Value-Based Care Is Here to Stay. Here’s What Your Lenders Need to Know

Healthcare consumerism, price transparency and the growth of Medicare Advantage are among the trends currently driving the healthcare industry. Underneath them all, however, lies the megatrend of value-based care.

According to the Health Care Payment Learning Action Network, the fee-for-service model, in which providers are paid a set amount per service, is still the dominant method of payment at over 60% of all healthcare services. After the passage of the Affordable Care Act (ACA), however, the payment system has been gradually moving toward a value-based care system, in which providers are rewarded for the quality of care they deliver, putting the focus on favorable patient outcomes.

The shift to value-based care is coming at a time when providers are dealing with a rising inflationary environment, which has led to a significant increase in supply costs. According to the American Hospital Association, hospital supply expenses per patient climbed 18.5% between 2019 and 2022.

Government (Medicare and Medicaid) and commercial payers are going to continue to push providers toward a value-based care system to control healthcare costs in the U.S. (which are the highest in the world) and improve overall patient outcomes. In essence, healthcare providers are being pressed to do more with less. 

Financing for value-based care

Value-based care represents both an opportunity and a challenge for providers, as the main goal is to provide the highest quality of care in a lower cost setting with the opportunity to share in those costs savings. In this new landscape, providers may need to invest in operational efficiencies, which could include technologies to streamline administrative tasks that free up front-line staff, including nurses and doctors, to spend more time on patient care.  

Implementing technologies or systems that improve efficiency requires a capital investment. When it comes to securing financing, providing detailed financial information has always been a necessity, but more than ever it’s crucial for providers to demonstrate their quality of care. Some questions you should be prepared to answer include:

• What quality of care metrics are you using?

• How does the state or other regulatory / licensing body measure care quality?

• Are you benchmarking your results against your competitors? 

• Have you conducted patient satisfaction surveys?

Just as the expectations have changed for healthcare providers, so have the conversations around how to provide financing to respond to those changes. In this new era of healthcare, it’s essential to make sure you’re demonstrating the quality of your care to all your key stakeholders.