Four Steps to Success in Value-Based Contracting

In my many meetings with physician groups who have enjoyed success in value-based contracting (VBC), the same four areas of critical focus are repeatedly articulated by executive leaders of these organizations.

Step 1.  Optimize network management.

  • Physicians in VBC should take great care to assure that the sub-specialists to whom they refer attributed patients are clinically effective and financially efficient. Our own experience with clients has demonstrated an average of $10-15K in medical cost savings per redirection to a higher performing specialist, as well as a 10% reduction in surgical intervention rate (in spine, hip, and knee surgeries).

Step 2.  Manage care transitions.    

  • Medical mis-steps are common and expensive when patients move in and out of in-patient, Miles Snowden, MD, MPH, CEBS Chief Medical Officer, OptumHealthemergency and skilled nursing facilities.  Focusing on seamless transitions is a key way to assure the population at risk achieves the best outcomes.  Experience with several of our clients has shown that adding dedicated staff and technology for care transition engagement can produce as much as a 37% reduction in 30 day readmit rates for adults with medical (non-surgical, non-maternal) admitting diagnoses.

Step 3.  Expand chronic disease management to the full, attributed population.

  • Managing chronic disease one office visit at a time is a good way to get burned in a VBC.  Often, the chronic disease patient with the greatest need for intervention is exactly the one least likely to show up in a physician’s office.  Our own internal experience has shown that contemporary predictive modeling analytics and systematic, population-based care manager outreach strategies can produce a 20% improvement in evidence-based medicine compliance among the chronically ill.

Step 4.  Invest in in-home intervention in the high acuity, post-acute population.   

  • Patients transferred home or to a skilled nursing facility with high acuity needs following an acute illness are at high risk of both unfavorable clinical outcomes and unfavorable medical cost impact.  Our experience has shown that in-home care management by nurse practitioners or physicians reduces average acute admits by 64% among Medicare beneficiaries compared to a similar, risk-adjusted control group.  The bed day reduction occurs through a combination of fewer readmissions and shorter subsequent inpatient stays.  Success with these programs appears dependent upon having the process and technology necessary to perform in-home clinical assessments, do predictive risk modeling on the assessment data and transfer this data and analysis to the treating physician without delay.

Data requirements for each of these activities vary.  Network optimization requires claims data.  Care transition management requires abstracted data (notice from hospitals of discharge, admission, emergency department visit, or skilled nursing transfer).  Population-based chronic disease management is best performed with both clinical and claims data.  Finally, post-acute care requires clinical assessment data only available from care manager observations recorded and submitted through portable technology platforms.

Feedback from physician leaders with experience in VBC is consistent with our own internal observations and experiences.  That is, with the right investments in new data, analysis, process flows, and clinical team accountabilities, physicians can expect to achieve success in VBCs when focusing on these four critical areas.


–Miles Snowden, Chief Medical Officer, Optum

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