Is there really value in value-based care?

Last month we explored things that needed to be addressed before you went down the pathway to value. This post suggests that there is also an economic consideration. 

Regardless of what it is called; accountable care, population health, shared savings, the goal of value-based care is to lower the total spend on care while maintaining or improving quality.  Typically there is a financial incentive for providers to meet that economic goal.  The basic question however is tied to that economic incentive.  If the upside potential enough to overcome the investment needed to successfully manage care?


Studies have shown that nearly 50% of the cost of care is driven by 5% of the population.  This is true even in commercially insured populations.  This means that, in a population of 10,000, the savings derived from better management of 500 people will need to generate an incentive payment large enough to help offset the needed investment.  Do you know the current level of spending on this group?  Do you have a firm idea of the achievable goal through better patient management?  Is your share of that cost reduction going to help pay for the enhanced data systems, care management staff and the potential loss of productivity as staff and providers struggle with a new approach to care?  Maybe not.


On a smaller scale Patient Centered Medical Homes (PCMH), while clearly enhancing the management of chronic patients, may not generate real dollar savings for years while the cost of care coordination may exceed any patient management fees available.  Filling gaps in care will ultimately lead to better health for the diabetic or hypertensive patient but over what time?


 Perhaps there are quicker “wins” that might be more attractive.  Reducing the cost of joint replacements, or cardiac care, or other resource-intensive procedures can help widen the margin on that care.  Could this be an early focus?


We suggest that having a short term goal, in addition to a more global strategy, makes financial sense.  We are all entering a new era of care models and we need to learn the rules before we become adept at the game.

As always, if you would like to learn more about our experience in this area or to discuss your situation please email Greg Mertz, Managing Director, at

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