HISTORY OF VALUE-BASED CARE
The fee-for-service (FFS) economic model of healthcare in the U.S. and in other parts of the world is not working. Healthcare costs have grown faster than both GDP and inflation for decades and have had little correlation to improvements in healthcare outcomes. The U.S., for example, spends twice as much as a percentage of its GDP than the average OECD (Organization for Economic Cooperation and Development) country, yet has a significantly lower life expectancy, more avoidable deaths, and higher rate of chronic disease than average.1
While the healthcare cost/benefit challenge is complex, the FFS model is definitively not part of the solution. When healthcare providers are paid for the quantity and volume of services they deliver, rather than the outcome/value of their services, healthcare costs will inevitably increase and when new technology extends the capability to provide care, cost increases even faster. The result is a constant tension between healthcare providers, new technology, and payers that focuses more on cost reduction and risk avoidance than improving patient outcomes.
In the global effort to rein in healthcare spending and improve outcomes, a new model—value-based care (VBC)—emerged nearly 15 years ago and has been steadily growing in popularity ever since. VBC turns the FFS model on its head, shifting the economic focus from the means (effort expended) to the end (value created in terms of quality, outcome, and cost). Beyond the immediate beneficial economics, value-based care also offers the potential to move the healthcare model from a reactive one focused on treating disease to a proactive one focused on preventing and managing it.