Does Your Strategy Prepare You For Success In A Value-Based Market?

Two top concerns currently on the minds of executive teams of provider organizations are how to increase consumer impact and assure financial sustainability, and moving to a value-based care business model. Value-based care contracting opportunities have been increasing for behavioral health organizations, with a growing number of organizations entering into performance-based contracts based on outcomes, and other alternative payment methods. To understand this growth in value-based contracting, it is important to look at both the factors pushing provider organizations toward this change, as well as pulling them toward a focus on value.

The push factors are related to the realization that the fee-for-service (FFS) funding mechanism that our healthcare system was built on is unsustainable moving into the future. CMS announced in the 2017-2026 Projections of National Health Expenditures(see, CMS Office of the Actuary releases 2017-2026 Projections of National Health Expenditures ), that national health expenditure growth is anticipated to increase by 5.5% per year during the next ten years, resulting in healthcare costs as a percentage of GDP rising to 19.7% by 2026. There are a number of reasons for this increase – including the aging population – however, the bottom line is that when the approach to slowing this growth is focused primarily on controlling costs by freezing fees and limiting productivity, quality will suffer. A business model built on the FFS model has sustainability issues because the focus is only on price and volume. This reduces the conversation between payers and provider organizations to an adversarial conversation around negotiating fee increases and limiting consumer access through benefit limitations or required authorizations. Discussions around quality results for consumers become secondary to focus on payer cost control and provider organization financial sustainability.

The pull side of the equation is related to the fact both payers and consumers are interested in value, and most provider organizations have a mission of improving consumer lives through effective services. Aligning payment with quality outcomes reframes the conversion and establishes new ground for negotiating both service outcomes and sustainable revenue to provide those outcomes. The focus moves to value-based care – identification of opportunities to create new services to better address consumer needs and eliminate unnecessary costs. The decision on what services to provide, along with where and how they are delivered, shifts from costly treatments in acute settings to community-based alternatives focused on integrated coordinated care. In a value-based care approach, the consumer preferences, outcomes, and satisfaction drive the conversation because engaged consumers result in more effective outcomes. For an example of how value-based care creates innovative solutions that result in greater consumer engagement, see Hidden Behavioral Health Opportunities In Value-Based Reimbursement.

The other aspect of value-based care is that reimbursement can be aligned with consumer outcomes. This changes the focus from managing productivity, to driving performance to achieve around outcomes. There are a number of new payment methods that support this shift of focus to results that also supports provider organization sustainability. Bundled rates, case rates and pay for performance arrangements move the business model from managing the encounter volume and rates, to driving performance. This shift requires the development of new organizational competencies, and the infrastructure of staff, processes, and technology to support it. Staff need new skillsets to ensure standardized service results, analyze data, and adapt processes with a focus on results. Processes require re-engineering to remove activities that are no longer needed and maximize the use of technology. The other key area to driving performance is acquiring the technology to optimize the value of consumer care and support performance management.

What are the key competencies that organizations need to develop to be successful in the new business model? OPEN MINDS has identified key competencies, organized into six domains of focus:

  • Payer Relationship Management & Care Coordination – Enhancing relationships with payers and facilitating care coordination with other providers, creates opportunities for new service development and integrated services opportunities (see Coordination, Care & Value-Based Contracting).
  • Clinical Management & Clinical Performance Optimization – Ensuring consistent treatment results and identifying opportunities to improve service quality requires the development of competencies around using data to drive clinical decision-making and quality management (for more on the role of clinical protocols and value, see Why Clinical Guidelines Matter More With Risk-Based Contracting).
  • Consumer Access, Satisfaction, & Service Engagement – Empowering consumers and creating engagement is important for delivering quality service outcomes and includes competencies such as consumer-informed access to services, mobile and service support technology, and a strong consumer feedback loop (for more on creating a consumer-centric organization, see No Whole Person Care Without Person-Centered Organizations).
  • Financial Management – Managing financial risks related to contract outcomes is key in value-based reimbursement, because payments are related to those outcomes.  Competencies to assess in financial management include revenue cycle effectiveness, encounter reporting, implementation of value-based payment management capabilities, and the ability to monitor and forecast performance (see Value-Based Reimbursement & Accounting:  Show Me The Money).
  • Technology & Reporting Infrastructure – Utilizing technology to leverage data for analysis and insight, creating a performance dashboard and management system, implementing consumer access functionality, and facilitating the exchange of data or integration of services are all important functions of the technology infrastructure driving value (See The Tech Equation In Value-Based Reimbursement Success and Your Tech Functionality Checklist For Value-Based Reimbursement).
  • Leadership & Governance – Aligning the governance and leadership focus around the new performance model that drives value, ensuring that the workforce has the required skillsets, and creating a culture where staff embrace the opportunities of innovation are important leadership competencies under value-based reimbursement (for more on educating boards on value-based reimbursement, see The New Board Conundrum – Managing Value).

To help provider organizations navigate the leadership challenges of this transition, OPEN MINDS has developed a web-based readiness self-assessment for value-based reimbursement readiness. The assessment is focused on scoring the organizational and technical competencies needed to make this transition successful. This tool was designed to evaluate, educate, and identify improvement opportunities in each of the competency domains.  Members of VBCforBH can access the assessment for free at OPEN MINDS Value-Based Reimbursement Assessment.


1 OPEN MINDS 2019 VBR Survey