3 ways to create value-oriented healthcare

Report: Focus on services' worth to combat soaring healthcare spending

Payers, providers and consumers should increase their focus on value as a way to address the soaring costs of healthcare and evaluate the worth of a service, according to a new report from Alvarez & Marsal. 

"In healthcare, the concept of value can now become reality as the threshold of affordability has been reached for employers and consumers," David Gruber, M.D., managing director at the professional services firm and director of research with its healthcare industry group, said in the announcement.

The report both highlights and provides recommendations for specific areas of concern with the focus on a value-oriented healthcare delivery system. Listed below are a few key findings:

1. Balance Medicare

Medicare expenditures are expected to rise to $954.6 billion in 2020. Most of the spending goes toward those with chronic conditions, while post-hospitalization care also contributes to Medicare spending. The report calls for a realignment of hospital financial incentives through a value-based purchasing program, to increase enrollment in Medicare plans and implement more accountable care organizations.

2.  Transition from fee-for-service models

Hospital expenditures are expected to reach $1,397.4 billion by 2020. Meanwhile, physician and clinical services spendings are projected to hit $890.7 billion. Transitioning from a fee-for-service, volume-based model of care to a risk-sharing approach may help offset these rising costs, the report says.

3. Encourage employers to manage their health

Private businesses and employees' premiums accounted for nearly one-third of the $2.9 trillion in health expenditures in 2013. Under the Affordable Care Act, premiums will no doubt rise due to the elimination of pre-existing condition exclusions, higher taxes and caps on medical spending. By implementing value opportunities, employers will no longer have to rely on ineffective external brokers and actuaries.

To learn more:
- here's the Alvarez & Marsal announcement
- here's the full report (.pdf)

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