Why Physicians Need to be More Efficient and Effective

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Almost 18% of the U.S gross domestic product is accounted for by its healthcare spending, which is relatively higher than other wealthy countries. More and more research shows that while the United States is home to some of the best medical outcomes in the world, some of its outcomes result in unnecessary or ineffective medical care. 

The Vision Behind Value-Based Care

The goal of value-based care is to lower instances of poor medical care and bring about positive patient outcomes. Value-based care offers many benefits: reduced costs, less medical errors, healthier habits among patients and increased patient satisfaction

Value-based care builds on the idea of better healthcare quality for the patient, as well as preventative measures for dealing with problems early on. With value-based care, compensation for providers is more dependent on patient outcomes, as opposed to the historical ‘fee-for-service’ model. To put it simply, the providers are rewarded on the basis of healthier patient outcomes, which makes this more of a proactive approach.

Value-based Care Models – An Integrated Team Approach  

Under a value-based care model, the emphasis is on a combined team effort where patient data is shared and there is coordination over care, making measuring outcomes easier and excess utilization less likely. 

One such model is: Bundled Payments. This includes lumping payments together, which means reimbursing multiple providers altogether, instead of being paid individually for every individual service they provide to a patient. With this concept, what determines the pay of providers are patient-outcomes, and not how many procedures they perform or the number of patients they see. 

As the healthcare industry moves towards this new way of care delivery, many providers want to know, how is value-based care different from the traditional model?

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In the traditional model, the pay of healthcare providers was dependent on the number of services they provided. This left many of them ordering more tests, procedures and managing a greater number of patients, so that they could get paid more. With this, there were greater costs of treating patients, and little improvement in patient outcomes. This model also proved to be a challenge for provider workflows, as physicians oversee a greater number of patients, within a fragmented network.

The new model incentivizes providers to use evidence-based medicine, engage with the patient, use technology to improve efficiency and effectiveness as well as employ data analytics. According to a statement issued by the American Hospital Association, 

bundled payment arrangements present many opportunities to re-tool the types and mix of post-acute care, and materially improve patient care and lower costs.”

Value-based care remains a new concept for many healthcare providers, as they continue with the effort to incorporate the appropriate processes into their practice. 

Although this change is expected to happen over an extended period, CMS has announced aggressive goals for making the move with Medicare providers and hospitals. This requires healthcare providers to effectively navigate the challenges posed by a payment model that requires sharing and analyzing of data in ways that fee-for-service and its legacy revenue cycle management systems and business processes never contemplated.”

Physician Group Practices Lag Behind Hospitals in Bundled Payments

According to a study in the JAMA Health Forum, hospitals fared better than physician group practices taking part in the Bundled Payments Care Improvement Initiative. Hospitals had cost savings in both categories: top 5 conditions that required medical intervention as well as the top five surgical procedures. Physician group practices lagged behind hospitals, as they had cost savings only for the top 5 conditions that needed medical intervention.  

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The study added, “To coordinate participation in future payment models, policymakers must understand the dynamics of PGP vs hospital performance, particularly given the evidence from other payment models indicating that physician groups may perform differently than hospitals in managing quality and costs.”

The Bundled Payments Care Improvement Initiative was launched with the goal of having greater cooperation between providers, that would cut down on costs in patient treatments. Study findings suggest physician group practices can cut down on costs and save money with a renewed approach to readmissions and post-acute care utilization. By coordinating care proactively, fewer unnecessary or duplicative tests and procedures are administered.

The Transition to Value-Based Payment Models: a Slow and Gradual Process

Progress remains slow, in terms of developing essential capabilities that are needed for value-based care. 

Traditional physician compensation puts volume before value. This means that traditional sources of payment are still dominant among physicians. Traditional sources of payment typically include salary or fee for service. Value-based sources include bundled payments, shared savings or capitation. Shifts in sources of payment among physicians are still lagging. The traditional sources of payment among physicians continue to dominate, whereas value-based payments account for less compensation among them. 

Slow progress in providing tools to equip physicians in practicing value-based care. Only 51% of physicians hold awareness over the costs and treatments they choose, and 48% of them are comfortable in having a discussion over costs with a patient. These statistics have not seen much change since 2014. In order to enable more efficient and effective care, PGP’s need to implement tools and technology that support these new workflows. 

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Nonetheless, there are positive trends when it comes to greater recognition among physicians with regard to their role in care affordability. There is now a rising trend among physicians who believe they have an important role to play in reducing the use of unnecessary tests or treatments. For example, physicians deploying real-time communication with Hucu.ai have access to their peers and to patients easily, thus improving care coordination without additional cost.

Physicians need to actively be on-board, if the healthcare industry wants a smooth transition to value-based care.

Initiatives Needed for a Successful Transition to Value-Based Care

Reorient physician compensation from volume to value. A shift towards value at work will lower burnout and give greater meaning to the work that physicians do. Provide Physicians with the tools to succeed. This will need a strong data-analytics engine which has interoperable data, advanced enterprise data warehousing and real-time reporting and analytics. “Value-based care is in line with physicians’ intrinsic motivation to deliver the best care to their patients, as it drives improvements in quality, outcomes, and patient experience.” The industry needs to make the most of this opportunity, by elevating the role of physicians as the servers of physical, financial and population health. 


Value-Based Care: What is it and what are its benefits? By Caroline Bodian.November 30, 2021

What Is Value-Based Care, What It Means for Providers?March 2, 2022

Physician Group practices struggle with bundled payments: study by Frank Diamond. January 3, 2023

Performance of Physician Groups and Hospitals Participating in Bundled Payments Among Medicare Beneficiaries. December 29, 2022 by Joshua M. Liao, Qian Huang, Erkuan Wang.

Equipping physicians for value-based care. 14 October 2020

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