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The Costs of Inaction: 5 reasons why health care organizations need to take on risk

In 2021, the Centers for Medicare & Medicaid Services (CMS) established a goal to have 100% of Original Medicare beneficiaries and the vast majority of Medicaid beneficiaries actively participating in accountable care organizations (ACOs) by 2030. CMS continues to support this objective by making advancements in accountable care models.

Each year, there is a growing sense of urgency for providers to shift their practices from fee-for-service methodologies toward patient-centered models capable of assuming risk. Providers who have already made the transition are benefitting from the financial rewards. However, providers who do not enter into risk-based payment arrangements can expect to be paid 5 – 10% less than those who do.

In an ever-evolving health care landscape, the costs of inaction will undoubtedly be felt. Below are five reasons why health care organizations need to transition their care delivery models and take on risk.

  1. Rising health care costs + an aging population

    The United States is home to the world’s most costly health care system. In 2022, our country spent an astounding 1.5 trillion dollars in health care and $747 billion on Medicare. In addition to a costly system, the American population is aging at an unparalleled fast pace. According to the 2020 United States census, compared to the previous 100 years, from 2010 to 2020, the population of those 65 and above expanded nearly five times faster than the overall population. By assuming financial risk, health care organizations and providers have a vested interest in controlling costs.

  2. Achieve financial sustainability

    By successfully fostering a collaborative infrastructure while preserving autonomy, ACOs help providers improve health care delivery through better care coordination, including identifying gaps in care, correcting costly inefficiencies, and optimizing resource utilization. This proven approach improves health care delivery and ensures financial stability by reducing waste, redundancies, and unnecessary costs, including emergency department visits and preventable hospital admissions.

  3. Quality of care rather than quantity of services

    Risk-based payment models require providers to adapt to patient-centered methodologies that emphasize quality of services rather than the quantity of services. Aligning provider incentives with measurable and improved patient outcomes leads to more accountability and patient-centric approaches that consider patient satisfaction and successfully position the entire health care team to concentrate on their specific areas of expertise efficiently.

  4. Improve provider collaboration and patient engagement

    Patient-centered, value-based care helps providers deliver the appropriate care in the proper place at the right time. The result is improved patient satisfaction, which leads to enhanced engagement. When their care is working for them, patients are more likely to work for their care – meaning, to take a more active, engaged role in their care journey.

  5. Maintain a competitive advantage in an increasingly demanding landscape

    The health care field has been hit hard with pandemic conditions, costs, and challenges. Many rural hospitals are closing, communities are experiencing health care insecurity, and health care professionals have reported unprecedented levels of stress, burnout, and turnover. Adapting to risk-based payment models of care will enable providers to align with evolving regulatory requirements that meet the needs of diverse patient demographics – and ultimately lead to sustainable practices.

In our recent white paper, ‘The Future of Health Care Delivery is in Risk-based Payment,’ we address the significance of transitioning to outcomes-driven, longitudinal care to maintain sustainable health care practices. This step is critical to stay competitive in our nation’s ever-evolving health care delivery landscape. The transition from fee-for-service models to value-based care is imminent. It’s critical to prepare for the new era of risk-based payment.

To learn more, download ‘The Future of Health Care Delivery is in Risk-based Payment.’

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