Why It Matters
IHI Senior Director Molly Bogan leads IHI's work on lowering health care costs while maintaining or improving quality for patients. In the following interview, she describes how health care’s transition from fee-for-service to value-based care is evolving.
What does it mean for health care to transition from volume to value?
I think of it as a transition not just for the provider, but a transition to increased value for the patient. Every person wants to have a full and healthy life. Getting care that’s more efficient and more focused on outcomes — rather than just the number of services they get — helps achieve that for patients.
Traditionally, health care providers were paid for the quantity of services they provided. There were quality metrics, but there wasn’t much consideration of whether providing additional services produced better outcomes for patients. The business model was “the more you do, the more you get paid.”
As [American health care] has shifted to considering value, providers are beginning to be paid based not only on the quality of their outcomes, but also the efficiencies of their practices. They’re being given more information about the costs of the resources they use. More providers are now entering shared risk or global payment models, like bundled payments, accountable care, or shared savings. These payment models challenge providers to address patient and population needs over a long period of time, not just encounter by encounter.
Patients now also pay a higher portion of the overall costs through increased premiums. There’s been a lot of cost shifting to patients through deductibles and co-insurances. So, patients also have a bigger stake in understanding and managing the costs of their own care than they did in the past.
The new payment models motivate both patients and providers to think about maintaining health and addressing more upstream health considerations, like managing blood pressure, reducing smoking, and attending to nutrition. There’s also more discussion about the appropriateness of care and location of care.
What did reducing health care costs typically mean five to ten years ago?
The idea of lowering costs had a negative connotation. It’s often been linked to the idea of poor-quality patient care resulting from rationing or providing fewer services. But lowering costs doesn’t have to mean reducing quality because research indicates there’s an extraordinary amount of waste in health care. There’s over $850 billion per year in the US alone. More awareness of waste has brought more acceptance of the idea of working smarter with the resources we have.
What are some examples of waste in health care?
Waste is more than just ordering too many supplies. It can include over-diagnosis, unnecessary diagnostics, and unnecessary surgery. For example, to avoid waste there’s been a big shift away from doing invasive diagnostic tests for things like radiology studies for mild lower back pain or pap smears every year for healthy younger women. These are tests that turn up a lot of false positives and expose patients to unnecessary risks. They also cost a lot of money and cause worry for patients without leading to improved outcomes.
Resources like the Choosing Wisely initiative have helped to open the dialogue between providers and patients about the risks and benefits of certain tests, treatments, and procedures. These kinds of discussions can lead to better shared decision-making.
Waste also includes things like inequities and disparate access to care. A system based on value compels us to address the data that indicates that people facing poverty or institutional discrimination, for example, have disproportionately poor outcomes.
How does moving from volume to value change what it means to provide high-quality care?
When a provider is financially motivated to manage care and costs over time, they have a greater incentive to tune into the patient as a whole person and the system as a whole. For example, under accountable care, the provider who is managing care for a patient must manage every episode in and out of hospitals, skilled nursing facilities, and home health care in addition to what happens in primary care. This expanded scope makes providers ask, “How can we prevent problems? How can care be more efficient across different locations of care? Can some care be effectively managed in lower-acuity settings?”
In the prior system that only rewarded volume, efforts to address efficiency or reduce unnecessary tests, treatments, procedures, or admissions would reduce revenue for doctors. Models focused on value motivate health systems to meet patient needs upstream and in lower acuity settings than they ever did before. They compel systems to improve access and outreach, so patients get less expensive preventative care, for example, instead of more expensive emergency care.
What factors contribute to successful transitions from volume to value?
Effective provider engagement is essential. Physicians are no longer the sole provider of care. They’re now members of a team working together to deliver high-quality, highly coordinated care for patients. In this model, physicians, medical assistants, nurses, care coordinators, social workers, mental health practitioners, and others are practicing at the top of their license.
[A team-based] model has multiple benefits. Practicing to the full extent of their training and education offers everyone on the team opportunities for professional development and joy in work. Physicians can focus on using the unique skills that probably got them into medicine in the first place. Patients have a whole team looking out for them instead of just one person. Costs go down because this model shifts the costs from the most expensive providers to less expensive providers without compromising care.
What is most exciting to you about transitioning from volume to value?
I’ve seen our partners combining data and the human touch to better understand how to improve care and value for patients. We now have volumes of information at our fingertips from electronic medical records, quality measures, claims data, and other sources. The field is evolving so quickly to use data to better understand patient populations and address their needs sooner and often better than we’ve ever been able to before.
Many accountable care organizations (ACOs), for example, are identifying the patients most likely to show up in the emergency department (ED) or be admitted to the hospital unnecessarily. Once they have a list, they do a kind of ethnographic study and reach out to patients to understand their behaviors. They find elderly patients experiencing social isolation or patients who never established a relationship with a regular primary care provider. They find patients who don’t have access to asthma medications, so they experience acute spikes in their condition and end up in the ED.
Once they better understand a patient’s situation, a member of the care team can provide targeted support. For example, a social worker, home health nurse, or care coordinator can help a patient better manage their chronic conditions over time and connect them with additional supports in their community.
Focusing on value helps health systems reach beyond their typical scope. This includes doctors writing prescriptions for healthy food from a local food bank or getting someone into emergency housing. I’m hearing more about health systems partnering with others to rethink structural issues, including the mental health, housing, and transportation systems in their communities.
We see our partners every day working in ways that I find inspirational. Things that used to be considered outside the purview of the health system are becoming front and center. And I think we’re going to keep seeing this kind of growth.
Editor’s note: This interview has been edited for length and clarity.