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Few On The Same Page When It Comes To The Value of Value-Based Reimbursement

Blog | 
Economics | 
Outcomes | 
System Dynamics | 

Yet another report shows that fee-for-service medicine is hard to kill. This time the culprits are a lack of faith in value-based reimbursement by clinicians and a lack of trust between providers and payers.

NEJM Catalyst released the new report, which Optum, the healthcare services business unit of UnitedHealth Group, sponsored.

NEJM Catalyst based the report on a survey of 552 healthcare leaders who work primarily at hospitals, health systems and physician organizations. The respondents fell into three types: executives, clinicians and clinical leaders.

Overall, the respondents said that 75 percent of their organization’s revenue comes from fee-for-service contracts with health plans and other payers. Only 25 percent came from VBR contracts.

That poor showing for VBR revenue mirrors the results of several other reports that we’ve cited on the 4sight Health blog. You can read about those other reports here.

And, at least according to the NEJM Catalyst survey respondents, those percentages won’t be changing any time soon. Thirty-five percent of the respondents said their organizations won’t be transitioning to VBR for at least two to five years. Another 8 percent said it will be more than five years. And 23 percent said they didn’t even know when it would happen.

So what’s up?

Overall, 46 percent of the respondents said VBR contracts significantly improve the quality of care, and 42 percent said they significantly lower the cost of care. But the opinions varied by type of respondent. Executives were far more bullish on VBR than clinicians or clinical leaders. For example:

  • 55 percent of executives said VBR contracts significantly improve the quality of patient care compared with 47 percent of clinical leaders and 38 percent of clinicians
  • 50 percent of executives said VBR contracts significantly lower the cost of patient care compared with 42 percent of clinical leaders and 36 percent of clinicians

Overall, the respondents said the top three barriers to implementing VBR models were: infrastructure requirements, including information technology; changing regulation/policy; and administrative detail. In-other-words, VBR isn’t worth the hassle if you don’t believe it improves quality and lowers costs.

Another hurdle, and it’s a big one, is mistrust of private payers. Only 17 percent of the respondents said they agreed or strongly agreed with the statement “value-based care should be left to private markets rather than government.”

So, on one hand, providers don’t like the administrative burden that comes with government-run VBR programs. On-the-other-hand, providers don’t think private health insurers have the best interests of patients at heart when they run VBR programs. And, providers themselves can’t agree on whether VBR improves quality and reduces costs.

The losers, of course, in this endless wrestling match are patients who deserve better clinical outcomes, better experiences with the delivery system and all for more affordable prices. Let’s get moving.


David Burda is a columnist for 4sight Health and news editor of 4sight Friday, our weekly newsletter. Follow Burda on Twitter @DavidRBurda and on LinkedIn. Read his bio here

About the 4sight Health Author
David W. Johnson
David Johnson CEO 4sightHealth

David Johnson is the CEO of 4sight Health, a boutique healthcare advisory and investment firm. Dave wakes up every morning trying to fix America’s broken healthcare system. He is a frequent writer and speaker on market-driven healthcare reform. His expertise encompasses health policy, academic medicine, economics, statistics, behavioral finance, disruptive innovation, organizational change and complexity theory. Dave’s book, Market vs. Medicine: America’s Epic Fight for Better, Affordable Healthcare, is available on