13 August 2014

To Embrace Value-Based Care, Look For Economies of Scale

Value-based care was a hot topic at the recent American Hospital Association Forum, and continues to be a subject on hospital executives’ minds. While all hospitals are expected to eventually transition away from the fee-for-service (FFS) model, many are still straddling the line. According to a study conducted by the Office of Civil Rights, the majority of payors and hospitals are still using a dual system of value-based and FFS reimbursements, but 60% are on track with the transition to value-based models. These groups predict that FFS reimbursements will decline more than 20% over the next five years.

Since costs and quality of care factor heavily into value-based purchasing, one strategy for hospital system leaders to help smooth the transition is to increase economies of scale where possible. Executives can spread technology or hospital management costs across multiple hospitals in a system to help bring down individual costs. In a report aimed at helping hospitals master value-based payment, Lisa Goldstein, managing director for Moody’s Investors Service, said “The contemporary thinking is that under reform, the bigger you are, the more you can spread the costs of your infrastructure over the enterprise's footprint…Long term, you can leverage a less-expensive healthcare system to payors, exchanges, employers and all purchasers of healthcare.”

Standardized procedures and common success metrics can go a long way towards maximum efficiency and decreased costs – and these savings are magnified when applied across multiple hospitals in a system. Learn more about our approach to managing hospital operations, and talk to us about using our health care management services across different hospitals in your system.