Daily News: May 14, 2014

A&M: Healthcare Stakeholders Must Shift Focus to Value

Healthcare payers, providers and consumers must increase their focus on value, defined as a function of quality and cost, to address the fundamental issues affecting care delivery, according to a new report by Alvarez & Marsal Healthcare Industry Group.

The report argues that the value proposition must be applied across the continuum of care, beyond single procedures or activities, with the goal of generating clinical and service excellence at a lower cost by eliminating the waste associated with inefficient and ineffective care delivery.

Among its specific recommendations, the report calls for:

  • An accelerated transition from a fee-for-service, volume-based model of care delivery — a core driver of procedural volume growth and fragmented care delivery — to a value-oriented, risk-sharing approach;
  • Correcting the imbalance between currently supported services and the actual needs of Medicaid recipients and the uninsured population;
  • Healthcare systems must transition their business model from acute intervention to prevention and patient self-management, and need to recognize that the site of service is a major driver of provider cost variation;
  • Accountability needs to be driven by employers; current models relying on external brokers, consultants and actuaries have proven ineffective and need to be replaced; and
  • Consumers to become more engaged, shifting their focus from cost and perceived quality to value — just as they would approach other retail purchases — without sacrificing outcome or service.

“In healthcare, the concept of value can now become reality as the threshold of affordability has been reached for employers and consumers,” said David Gruber MD, managing director at Alvarez & Marsal and Director of Research with the firm’s Healthcare Industry Group. “Doing more with less is not only desirable, it is also practicable according to our research. The key is for all stakeholders to shift their focus from reducing or shifting costs to increasing value. With no demonstrated relationship between the cost of care and the quality of outcomes, and well over $765 billion of waste in the healthcare system, or 31% of total spending, the opportunities for value creation are clearly evident.”

The report is available for download here.