payers work together on creating shared strategic goals and helpful incentives as early as possible. Contracts shouldn’t be signed until the incentives reward cooperation and both parties have agreed to work toward mutually beneficial results.

Involve Everyone in Culture Change 

Some CIOs seem to feel that creating and maintaining a positive culture in the organization is their job. Of course, CIOs and other executives have important roles, but everyone in an organization affects the overall culture. The frontline clinicians and other employees will need training and a change of mindset to help their organization in a transition to VBR.

No physician wants to feel bullied into compliance. Instead, the organization should help each member feel like a valuable voice. Only when the “average Joes” of the health system have jumped on board can the organization move forward in a VBR strategy.

Choose a Few Good Metrics

Too many payer and provider employees feel overwhelmed with the sheer number of metrics they’re measured on. Some of these metrics measure basically the same things but require extra work to track. This doesn’t help the organizations pursue their VBR goals.

The simple truth is that employees don’t care about their organization’s goals unless those goals are reflected in the metrics they’re measured on every day. So what can provider and payer leaders do? Choose a few key behaviors they want to push and measure only those. The employees will then be able to understand what’s expected of them in a VBR strategy.

Driving Toward Success

Taking on a VBR model will always be tricky, but there is good news. 84% of the summit attendees, who were surveyed before the event, said that the industry transition to VBR is likely or very likely to be successful in the end.

Just as I had to fix my car’s alignment and replace my tire, healthcare stakeholders who want to achieve success with VBR will have to align their incentives and metrics and change their cultures. But if they follow the guidance of the experts at the PHM summit, they’ll be able to have a safe trip down the VBR highway.

I’ve shared only a few tidbits that we learned at the Cornerstone Summit. I hope you’ll access all of the attendees’ insights by reading the white paper.


Photo cred: Shutterstock, FotoDuets