2021 Inline Sessions: Value-Based Care vs. Fee-for-Service

Mar 29, 2021

Value-based care: The latest buzzword in healthcare. What does it actually mean and how does it impact the longtime fee-for-service model? On this installment of The Inline Sessions, Dr. Ben Kornitzer of agilon health to learn more.

For practices centered on value-based care, the focus is providing high quality care, delivered as efficiently as possible, with the absolute best outcomes possible. In one word, it aims to be sustainable. 

When comparing value-based care to fee-for-service, Dr. Kornitzer compared healthcare to visiting a car mechanic. Fee-for-service represents paying each individual time your car needs to be fixed. This means the mechanic benefits from not totally fixing the car. Value-based care represents paying the mechanic one large fee to take care of your car for the life of the vehicle. Which means the mechanic is incentivized to fix the car and prevent it from needing work. 

So is value-based care the future of healthcare delivery? As a whole, insurance companies, the federal government, and large employers are all saying the same thing: the U.S. is spending too much money on healthcare with a lack of good outcomes. The only logical solution here is making the transition to value-based care. A 2016 study further exposed this issue: 

  • 17.8% Amount of U.S. Gross Domestic Product (GDP) spent on healthcare
  • 9.6% - 12.4% Average range spent in other countries in study
  • 78.8 U.S. life expectancy (lowest of all countries in study)
  • 80.7 - 83.9 Life expectancy range for other countries in study
  • 90% of Americans are insured
  • 99%-100% Insurance coverage for all other countries in study

How would value-based care affect insurance companies? 

Holistically, if decreasing waste increased profitability for insurance companies, value-based care makes sense for them. In fact, most insurance companies have some type of “value-focused” program in pace already. By eliminating unnecessary tests and standardizing clinical processes, value-based benefits eliminates unnecessary payments from insurance companies.

The transition to value-based care is simply a shift of focus. Dr. Kornitzer mentioned a quote from Mt. Sinai’s CEO:

“If our beds are filled, it means we’ve failed.” 

Looking forward, all of our hospitals need to think this way in order to transition to value-based care. Consider that the U.S. spends almost twice as much on healthcare as other countries studied, but still has the lowest life expectancy among those 11 countries. 

Value-based care creates a clear path to a more effective, efficient healthcare system in the U.S. To learn more and watch our full Inline Session with Dr. Kornitzer, click below to gain access to all of our Session recordings.

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