How VBC has grown (and the challenges it faces)

VBC has grown significantly in recent years. Wirth noted that around 14% of healthcare payments in the United States are now tied to capitated risk, a substantial increase from 7% in 2021. This growth indicates that VBC is gaining traction, despite uncertainties in the healthcare payment landscape.

Johnson added that the post-pandemic period has seen a remarkable comeback for VBC. "The fact that we've doubled the share of the population in something that looks like value-based care in four years, really three years, that's impressive," Johnson said.

This outlook contrasts with the skepticism often heard in the market, where many believe VBC is moving too slowly.

However, despite VBC's growth, the journey toward widespread VBC adoption has been fraught with challenges. Wirth emphasized the importance of execution, likening it to a football team winning the Super Bowl.

"We need to get people aligned to the right goal, executing consistently and going beyond when others may stop," Wirth said. Johnson similarly stressed the need for a long-term view and continuous improvement.

One of the key challenges is the regulatory and administrative environment, which has changed significantly over the past four years. Johnson noted that the new constraints around HCC coding and Medicare Advantage (MA) have created uncertainty and trepidation about implementing VBC models. Johnson added that he believes understanding and adapting to these changes is crucial for success.

How to succeed in VBC and what the future looks like

Both Wirth and Johnson agreed that there is a playbook for succeeding in VBC. Wirth mentioned that organizations that treat VBC as a core part of their business, rather than a side project, are more likely to succeed, citing Advocate Health and UNC Health as examples of organizations that have integrated VBC into their operational and academic missions.

Johnson added that having a dedicated business unit responsible for VBC contracts is essential. "Somebody has to care about this when they get to their desk at 8 o'clock in the morning and that's all they care about," he said. This executive commitment is critical for driving VBC forward.

Johnson also highlighted the importance of addressing the hospital's role in VBC, as this is where the bulk of healthcare dollars are spent. Johnson added that primary care was the first hill to conquer, but now the focus must shift to specialty and hospital care.

Wirth acknowledged the challenges in engaging specialists in VBC, citing incentives and the diversity of specialty care as major obstacles. However, Wirth noted that 38% of specialists expressed a desire to have more of their compensation tied to risk, indicating a shift in attitudes toward VBC.

Johnson said he believes that the emphasis in MA will shift from top-line premium funding to bottom-line total cost of care management, adding that he hopes to see more investment in care models, population health, and care navigation for patients.

Wirth noted that while many providers are frustrated with MA, there is renewed interest in commercial risk, adding that despite the high churn rate in commercial patient populations, there is demand from employers to control costs, leading to more openness to models like centers of excellence and advanced primary care.