Value-Based Payments: But Is There Any Value for Doctors?

Leigh Page


October 08, 2015

In This Article

Will the Transition Be Difficult?

One problem with the switch from fee-for-service (FFS) to value-based payments is that "you're riding two economic horses," says Tyler G. Hughes, MD, a general surgeon in McPherson, Kansas, who will speak on this topic at the October meeting of the American College of Surgeons.

Whereas FFS incentivizes physicians to provide more services, value-based payments call for prudent management of resources. That dichotomy, Dr Hughes says, can make it hard to run a practice as the payment methodologies are changing. If most of your work is rewarded with FFS payments, as is the case for most physicians today, then it might be financially perilous to cut back on services under the value-based approach.

He identified another dilemma, too. In a value-based system, "you're supposed to be a steward of healthcare resources," he says. "But your own patients don't really care about the whole population. They just want to make sure that they get the care they think they need."

Hospitals, too, are grappling with the mixed incentives of the two payment systems, according to Woodcock. "Hospitals have a conflict between their traditional role of enhancing volume and their new role, which is try to keep patients out of the hospital," she says.

These mixed motives can be frustrating to employed physicians who want to embrace value-based approaches, Woodcock says. Some hospital administrators are ahead of the curve, introducing value-based measures as part of their compensation formula. But other administrators, depending on how they're paid, still have little interest in value-based approaches, and might not even welcome any value-based proposals from an enterprising employed physician, she says.

The transition period from FFS to value-based payments is likely to last for a while, says James Holly, MD, CEO of Southeast Texas Medical Associates (SETMA). SETMA, a 50-provider multispecialty practice in Beaumont, Texas, has been using value-based approaches for almost two decades.

Rather than hold back until the tide has turned, Dr Holly advises speeding up the transition within your own practice. It's easier for you to be firmly in the value-based camp than to be somewhere in between, he says.

For example, when SETMA first accepted capitation through a Medicare Advantage plan in the late 1990s, it had high lab volumes that beefed up reimbursements from FFS payers but undermined its capitation. The practice created an internal capitation for lab services, which drastically reduced the number of tests ordered. Volume plummeted. Dr Holly says the practice lost $50,000 of profit in a month.

But the change was ultimately a success. "We realized that if we didn't give up the profit, we weren't going to have the opportunity to move ahead," he recalls. The practice made up for the losses by such achievements as cutting preventable readmissions by 22% from 2009 to 2012 and reducing the average blood glucose levels of patients with diabetes.


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