Value-based care (VBC) is a healthcare delivery model that focuses on improving patient outcomes while controlling costs. It also ties the amount healthcare providers earn for their services to patient outcomes.

This is done through financial incentives and other benefits being provided to healthcare providers for meeting certain goals and milestones. Value-based care is beginning to grow, with more organizations adopting it throughout the United States.

Graduates of accelerated nursing programs in Missouri have likely heard of the value-based care approach, as organizations, including the Missouri Primary Care Association, promote it. 

Value-based care, however, isn’t without its criticisms and doubts. While value should be prioritized when it comes to healthcare outcomes, providing incentives based on results has been calling the healthcare model into question.

In U.S. healthcare, providers typically operate using the value-based care model, or the other more well-known model, fee-for-service (FFS). In this article, we’ll be comparing both systems, as well as unpacking the benefits and disadvantages of both.

Value-based care is rapidly growing, with investments having already quadrupled since the pandemic. While the fee-for-service model is currently the standard, VBC could shake up and change the healthcare landscape as a viable alternative.

The history of value-based care

Today, value-based care is a well-known term in the healthcare industry. It describes a healthcare system that is designed to focus on the quality of care, patient outcomes, and patient experience.

Value-based care is a relatively new concept, however, with the term only first coined back in 2006, although the history runs deeper than that. In 2006, Michael Porter and Elizabeth Olmsted Teisberg coined “value-based care” in their book, “Redefining Healthcare.”

In the book “Redefining Healthcare”, the authors, Porter, and Olmsted Teisberg, argued that healthcare should run on a value-based care system. Where providers prioritize value over volume, and competition in healthcare should be based on the value to the patients.

This was the first introduction to the concept of value-based care, which has since been pushed for adoption by the Affordable Care Act (ACA). Since the ACA has passed, more people have been able to experience the benefits of value-based care.

What is value-based care?

Value-based care is an alternative to the current fee-for-service model that is widely adopted in the United States as the standard, and most countries in the world. In a VBC model, instead of paying for individual services, regardless of effectiveness—patients would pay depending on the outcome and value of the service.

This care model aims to incentivize healthcare providers, like doctors and nurses, to focus more on each patient and ensure they’re providing quality services, rather than quantity and churning through patients to maximize profits.

In value-based care, providers would be reimbursed for their services in a way that reflects their patient’s outcomes instead of their volume of care. It would also reduce costs for healthcare services overall, as it reduces unneeded tests and procedures and promotes prevention.

Benefits of value-based care

The value-based care model features a range of benefits. These include the patients seeking healthcare services, the healthcare providers, and the organizations, whether it be a clinic, hospital, or other setting.

• Emphasizes positive patient outcomes. Value-based care emphasizes improving outcomes for patients, as it incentivizes providers to focus on quality over quantity when it comes to care.
• Reducing costs. Value-based care encourages reducing costs for the patient, providers, and healthcare organizations. This is because it reduces unnecessary tests and procedures, which lowers overall costs for paying for services and providing them.
• Reducing hospital readmissions. One of the main aims of value-based care is to reduce hospital readmissions through better follow-up care for better outcomes.
• Increasing care coordination. Value-based care promotes care coordination among healthcare providers, leading to more consistent, and cohesive care for patients.
• Holding providers accountable. Value-based care aims to hold providers accountable for the services they provide, ensuring they focus on quality over quantity.

Value-based care is also designed to focus on long-term health improvement and prevention. In comparison, other models, like fee-for-service, tend to focus on immediate fixes with a lack of foresight.

Statistics also show that patients receiving value-based care were also more likely to get preventative care; there were also 30.1% fewer hospital readmissions for value-based care patients.

Fee-for-service vs value-based care

In this article, we’ve mentioned the fee-for-service model quite a few times. This model is the traditional method, where healthcare providers, like doctors, are reimbursed for every procedure or service rendered to a patient.

These services could include unneeded tests, and don’t consider the patient’s outcome. It’s currently the most common practice and has been the standard for the U.S. healthcare system.

The fee-for-service model has been under scrutiny for years, with some parties even calling it a “malicious practice”. Medisysdata states that it is “widely agreed” that the model leads to overprovision, disorganization, and uncontrollable health expenditures.

The FFS model promotes the overutilization of healthcare resources and encourages providers to perform more procedures and services than required, as they are reimbursed for each one. This can lead to a “revolving door” mentality.

There are benefits however for the fee-for-service model. It can be beneficial for patients who require a lot of healthcare services and do not need to worry about the cost if they’re covered by insurance.

On the other hand, value-based care doesn’t reimburse the healthcare providers for the number of procedures and services they provide. Instead, they are reimbursed for the quality of care they render to an individual.

This promotes better practices within the industry and incentivizes providers to spend more time per patient in a landscape that is otherwise fast-paced. It also ensures that healthcare providers are held accountable for the level of care they provide.

The disadvantages of value-based care

Value-based care isn’t without its fair share of disadvantages, either. Like with the fee-for-service model, it has its criticisms, too. These include:

• Moving to a value-based care model can be financially risky for financial providers who are looking to transition from an FFS model.
• VBC can be more administratively complex compared to the fee-for-service model, which can create an extra workload.
• Currently, patients may face a higher out-of-pocket cost when visiting a VBC provider. This is because most healthcare services cover FFS providers.

The future of value-based care

Value-based care is rapidly growing in the country and around the world. The care model saw private capital inflows increase more than fourfold from 2019 to 2021, while new hospital constructions—a proxy for investment in the traditional FFS model—fell flat.

Estimates see the future of value-based care to be bright, and continuing to grow at an accelerated rate. The number of patients receiving value-based care as opposed to traditional FFS care has grown by 2.3 million over the past decade.