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Healthcare is not only expensive, unfortunately, it’s also wasteful. In fact, nearly $760 billion annually is spent unnecessarily in healthcare, according to a recent study published in JAMA.
In addition to identifying the problems within healthcare, the researchers of the JAMA study also suggested methods of addressing waste. One such solution is greater adoption of value-based payment programs. Primarily aimed at improving care quality and reducing costs, value-based payment programs have downstream effects on both care and business processes that can reduce administrative waste for payers and everyone they work with in delivering and financing care.
Value-based vs. volume-based
Value-based payments are transforming the healthcare industry. Traditionally, in a fee-for-service model, payers pay providers for the individual services they provide. For example, each office visit, each medication, each MRI is a claim and a payment.