How virtual care providers are embracing value-based healthcare

This is the 2nd part of the virtual care & VBHC series. Click here to read the 1st part.

The cost of healthcare is skyrocketing due to an ageing population, an increase of chronic diseases and co-morbidities and new, expensive innovation. Despite the increasing cost, the outcomes are not improving. With our fee-for-service world, medical providers are paid for quantity, not quality. Driving care volume (visits, treatments, operations) is still the main game in healthcare. We need to create a more efficient and sustainable healthcare system that delivers real value for patients. We need a paradigm shift. Now.

Value-based healthcare (VBHC) can help with this shift. VBHC is a delivery model in which providers are paid based on patient health outcomes while reducing costs. The concept was introduced by prof. Michael porter in 2006 and fifteen years later VBHC is still there. 

Hospitals like Mayo Clinic, Santeon, Vall D’Hebron prove that VBHC is possible. Alongside these successful examples, the widespread transition to VBHC is rather difficult. The main obstacle Value-Based care faces is the fact that it’s not clear what value means in healthcare. Value for an insurance company is totally different than for a physician or hospital manager.

Nevertheless, virtual care providers can play an important role in the transition to VBHC. And some are already doing so.

Think about it like this: we don’t really need in-person consultations to be the default for healthcare. Basic patient needs like dealing with the flu or acne, getting prescribed birth control or checking up on an acute injury, don’t always demand physical appointments; for routine health services, virtual care options could open the door for newfound accessibility and patient-focused value.

What I’m suggesting is a hybrid solution, where in-person care is still common -- but it’s complemented by digital capabilities. Let’s look at how that model might play out in our healthcare system today.

Reduced Cost

The integration of virtual primary care can bring substantial monetary value to society -- by mitigating the historical costs of healthcare. In Sweden, it’s been suggested that the healthcare system can save roughly $136 million each year -- simply by shifting one in ten primary care visits to the virtual model. 

We already have evidence that telehealth solutions utilized for chronic patients can decrease the total cost of healthcare by between 2-3%, but the actual figure -- once stakeholders adopt them as the new normal -- is expected to be much greater. One peer-reviewed paper furthered that notion, maintaining that Babylon Health was able to deliver 35% of cost savings in acute care for their members, while in the U.S., their members were able to avoid 34% of the ER/Urgent Care visits sought out on average. 

Lyra Health - a virtual platform for mental health covering more than 2.5 million people -  lowered the overall healthcare claims costs by $2,300 for their members (including costs related to general healthcare, prescription, medication, and emergency department visits). 

Firefly Health - a virtual-first care and coverage health plan - saves an average of 30% on employee healthcare costs by moving patients to lower-cost settings and avoiding unnecessary referrals and specialist costs. 

Improve outcomes

The COVID-19 pandemic has placed immense pressure on our healthcare system, a system that was already overstretched before the pandemic. Due to the overflow of positive cases non-urgent care was postponed in many hospitals. This has certainly left deep marks. Several studies have shown that, since the pandemic, there is an increase in the number of avoidable cancer deaths. By delaying regular care, cancers are diagnosed too late. And we could have avoided that by embracing virtual care. By giving patients access to a physician within 15 minutes, we can reduce delays in the diagnosis and treatment and treat them faster.

Virtual care can also be effective in the management of chronic conditions, including COPD, heart failure and diabetes. It can impact the quality of life of chronic patients and reduce ER admission rate. 

Patient from Virta Health - a virtual medical clinic that wants to reverse Type 2 diabetes without medication - eliminated 63% of diabetes-specific medications. Additionally, 94% of their patients eliminated or reduced insulin usage. The examples are endless; I will mention a few more:

What’s next?

From these examples, it’s clear that some virtual care providers are already reducing the costs while improving outcomes. The problem is that they are currently not incentivized to do this (unless you are a health plan, like Firefly or Oscar). Christina Farr and Jonathan Slotkin explain this nicely:

“Digital approaches won’t sustain and scale if there’s not a clear path to reimbursement. Virtual care may lower costs, improve outcomes and patient engagement, but these approaches can lead to relatively decreased revenue in the fee-for-service world. (...) Digital-first providers should become “market makers” for value-based healthcare. They should determine where they can underwrite themselves and define new value-based care models that stretch beyond capitation or bundles.”

Obviously, there is still much work to do. The transition to VBHC will not happen tomorrow. In the meantime, governments should create a legal framework to make virtual care possible (the US is taking big steps here, while in most European countries there is still a lot of uncertainty).

In addition, we need to think further about how we can evolve from a volume-driven to a value-driven healthcare system. And lastly, virtual care providers should (continue to) invest in scientific evidence to prove that they improve outcomes while reducing costs.

In my next article, I will talk about what steps virtual care providers can take to achieve and embrace value-based healthcare. 

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I have probably forgotten quite a few virtual care providers who are also reducing costs while improving outcomes. Feel free to send me those ones via Twitter or LinkedIn. If you want to react or give feedback you can use the exact same channels :-).