The ongoing conversation around health care in the United States presents a daunting question: How is it that this country—with all its wealth, education and innovation—has among the highest health care costs of any industrialized nation, yet its clinical outcomes still lag behind? 

Illustrating the point, according to a Kaiser Family Foundation analysis, disease burden in the U.S. is greater than in other similar countries, with poorer management of preventable diseases resulting in increased use of emergency rooms, increased hospital admissions, worse outcomes, higher costs, and higher mortality rates.

There are numerous opinions coming from inside and outside of the medical community on how best to improve treatment quality and outcomes, boost patient experience and reduce the cost of care. We believe that medical organizations that embrace integrated coordinated care are uniquely positioned to help drive the changes needed.  There are groups throughout the country that have decades of experience practicing coordinated care and many more that are embracing this care delivery model each year. It is worth taking a closer look at how these groups are financially structured and the foundations of their clinical cultures. 

The vast majority of American health care providers are still operating in a model that the industry refers to as "fee-for-service," in which the provider is paid based on the services and treatment rendered, not on the patient's health outcome (quantity rather than quality).  However, very different types of health care finance models have existed for decades. Most accept a variety of payments including shared savings, bundled payments, being part of an accountable care organization (ACO), shared risk and full risk.  

In the full risk model, a provider organization is paid a flat per-patient, per-month rate. The group thus accepts the clinical and financial accountability of a defined population. In order for organizations to be successful under this and other risk-based contracting models, they must have: an engaged and committed clinical and business leadership; invested in building a unique infrastructure with focus on prevention and early detection; and an advanced care management department working closely with numerous healthcare professionals, applying innovative resources and programs and using data/analytics to improve the quality of care delivery. This model places financial incentives for providers to keep the patient in the best possible health in order to reduce downstream health problems and complications with their associated costs.

In the short term, a fee-for service financial model may offer steady, predictable income; however, it is not a sustainable strategy for the long term. Making the shift from a volume-based fee-for-service model to a value-based risk-bearing care model can prove to be beneficial for patients and the medical organizations themselves. But how and what changes are needed by organizations, most of which recognize that these and other changes are inevitable?

While many medical groups claim that they are “patient centered,” the key is implementing day-to-day action that proves it. For example, HealthCare Partners, a DaVita Medical Group, has spent the last three decades caring for hundreds of thousands of patients in Southern California. Over that time, we built an intentional culture where patients are at the center of the clinical model. In this model, coordinated teams align with physicians who have the independence to develop a care plan in collaboration with their patients. This basic but fundamentally unique approach laid a cultural foundation for all of our clinical programs and naturally fostered an environment where a full-risk model has been highly successful.

Our group and other medical groups that prioritize value-based care use key performance indicators to determine how successful this approach has been, such as monitoring how often patients are going to the emergency room for non-emergent care and how often they are being admitted to the hospital. Typically, a group’s assumed financial risk, coupled with a patient-centered culture, heightens the organization’s focus on, and investment in, helping to safely promote avoidable hospital stays and deliver the right care, in the right place, at the right time.

For example, at HealthCare Partners, this includes investing in and prioritizing innovative new programs such as in-home care for frail and elderly patients and often those who have chronic illness and are homebound, and a specific program to provide care for patients with chronic obstructive pulmonary disease (COPD). 

Here are some notable results from the program providing home care for high-risk patients: 27 percent reduction in emergency room visits; 26 percent reduction in avoidable hospital admissions; and 25 percent reduction in hospital bed days.

As for the COPD program, its results include: 30 percent reduction in avoidable hospital admits; 23 percent reduction in emergency room visits; 39 percent reduction in hospital bed days. This has led to 34 percent reduction in total costs.

These programs, which support the value-based model of care, may seem challenging to implement for many health care providers still operating in the old fee-for-service model; however, they don’t have to be. Small changes, starting with an intentional culture and a willingness to shift toward prevention and focused care for high-risk populations, can go a long way in helping transform America’s health care system. The potential benefits and the effect could bring much-needed change.