Outcomes-Based Approaches to Health Care Finance Can Address Unmet Needs
- William H. Shrank Eric Letsinger Health Affairs 9/2/22
For outcomes-based financing to successfully take root in this sector, key stakeholders will need to think and operate in novel ways.
Health plans must commit to novel contracting structures and partnerships with community service providers who deliver value commensurate with compensation. Individual health plans do not have to go it alone; they can and should engage other in-market managed care organizations as investment partners or purchasers of outcomes to lessen transaction risks for all parties. Through collaboration, health plan investments can better support community infrastructure to meet social needs for members of all plans.
Community-based service organizations must embrace the value they deliver—as demonstrated in outcomes measures—to new payers and be willing to assume some level of performance risk. This shift in mindset and approach will open the door to new value-based payment streams and to compensation structures that reflect the tangible results these organizations deliver.
Government agencies must provide the flexibility needed for real-world experimentation that leads to greater payment innovation, value creation, and higher-quality services. As health plans and community-based organizations increasingly enter into value-based and outcomes-based arrangements, there is an opportunity and an impetus to review and re-evaluate federal and state policy around payments and reimbursements.
Investors must embrace moving more capital to facilities that deliver measurable health improvements, societal benefit, and reduced costs. In demanding both risk-adjusted returns and measured health impact reporting, investors can move away from the old paradigm that says returns must always be sacrificed when investing in social outcomes.
We should be impatient and creative in our collective efforts to reallocate investments that are most likely to produce better health. By aligning on valued outcomes and moving capital to pay for them, all parties can do well by doing good. In the process, we can accelerate the adoption of value-based purchasing, reduce total health care costs, and produce a better evidence base to guide future program investments in health-related social needs and social determinants of health.
