The way we pay for healthcare services is transitioning from the old Fee-for-Service model, to a new model often referred to as Value-Based Care. Under the traditional model, healthcare providers were paid for “doing stuff” with little regard for the actual result. I do not mean to imply that providers didn’t care about results but rather, at least when it came to compensation, outcomes weren’t much of a factor. Augment this with a lack of transparency in pricing and you have a good recipe for rapidly rising healthcare costs. And that’s just what we got.

Separating medical outcomes from payment also makes it difficult to justify having providers work to improve the system’s efficiency; as a more efficient system means less income for healthcare providers and higher profits for insurance companies. It’s not that healthcare providers don’t care about efficiency, but the incentives are entirely misaligned in a way that often punishes providers for pursuing higher levels of efficiency.


The value of value-based care

Value-based care takes the opposite approach. Outcomes matter and providers are rewarded for improving both clinical and financial outcomes. Under this model, incentives are aligned in a way that unlocks creativity and drives new approaches and collaboration. It’s an exciting time for those who are willing to embrace this change and begin to build a new system of care. Complete adoption of the value-based care model won’t happen quickly, but the changes are already evident. Some studies predict that value-based care will represent 50% of all reimbursement to providers by 2018.


Physician and Patients


A key component of value-based care is the Clinically Integrated Network (CIN). A CIN is a group of healthcare providers coming together in a purposeful and carefully orchestrated way to deliver care that is better, cheaper, and provides a more satisfying experience for patients. For example, a group of orthopedic surgeons, a hospital, a rehab facility, and a home health company might all join together to form a CIN that focuses on joint replacement. The insurance company would negotiate a set price for the entire episode of care as well as standards to ensure the quality of care is not diminished. It is then up to this CIN to figure out how best to care for the patient “on a budget” while still hitting the quality targets. A key benefit of this approach is that the providers are given the freedom to decide how to organize and deliver the care as well as how to divide up the money. Unlike fee-for-service where providers bill for their specific service, this approach creates a stronger incentive for healthcare providers to collaborate in order to provide the best quality of care possible for the patient.


Collecting and collaborating

As you might imagine, one of the most important aspects of a successful CIN is the ability to collect and share health records and medical data easily. Essential data about the patient who requires care is needed as well as data to drive analytics and help providers manage that care efficiently and effectively.

But what happens when not everyone is using the same Electronic Medical Record (EMR) system? Despite a large increase in the use of EMRs, we still have many large information silos of patient data that are hard, if not impossible, to connect.

Many health organizations believed they could get around this “silo problem” by adopting a single, enterprise-wide EMR system and extending that platform to important members of their CIN. At the same time, these organizations purchased many independent medical practices. I call this the “Borg Strategy”: You will be assimilated! This approach has certainly shown some benefits. When all providers are together on the same EMR system, it is easier to collaborate, coordinate care, and collect the data needed for analytics.


Not all EMRs are created equal

While the trend to consolidate is far from over, it has also become clear that there are some counter-trends that put the “Borg Strategy” in serious doubt. It turns out that resistance may not be futile after all.

First, not all provider groups want to be bought. They aren’t averse to being part of a CIN however; they also want to maintain their independence. Or, perhaps they like their current EMR software and don’t want to deal with the cost and hassle of making a switch. In the example above, if the orthopedic group doesn’t want to merge with the health system and/or won’t change their EMR, it’s unlikely the CIN will succeed. Second, there is also the “onsie-twosie” problem:  Buying a group or replacing their EMR system is expensive and it is tough to justify the cost of doing this for small medical practices with only a few providers.


Medical Technology


A whole new set of issues arises when attempting to link the disparate systems used by rehab facilities, pharmacies, home health providers, and other providers. Linking contrasting EMR systems typically leads to an exponential nightmare of interfaces, complexity, and cost. We could devote an entire blog post to the importance and challenges of bringing patients and caregivers into the loop (and we will!).

We are clearly seeing what I call “the edge of the CIN”. At the edge, there are key players who must be part of the CIN for it to succeed, as well as others that would be “nice to have” if there were a feasible way to include them. In my next post we will explore ways that technology can make the “edge” irrelevant.

Dave Levin, MD is the Chief Medical Officer for Sansoro Health where he focuses on bringing true interoperability to healthcare. Dave is a nationally recognized speaker, author and the former CMIO for the Cleveland Clinic.


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