How to Implement a Value-Based Care Model

As a care provider, you are probably well aware that healthcare has shifted its focus from a fee-for-service structure to a value-based care model. Healthcare professionals agree that providing value-based care is not only optimal for the patient experience, but it also improves an organization’s reputation and reduces overall spending.

For these reasons, we imagine you’ve had a conversation or two about implementing value-based care, are planning to implement it, or have already implemented it. That’s why we’ve created a comprehensive guide on how to implement streamlined care programs with a value-based care model that will actually work.

Why should I adopt a value-based care model?

Value-based care models create a lasting doctor-patient relationship that benefits both you—the care provider—and the patients you treat. This model focuses on understanding what the patient needs for both their short-term and long-term health, and results in increased patient engagement and satisfaction, improved patient outcomes, and reduced costs.

Value-based care is becoming the standard in the healthcare industry, which means that implementing value-based care models is crucial to your organization’s continued success in today’s landscape.

How do I implement a value-based care model?

As the healthcare industry shifts its focus from a fee-for-service framework to a value-based care model, some care providers—though eager to implement these changes—are stumped by exactly how to do so. Follow these calculated steps to bring value-based care to your own organization.

Organize care around patient conditions

According to Harvard University professor, Michael Porter, value creation occurs when a healthcare provider looks at a patient’s medical condition (or conditions), evaluates the potential outcomes and costs over the entire period of care for that condition, and implements a value-based approach based on the patient’s individual health. Understanding your patient, their well-being, and their condition is the foundation of creating an effective value-based care model.

Measure patient outcomes and costs

Over time, trends that occur with patients who have the same condition can be analyzed to determine the best possible care plans and outcomes for that particular condition. In measuring the medical challenges these patients face and the associated costs of care, you can be better equipped to not only improve patient outcomes but also reduce the overall spending at your facility.

However, in order to track patient outcomes and costs, you must analyze your current (maybe outdated) measurement methods.

Outcome measurement

The first step to defining outcome measures is to define what exactly you are measuring and who the necessary stakeholders are when treating that condition (including the patient), then putting together a multidisciplinary team that will treat and care for the patient over the course of their condition’s cycle. If this seems like a daunting task to tackle, start with the Standard Sets outlined by the International Consortium for Health Outcomes Measurement (ICHOM).

Formed in 2012 by thought leaders from Harvard Business School, Boston Consulting Group, and the Karolinska Institute, ICHOM has brought clinical leaders and patients—not just from the United States but across the globe—together to create outcome measure sets for 25 different conditions. These Standard Sets include everything from more common conditions like depression, anxiety, and lower back pain to genetic and rarer conditions like congenital upper limb anomalies and craniofacial microsomia.

Once you have established your own outcome measure sets, you can begin implementing your organization’s value-based care models and collecting data to further improve your individual care plans. This dedication to your patient’s well-being will be obvious to them, to your coworkers, and to the general public. In addition to improved patient satisfaction and patient outcomes, you can expect your reputation as a passionate group of care providers that truly cares about its patients to increase exponentially.

Cost measurement

Archaic methods of healthcare accounting systems rely on individual charges for tests, treatments, and consultations. When using today’s modern value-based care models, those systems prove to be inaccurate.

Time-driven activity-based costing (TDABC), an accounting concept introduced to healthcare by Harvard Business School professor Robert Kaplan in 2010, is one cost measurement method that analyzes cost by patient and condition over the entire cycle of care. TDABC creates incredible opportunities to improve efficiency and guide reimbursement.

To create a cost measurement system for your organization, you can begin by outlining all essential processes for treating a patient who has a certain condition—including personnel, equipment, space, and time. These factors will guide your cost measurement over time to determine exactly how much it will take to treat one patient for their condition over the course of the value-based care model.

Move to value-based payment

The current fee-for-service reimbursement model rewards healthcare organizations that value volume over quality of care. For this reason, two new value-based payment models are emerging.


With a capitation payment system, a care provider or hospital is paid a fixed amount per patient for a certain amount of time by an insurer or physician association. Care providers contracted by an IPA can benefit from capitation for the following reasons:

  • A smaller billing staff on payroll.
  • Not having to wait to be reimbursed for its services.
  • Alleviated costs and hassles allow their practice to treat more patients at a lower overall operating expense.

Bundled Payment

Bundled payments predetermine the total allowable acute and/or post-acute expenditures for an episode of care. With bundled payments, the care provider absorbs the costs that exceed this target price, but also reap the savings if they are able to spend below the target price while still maintaining quality.

These value-based payments align reimbursement with value—which, in turn, creates better patient outcomes. And with better patient outcomes, providers ultimately reduce spending and receive more patients due to their improved reputation.

Integrate care

When evaluating a network of healthcare facilities with multiple locations, it’s important to determine how you can deliver the right care in the right location to optimize the volume and capabilities of each facility.

To do this, you must take a hard look at how each location within your healthcare organization contributes to the network as a whole.

Four levels of provider system integration

According to Professor Porter, there are four levels of integration for care provider systems:

  1. Define the overall scope of services. This will be determined by the location at which a care provider can best achieve high value for their patients, depending on different conditions and needs.
  2. Concentrate volume in fewer locations. By specializing locations to treat specific conditions, you can disperse the volume of patients and designate the higher volume of patients to the locations that can most easily treat that volume of patients—such as downtown facilities that specialize in common but difficult treatments like surgery and chemotherapy.
  3. Choose the right location for each service. You can decide this based upon the medical condition, acuity level, resource intensity, cost level, and need for convenience.
  4. Integrate care across appropriate locations. Care should be organized into integrated practice units (IPUs) around patient medical conditions.

The purpose of this structure is to deliver the right care at the right time in the right location so that your care team is trained to do what they do best, and patients will see the best possible outcomes—no matter which facility they visit.

Use technology

Technology is an incredible tool to support the value-based care model. Integrated digital systems help clinicians easily understand their patient’s overall health, communicate with their peers, and reach out to their patients when needed. Technology helps care providers deliver more positive health outcomes for patients through flexible, personalized program design.

Start introducing value-based care models to your organization today

As you’ve seen, making the transition to value-based care models can be a little challenging. But the significant impact and overall success of your healthcare organization—plus the ongoing well-being of your patients—is well worth the effort of the shift.

For more information on how to start the transformation to value-based care at your organization, download our ebook How to Deliver Value-Based Care.

Make your program more care-centric today.

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