Value-based payment isn't about skyrocketing costs


Patient care is poised to change dramatically as new models of payment overtake traditional arrangements. But according to physician leaders from some of the nation’s cutting-edge health systems, this shift in the health care environment will be a “game changer” for reasons that go far beyond economic considerations.

As high as health care costs have risen—more than 17 percent of the nation’s gross domestic product—patients are eating up most of the costs, with employee cost shares rising 50 percent faster than the rate of overall premium increases, Charles Kennedy, MD (pictured left), said during a panel discussion Saturday at the 2015 AMA Annual Meeting.


Dr. Kennedy is chief population health officer at Healthagen, where he is working toward a more patient-centered system of care. He spoke about how value-based payment is more than a business issue—it’s a paradigm shift.

Placing the patient at the center

The existing model of payment places “profitability” with episodic treatment of sick people, which contributes to rising costs and makes care transactional, Dr. Kennedy said. The value-based system of the future will be about holistic care for the entire population, with an emphasis on keeping healthy people well and effectively managing diseases among those who are sick.

Other panelists agreed that value will only come with overall changes to the system of care.

“You can’t just change the way that you pay and have it amount to anything,” Grace Terrell, MD, president and CEO of Cornerstone Healthcare in Highpoint, N.C., said. “We actually have to change the way we take care of our patients. We ought to be able to get back to what it’s all about … with the patient at the center of all of it.”

For Dr. Terrell’s practice, “value” isn’t a term restricted to finances. Her practice reorganized to become a “population health management hub” to provide better care and simultaneously allow physicians to thrive. The changes they made were based on the question, “How can we take back medicine in a way that’s valuable for all of us?”

Essential elements for moving to value-based care

In talking about changes that have been made so far and what the future could hold, panelists noted several elements that will be essential to achieving a high-value system of care:

  • Data. Dr. Kennedy noted that “proof points” of successes will be essential to making broader system changes, and practical data—such as the actual cost of care—should guide decisions.
  • Collaboration. “This is a time of change,” Dr. Terrell said. “For us as a profession, this could be a game changer in a very positive way. It will be a time of collaboration as opposed to a time of competition to get this done right.”
  • Patient engagement. “You can’t be a reactive organization anymore and wait for [patients] to come in when there’s a problem,” panelist Donald Fisher, Phd, president of the American Medical Group Association, said. “If we can’t figure out a way to get patients engaged [in their own health], we will fail.”
  • Remembering the ultimate goal. Dr. Terrell emphasized that the key thing to keep in mind about any health care changes is that “it’s about taking care of patients again.”

Support for physicians in new models of care

The AMA’s Professional Satisfaction and Practice Sustainability initiative aims to ensure that physicians can thrive in their practices, resulting in improved health outcomes and greater professional satisfaction.  

Key components of reaching that goal are promoting successful care delivery and payment models in the public and private sectors, and creating tools that will enable physicians to adopt proven models that fit with their practices.

Visit the AMA’s Web page on next generation models to access existing resources for physicians who are pursuing new models of care and payment.