Economic Analysis of Value-Based Care and its Impact on Healthcare

This essay examines the economic principles that have led to a significant shift in healthcare from volume-based, fee-for-service care to value-based care, which emphasizes efficiency and quality. It highlights the micro- and macro-economic challenges associated with volume-based care, such as increased profits for providers without corresponding improvements in patient outcomes, and payment systems that penalize providers for maintaining patient health. The paper discusses the benefits of value-based healthcare for patients, providers, payers, and society, including lower costs, improved patient satisfaction, and better management of chronic diseases. It also provides an example of how the shift to value-based care has influenced personal care practice, requiring professionals to work as networked teams with a focus on coordinated care and shared rewards and risks. The essay concludes that value-based care has the potential to drastically reduce overall healthcare costs and provide long-lasting benefits as the healthcare service delivery landscape continues to evolve.

Running head: HEALTHCARE
Healthcare
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Healthcare reforms in the country are facing a drastic change in the recent times due to
varied factors, the impact of which is on the care delivery process. This has led to a shift from
volume-based, focusing on fee-for-service care, to value-based care emphasizing on efficiency
and quality. The present paper analyses the economic principles that are the cause of the shift
mentioned above. Implications of this volume to value shift is also highlighted. Lastly, an
example is provided of how the shift has affected professional practice.
Noteworthy challenges had emerged in the last few years within the healthcare system of
the country in relation to the quality of care delivered and costs of service delivery. Volume-
based care brought about certain economic challenges that had compelled the shift to value-
based care. At the micro-economic level, hospitals, physicians and other care providers had been
gaining increased profits and revenues by delivery of more services to consumers. This had led
to the fueling of inflation in healthcare costs in the country in absence of any analogous
development in outcomes. Further, the payment system implemented on a national scale
frequently penalized providers for maintaining health of the patients, cutting down errors and
complication, and eliminating redundant care. This is a macro-economic phenomenon since it
involves the national healthcare system as a whole. Such a situation brought into focus the needs
of alternative care system which is the value based care system (Putera, 2017).
The value based healthcare delivery has many benefits for the patients, care providers,
payers and the society. The first implication of the system is that patients are to spend less money
for achieving better health. Value based care model has the focus on supporting patients to
recover from health conditions in a more rapid manner. Patients would therefore face less
number of medical tests, and physician’s visits since chronic diseases can be avoided in the first

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place. The second benefit is that providers can achieve better patient satisfaction. Patient
engagement measures would increase when the focus shifts to value in place of volume. Further,
payers can control costs and thereby reduce risks (Burwell, 2015). Value-based payment would
ensure payers increase efficiency by bundling payments covering the full care cycle of patients.
In addition, the society is to become healthier with simultaneous reduction in overall healthcare
spending. Patients can better manage medical emergencies and chronic disease care process
(Young & Kroth 2017).
The shift to value based care has influenced personal care practice. For example, the
integration of the new model of care has instilled the need of professionals to work as a
networked team with the focus on best possible coordinated care. Earlier, there was less need of
working in a coordinated approach. As professionals each individual is supposed to share
rewards and risks with receipt of incentives for improving access to care and better patient
outcomes.
In conclusion it can be stated that value based care holds the potential to drastically
reduce the overall costs of health system in the country. Though the shift of volume based care to
value-based care would take time for proper implementation, the transition would be fruitful.
Since the country’s healthcare service delivery landscape is undergoing continuous evolution,
value based care would have long lasting benefits for all.

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References
Burwell, S.M., 2015. Setting value-based payment goals—HHS efforts to improve US health
care. N Engl J Med, 372(10), pp.897-899.
Putera, I. (2017). Redefining health: implication for value-based healthcare reform. Cureus, 9(3).
Young, K. M., & Kroth, P. J. (2017). Sultz & Young's Health Care USA. Jones & Bartlett
Learning.