A framework for guiding efforts to reward value instead of volume

Area of Science:

• Health Policy
• Healthcare Management
• Health Economics

Background:

• The U.S. healthcare system is transitioning from fee-for-service to value-based reimbursement.
• Current models focus on quality bonuses and risk-sharing, with limited success.

Purpose of the Study:

• To identify mechanisms for rewarding value in other industries.
• To understand barriers to implementing these mechanisms in healthcare.
• To develop a framework for rewarding healthcare value.

Main Methods:

• Analysis of health policy and business strategy literature.
• Development of a framework linking provider profitability to value.
• Identification of barriers to market share growth.

Main Results:

• Provider profitability increases with value relative to competitors.
• Market share (volume) is the most potent lever for rewarding value.
• Current reforms using quality bonuses and risk-sharing are limited.
• Barriers to rewarding value with market share were identified.

Conclusions:

• Healthcare reform should prioritize removing barriers to market share growth for high-value providers.
• Shifting focus to volume rewards for value is essential for meaningful reform.
• The presented framework can predict the impact of proposed reforms.