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As health care shifts from the fee-for-service model toward value-based care, providers are finding inventive ways to balance their investment of time, staff and resources.

In a small rural hospital, physicians treating stroke victims have one goal: to minimize the damage to their patients’ nervous system and avoid permanent disability. Being in a remote location and operating on a limited budget, though, can make it hard for the hospital to attract the talent needed to provide effective care. Patient outcomes sometimes bear that out.

But a move toward value-based health care is pushing hospitals and health care networks to rethink their business models in the name of improving care, while also lowering costs. Instead of ordering pricey tests or opting for multiple treatments that may not do much, that small rural hospital can tap a team of highly trained neurologists through a telemedicine program. These doctors can help onsite physicians assess patients and manage treatment plans better, thereby improving results.

To make a successful transition to value-based care, hospitals typically have to invest in their technology infrastructure. But many also have to rethink the way they apportion time, staff and equipment to take full advantage of the cost-savings and improved results value-based care can yield.

Quality and Cost at the Center of Care

For decades, providers delivered health care in a fee-for-service model, in which they were paid for each visit, test and procedure. While that may work in other industries, in health care, this practice has contributed to skyrocketing prices. Total health-care spending in the U.S. is more than $10,000 per capita a year, about twice as much as much as other wealthy nations.

“The power has shifted to the consumer.” Mark Hoffman, VP Key Equipment Finance

The Affordable Care Act is trying to rein in health care costs. Since 2014, the Centers for Medicare & Medicaid (CMS) has created programs to start moving providers away from fee-for-service.

Under a value-based system, physicians rely on a results-oriented approach that incentivizes positive patient outcomes instead of the number of procedures performed. Providers with favorable outcomes receive bonuses, while those who don’t perform well are penalized. Customer satisfaction is also a key part of the outcomes formula. The primary idea is that patients do better, and the system can save money when doctors are paid according to results rather than volume.

“The power has shifted to the consumer, whereas it has been with the health care entity previously,” says Mark Hoffman, senior vice president of Key Equipment Finance.

The results so far are promising. According to a recent report from insurer Humana, patients who are served under a value-based model receive more preventative care and see costs that are 15.6 percent less than with traditional medical fee-for-service.

Furthermore, a survey of 120 health care payers commissioned by Change Healthcare found that 77 percent reported improvement in quality of care.

A Slow but Steady Shift

Even though value-based care shows promise, it has been a slow transition for the industry as a whole. In 2016, former Health and Human Services Secretary Sylvia Burwell announced plans to tie 50 percent of payments to value-based models by the end of 2018. Currently, just 20 percent have hit this goal.

“There are so many challenges to performing well in a value-based world, and fee-for-service is comfortable for providers,” says Shelli Pavone, vice president of sales and marketing at Avantegard Health, which works with hospitals and health systems to improve quality of care and profitability.

Take data and records keeping, for example. Without the ability to collect solid data on a hospital’s patients and maintain up-to-date records, it’s nearly impossible for providers to do their jobs efficiently. How will they know if certain tests have already been performed? How can they trust that patients have given them an accurate medical history?

“To make the shift to value-based care, you really need good data,” Pavone says. “Ultimately, having the timely data will help providers get a clear view of what levers to pull to improve outcomes.”

Providers can also use data to generate predictive and real-time analytics, Hoffman explains.

“Providers must assess the health care needs of the population they’re serving,” he says. “Understanding the needs of that population is going to be critical to the types of services they offer.”

Additionally, payment systems need to be updated since they’re not currently configured for the unique characteristics of a value-based model. For example, because reimbursements may provide bonuses or penalties depending on outcome, they require a new accounting system. Additionally, value-based models have also embraced accountable care organizations, which coordinate care among several providers.

“Those payments need to go into a central pot where they can divide up the incentive,” says Peter Wheeler, senior vice president of the health care and insurance vertical for KeyBank’s Enterprise Payments.

Why Investment Makes a Difference

Some hospitals may find it difficult to fully embrace the demands of value-based care with their current systems and processes. They may need to assess their shortcomings and come up with a game plan for the shift, much like the rural hospital in our intro that invested in powerful computing capabilities to bring access to top neurologists to their patients.

KeyBank not only helped that rural hospital identify the right equipment, it also facilitated vendor-financing for the purchase, Hoffman explains.

In another instance, KeyBank worked with a radiology group practice to assess how efficient its payment system was and how well it was poised to take advantage of value-based care. The KeyBank team first explored payments by spending time in the patient registration area before evaluating back-office operations and billing.

The team found that while the radiology clinic had robust technology in place, including a patient portal, there were several redundancies in the payment system across a handful of different vendors.

Specialists from KeyBank recommended reducing the number of vendors and adopting a modern payments platform for patients.

“You can deliver a great patient experience, but if you’re not providing patients the ability to make payments the way they want, especially younger people, you could have dissatisfied patient.,” Wheeler says. “You have to get the payments right.”

Value-based care is the future of health-care payment, and its adoption will likely only continue to increase, even if the initial rollout has been slower than expected. Building capabilities for the new model requires a significant investment of time, staff and resources. A trusted financial partner can help assess how well an organization is positioned to implement this new model and which investments can help show value.

Using our years of experience in the healthcare industry, KeyBank can help your healthcare organization expand, improve and grow. Learn more at

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