Apr 15, 2022

Value-Based Care: Why Providers are Still Incentivized for Volume


If you’re tuned into healthcare compensation, you’ve likely noticed that many organizations are discussing the recent RAND Health System study published by JAMA Health Forum, Physician Compensation Arrangements and Financial Performance Incentives in US Health Systems, and the concept of value-based care.

The easy-to-see facts are getting re-shared across the industry: systems are not paying providers for value or shifting value-based risk, they’re incentivizing volume.

Despite overwhelming data from Humana and Blue Cross and Blue Shield of North Carolina, among others, demonstrating how value-based care encourages preventive care, lowers costs and improves patient outcomes, this recent study highlights how most health systems still pay on volume-based incentives. Despite evidence that the payments from private and governmental payers will in fact be heavily reliant on value indicators. 

Systems that do not shift risk to their providers will not only miss out on the innovations and collaboration that will improve outcomes, but will struggle to compete against those that did.

Like many of you interested in this topic, we at ProCARE are here to transform healthcare. 

Changing the way providers are measured, incentivized, and paid is paramount to accomplishing this milestone because it aligns all stakeholders – Patients, Providers and Health Organizations – and assists organizations in achieving improved population health, decreased cost of care, enhanced patient & provider experience, and equity in all measures between populations.

It’s encouraging to see this topic’s open discussion, however, few, if any, are getting to the root of the issue or interpreting the data points correctly.

The Reason Providers Aren’t Paid on Value

These perspectives come from a team with decades of experience in Fortune 100 incentive compensation technology and healthcare change management. 

Over the last five years, we’ve applied this experience and insights into customizing and deploying provider incentive compensation automation solutions for health systems. 

“Our unique vantage point provides us a behind-the-scenes look at exactly why these organizations are not paying their providers on value, but rather continue to incentivize on productivity and volume,” shares Matt BonDurant, Founder & Senior Partner with ProCARE, “and, the root cause of this standstill boils down to one thing: systems are too complex with too many process issues.”

Traditional Compensation Models

Traditional compensation models and methodologies do not easily adapt for value. Processes are disparate and systems were not built to handle variations or ongoing demands. Moving to value requires teams such as Finance, Operations, and Clinical pillars who traditionally have not interfaced with regularity to all of the sudden work as a cohesive group and scale change without support of technology across diverse organizations.

Contrary to what you’re likely reading on main news outlets, the needle is not stuck because there isn’t value, desired change or attempts. 

Rather, it’s stuck because health systems can’t keep up with the deluge of unique provider intricacies and the processes and methodologies to move these diverse groups into more value and risk-based contracts.

There are enormous demands on these three teams to adapt to life in an integrated world where providers were brought together rapidly with diverse needs and histories. Teams are spending all of their time calculating models of the past and have no time to move models forward. 

Small strides can be made by the most dedicated, but real change is hampered because of integration, communication, process, data and technology problems.  

Compensation Models of the Future

There will not be a magic bullet of a model that works for every type of provider or market. Every organization is highly unique because of the way it was formed, has grown, and what information systems and processes exist. 

These uniquenesses require the methodologies and model components to be fluid, flexible  and constantly evolving. Because health organizations can not instantly deviate from their current methodologies, they must have capabilities to make gradual change.  

In order to move organizations to value, disparate and static processes must be changed to flexible systems that can handle current business rules, removing integration and data issues that exist today.   

The right technology is needed to get them there.

A Compensation Automation Gap

There is an astounding gap in the current state of compensation management and the future state required to incentivize on value. And this gap is a technology gap. More specifically, an automation gap.

“Organizational goals of health systems haven’t changed. But now they are recognizing that they cannot achieve their goals of improved clinical outcomes, enhanced patient experience, increased efficiency, reduced worker burnout, and quality equity without adopting new technology,” shares Jack Liu, Founder & Managing Partner with ProCARE.

Even the largest of health systems is oftentimes still operating with a homegrown provider compensation automation system reliant on Excel spreadsheets that are error-prone and difficult to scale or modify. Existing information systems such as Payroll and EHRs do not “speak compensation” nor scalably keep up with all the required data points, organizational attitudes and business rules.  

These rigid solutions and limited data visibility prevent organizations from advancing in their industry, making informed decisions and shifting to value-based care.

The Solution to Providing Value-Based Care 

Organizations need a platform that can take the current state of provider compensation for organizations and automate it to provide the bandwidth and capabilities to incorporate value-based payments into their compensation models.

Organizations need a system that can automate all the necessary data into a single source.  They need a system that allows them to store, change and evolve all of their business rules without custom development or backend coding. 

This type of platform will empower them to create better incentives to drive and align to the ideal provider behaviors. This will improve the relationship with their providers and enable change that leads to collaboration across their system to improve outcomes.

The shift to automated compensation management solutions is required for health systems to move to value-based care. 

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