In early 2018, healthcare surpassed retail and manufacturing as the leading U.S. employer. This milestone was a long time coming. The health sector had added jobs at seven times the rate of the American economy as whole from 2006 to 2016, and the U.S. Bureau of Labor Statistics (BLS) has estimated that six of the seven fastest-growing industries from 2016 to 2026 will be healthcare-related.
Although healthcare is both a vital service and a powerful economic engine, it is relatively expensive in the U.S., and its steep costs do not always correlate with high quality. High-profile examples such as five-figure bills for broken arms capture some of this divide, but it more regularly appears in more subtle activities such as inefficient electronic health record (EHR) management, poor coordination across providers, and superfluous follow-ups, all of which fuel higher healthcare spend that drains money from the rest of the economy.
From FFS to VBR: The major shift in how healthcare is paid for
The dominant provider payment method of fee-for-service (FFS) incentivizes these very workflows. An alternative, value-based reimbursement (VBR) or simply value-based care, has emerged to in theory improve outcomes for patients and populations, reward the best health providers, and bend the healthcare cost curve.
VBR emphasizes:
- A full view of the patient's physical and mental health, supported by EHR data and a thorough accounting of each individual's preferences and values.
- The pursuit of quality measures set by institutions such as the Centers for Medicare and Medicaid Services, which affect how physicians and hospitals are compensated.
- Lower healthcare costs thanks to fewer readmissions, more effective treatments optimized for each patient, and greater consistency across providers and payers.
The transition to VBR will take time and require careful administration, given how deeply embedded FFS is throughout the health system. Healthcare expertise will be in high demand: The BLS predict 20 percent growth in employment of medical and health services managers from 2016 to 2026, much faster than the average for all occupations.
The Healthcare Master of Business Administration from the George Washington University can help you understand the intricacies of value-based care and how to overcome its most pressing challenges. Learn more on the main program page, where you can answer a few questions to receive a free copy of our brochure.
Sources:
U.S. Bureau of Labor Statistics
Becker’s Hospital Review
Investopedia
