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Transitioning to Full-Risk Capitation

Healthcare’s “value movement” is a concept just about everyone comprehends. It’s easier to compensate someone for the value they’re making versus simply doing the job. A situation of affordability sparked value-based care, with the Affordable Care Act contributing heavily. Today, among the few programs that have near-universal political support, value-based care is one. When efficaciously enforced, clinicians are spurred to care for the entire person and tackle the risk factors so essential to the quality of life of patients.

Many value systems are still developed on a fee-for-service basis, where doctors are constrained in what they can do with the conventional method of billing and coding. What’s more, these programs too often measure processes rather than results (for example, checking blood pressure versus improving it and cutting down on hospitalizations). It’s not clear whether calculated actions would result in the true desired outcome of less expensive, more sustainable healthcare, and those acts say little about the experiences of actual patients.

A typical primary care doctor sees about thirty patients daily, generating around $600,000 in a year at $80 a visit. This individual is trying to keep patient visits short, there is a ton of paperwork they need to take care of, and, after covering the costs of running the practice, they are hoping to take home a portion of what specialists earn. There is minimal benefit resulting from value-based care payouts, regardless of their PCP skills.

What if the individual assumed “full” risk for these patients? If the doctor took the reins and was responsible for everything about their patients? Things shift radically. Presuming the payor negotiations have been taken care of, this same doctor may have somewhere around $12 million (average $500 per patient per month), about twenty times the money. There is the danger the $12 million is expended, and the doctor incurs a loss. But primary care is worth more than five percent ($600,000 of the $12 million) of overall costs collected by the doctor in the fee-for-service environment because PCPs will redefine the “downstream” treatment use. To stop wasting the other 95 percent of preventable, avoidable, and wasteful treatment, everything now becomes how to maximize patient health. It’s about working with patients, encouraging them to do what’s needed to have a positive effect.

To read more, visit https://www.linkedin.com/pulse/full-risk-capitation-model-why-make-change-christopher-chen/.

This update is provided by CareOptimize. We provide healthcare management consulting services and products, managed care solutions, value-based expertise, Nextgen EHR utilities, MIPS consulting, and more. CareOptimize has helped numerous healthcare organizations succeed for more than a decade. For more information, please call 855.937.8475.