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Value Based Care In Healthcare

Jan 6, 2023

The healthcare industry is undergoing a significant transformation, with value based care being a critically discussed topic. Value based care provides a framework to help address rising healthcare costs, improve the sustainability of healthcare systems, and improve patient outcomes. Many existing care models have been identified as not adequately supporting value based care, with remaining opportunities to improve the efficiency and quality of care.


Key Points:

  • Health care is shifting from fee-for-service care to fee-for-value, which aims to maximize patient value.
  • Value based care in healthcare is based on the concept that value for patients must be the underlying principle in managing and organizing healthcare delivery systems.
  • Value based care is an essential part of any healthcare organization’s short and long term to control costs and improve the quality of patient care.
  • Value based care models in healthcare aim to provide patients with reduced costs, coordinated care, holistic care, and education.

Value Based Healthcare Definition and Origin


Value based healthcare (VBCH), first introduced in 2006 by Professor Michael Porter and co-author Elizabeth Teisberg, is a movement based on ten years of research into why the healthcare industry did not conform to the principles of competition seen in other aspects of the global economy. Porter and Teisberg established that the US healthcare system spent more per citizen on healthcare and had the poorest patient outcomes compared to any other nation.

Thus, Porter and Teisberg proposed restructuring healthcare systems with the main focus on improvement and competition. They proposed that the single overarching goal of healthcare is to deliver value for the patient. “Value” was determined to be measured using evidence-based approaches and defined as patient-relevant outcomes over costs per patient. There are four dimensions of VBHC, (i) measure of value, (ii) set and communicate value benchmarking, (iii) coordinate care, and (iv) payment to reward value-add.

Simply put, value is expressed as the outcomes that matter most to patients and the costs associated with achieving those outcomes.

Value Based Care Models in Healthcare


Value based care models differ from fee-for-service or capitated approach models, which see providers being paid based on the number of services they deliver. Value based care models are centered on patient outcomes and how sufficiently providers improve the quality of care based on specific measures. These measures include using certified health information technology, reducing hospital readmissions, and improving preventative care. In value based care, reimbursement is tied to care delivery and the quality of care provided, therefore rewarding providers for both effectiveness and efficiency.

In 2006, Micheal Porter provided a specific six-component VBC model that has since been adopted worldwide. The six-component framework for a VBC in healthcare includes the following:

  • Measure outcomes meaningful for patients and associated costs accurately by a medical condition
  • Communicate these outcomes and costs transparently with a performance classification
  • Organize coordinated care relying on multidisciplinary teams around a patient’s medical profile
  • Develop innovative payment schemes to foster joint outcome responsibility and selectively reward high-performing care providers accordingly
  • Design solutions to improve health outcomes
  • Expand partnerships

Models should be networks of care that perform the correct services at the right location with the correct healthcare providers. They should be linked with an information technology platform that mutually supports all those elements. Components suggested to build an integrated information technology platform include:

  • Organize into integrated practice units (IPUs)
  • Measure outcomes and costs for every patient
  • Move to bundled payment conditions
  • Integrate multi-site care delivery systems
  • Expand graphic reach

Implementing value based healthcare models

Factors that lead to the successful implementation of value based healthcare models include:

  • Leveraging access to high-quality data as a key driver to facilitate implementation
  • The movement towards a relationship-based model of care as opposed to a transactional “episodic” approach
  • Adoption of a pricing model where health providers are rewarded for the whole care cycle
  • Increasing provider accountability by tying some of the provider’s compensation to patients’ outcomes and the expected cost for each.

Key observations from the successful implementation of value based healthcare models:

  • Scope of Implementation
  • Quality vs. outcome
  • Cost vs. spend
  • Data infrastructure
  • Leadership and resources
  • Clinical behavior

Why Value Based Healthcare is Important


In recent years, patients’ demands for personalized care and informed shared decision-making with healthcare providers are rising. This trend is being enabled by an information boom, driven by digital technology. Value based care is important because it allows for the replacement of the fee-for-service, shifting healthcare delivery towards a patient-centric approach.

A value based approach provides the necessary framework for a shift towards population health management, lifestyle changes, and disease prevention, providing better management and outcomes for patients diagnosed with chronic conditions.

There is also a need for the healthcare industry to shift towards implementing more integrated care delivery models across and within all provider settings and care levels.

The Benefits of Value Based Care in Healthcare

The benefits of implementing a value based care model extend not only to patients, but also to providers, suppliers, payers, and society. Patients experience improved outcomes and lower costs, spending less money to achieve better health. This is especially beneficial for patients that suffer from chronic and progressive diseases.

Providers benefit from higher patient satisfaction rates and better care efficiencies. Patient engagement and quality increase when the focus is on value and not volume. Payers experience stronger cost controls and reduced risks. Suppliers align prices with patient outcomes, and society benefits from reduced healthcare spending and increased overall health.

Other benefits of value based care models include the following:

  • New incentives leading to novel investments, such as interdisciplinary care teams and developing risk capitalization.
  • Expanded coordination between different departments and specialties.
  • Significant outperformance of provider-led organizations. Data shows that physician-led organizations significantly outperform provider-led organizations.
  • Support programs always in place and available.
  • Overall reduction in medical errors.

How Does VBC Translate in Nephrology?


Value based care in healthcare has laid the framework for organizational changes in kidney care, moving from ‘fee-for-service’ to the Affordable Care Act being implemented in 2012. When value-based kidney care was first introduced by the Centers for Medicare and Medicaid Services (CMS, CMS launched a value-based kidney care model called Comprehensive End-Stage Renal Disease (CEC) model. This VBC model was aimed at better coordinating care and spending incurred during end-stage renal disease (ESRD). This model was only centered around dialysis providers and did not include nephrologists.

The CEC model structure was improved upon by the CMS with the introduction of the Kidney Care Choices (KCC) model. The KCC model is designed as a nephrologist-led care model that extends beyond ESRD patients to include CKD patients. This model is structured to give providers the tools to improve the quality of care and reduce the costs for patients with late-stage CKD and ESRD. The KCC model also encourages kidney transplantation, reducing or delaying the need for dialysis.

The value-based kidney care model has been proven to drive improved patient outcomes, slow CKD progression, and reduce healthcare costs while providing financial incentives to healthcare providers.

Panoramic Health Value-Based Kidney Care Model


Panoramic Health is a physician-led organization providing a transformative approach to kidney care delivery. We advance patient care by partnering with practices, providers, and payers. Panoramic Health provides a comprehensive care model by leveraging operational and clinical data to create patient-centric population health initiatives that are tailored to each practice’s specific care-delivery process. Our comprehensive care model allows us to deliver personalized and compassionate care for all patients across the CKD spectrum.

Panoramic Health value-based kidney care by the numbers:

  • $872 average pmpm savings
  • A platform of 800+ providers
  • 930+ partner dialysis centers and hospitals
  • 30% at-home dialysis starts
  • 54% improvement in planned dialysis starts
  • 56% reduction in hospital readmissions
  • 65% patient engagement


Panoramic Health also provides value-based care opportunities by offering unparalleled data integration and an analytics engine for predictive modeling, and advanced risk stratification that helps providers identify at-risk patients earlier.