More health systems invest in VBC

Over the last few years, interest in VBC has accelerated and is expected to continue to grow. According to a 2022 report from McKinsey and Company, companies engaging in VBC could create $1 trillion in enterprise value by 2027, a significant increase from the $500 billion reported in 2022.

CMS has also moved toward rewarding providers for positive health outcomes, with many commercial insurers also doing or starting to do the same.

"The market pressure that [providers are] feeling from payers, as well as the world where their margin and their financial resiliency can be improved through value-based models, it's really catalyzing groups to move into these programs kind of much more aggressively and with more of a longer-term view than they had historically up to now," said Seth Edwards, VP of strategic collaboratives at Premier.

To help them transition from traditional fee-for-service models to VBC, many health systems are turning to consultants to help them build new VBC models or provide different services, like peer-to-peer training programs for physicians, data analytic platforms, and more.

For example, in 2019, SSM Health partnered with Navvis to develop a singular system to combine and track patient data and outcomes. They also created seven programs focused on acute care transitions, including strategies on transportation to visits and how to get medications to patients between visits. 

Navvis also helped SSM prepare its staff for the transition to VBC, restructure leadership of its medical group, change its physician compensation model, and contract with payers. 

Other providers are also using consultants to gather data, establish timelines, train their staff, and speed up the VBC implementation process.

"It takes a while to change the culture of a health system toward value-based care and sometimes outside help can accelerate that change and can bring tools and expertise and knowledge that the health system needs and would benefit from," said John Harris, a managing director at VMG Health.

"As value-based contracts move beyond the traditional focus on primary care — getting attribution right, getting risk scores right — the sustainability of such contracts will depend on getting specialists, subspecialists, and health systems into the center of the mix, and ensuring that the clinical models, financial incentives, and organizational support functions are all aligned is quite complex," Erik Johnson said.

Overall, "value-based contracting is an intensely analytical exercise," Erik Johnson said. "Most providers have not developed, nor have had much reason, to develop the market-wide data sets that are necessary to understand what the overall market risk and pricing challenges are in negotiating sustainable contracts."

*Advisory Board is a subsidiary of Optum. All Advisory Board research, expert perspectives, and recommendations remain independent.