Value-based care benefits for providers

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Apr 9, 2022, 2:42 PM

As pressures of moving to value-based care (VBC) continue to rise, many providers have, or are beginning to, enter VBC arrangements. Through this transition, organizations are often unsure of how far to go—how many VBC contracts should they accept? How much risk should they take on? How will this impact their fee-for-service (FFS) business? This brings up an important topic, that will be referred to as the “tipping point”—the point at which an organization’s VBC financial opportunities start to outweigh FFS revenue reductions. Success within value-based care arrangements necessitates alignment of payer contracting and payment reform with care model transformation. This article will focus on the financial side of the equation.

Based on our experience working with providers, organizations need to reach a tipping point of 40% of their care delivery/clinical revenue managed under VBC contracts in order to be financially and operationally incentivized to manage total cost of care versus the volume of services provided. Within this article, we will outline how the tipping point is defined and calculated, why 40% is considered the tipping point, the risks of being above or below the tipping point, and how provider organizations can increase the amount of revenue they have tied to VBC.

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