Value-Based Care: How Companies are Saving Money

In today’s job market, health insurance is a top priority for American employees, with 96% valuing this benefit. But how can companies balance employee health and profitability? Enter “value-based care,” a game-changer rewarding healthcare providers for better patient outcomes.

Sep 19, 2023 6.1 minute read
Shift to value based care

According to the United States Chamber of Commerce, up to 96% of all Americans believe that it is important for employers to offer health insurance. Many workers choose jobs specifically because of these benefits. According to various surveys, Americans see these as the most important benefits an employer can offer. Many Americans view that they would not accept a job unless the employer offers health insurance. On the other end of the spectrum, American companies must strike a delicate balance between protecting the health of their workers and remaining profitable. One of the most innovative strategies for companies that wish to achieve this goal is value-based care.

Value-Based Care Defined

According to the New England Journal of Medicine, value-based care is a system in which healthcare providers earn benefits based on patient outcomes. Therefore, there is a strong incentive to provide the best results possible to increase financial performance, individual salaries, bonuses, and other non-economic benefits. This is called “value-based” care because it assigns a value to healthcare services based on factors such as quality, cost, and equity.

Measures of Success for Value-Based Care

The Commonwealth Fund states that there are three measures of success associated with value-based care:

  1. Quality: The overall quality of a healthcare outcome depends on effectiveness, efficiency, equity, patient centeredness, safety, and timeliness.
  2. Cost: Reducing costs provides more value, and value-based care encourages the reduction of costs through strategies such as preventative treatment, early diagnoses, and fewer visits to the emergency department.
  3. Equity: Value is also defined based on equity – specifically addressing the lack of accessibility for low-income Americans and certain minority groups.

Contrasting Value-Based Care With Capitated Care

Value-based care contrasts with capitated care – a system that provides a financial incentive to provide quantity over quality. Under this system, healthcare organizations experience greater rewards if they provide more services, but not necessarily better outcomes for patients. Fee-for-service or “FFS” is another term for capitative care.

How Does Value-Based Care Reward Healthcare Providers?

A key aspect of value-based care is the incentivization of greater healthcare outcomes. Healthcare providers who achieve these goals may experience the following benefits under a value-based system:

Financial Benefits

Financial incentives can motivate healthcare providers significantly compared to other methods. The most basic form of a financial benefit is increased payment, which may occur in different ways. Note that these strategies can both reward and penalize healthcare providers. In other words, providers may lose money for providing non-satisfactory outcomes.

Retrospective payments only occur after certain outcomes are met, unlike a capitative system that takes payment before treatment even begins. This is another simple example of financial incentivization associated with value-based care.

Reputational Benefits

A healthcare provider also improves its reputation by providing positive outcomes. This can attract more patients, therefore guiding the organization toward better overall financial performance – even when offering more affordable care.

Emotional Benefits

On a more basic level, healthcare providers – specifically individuals – may feel a greater sense of accomplishment by focusing on positive patient results. Entire organizations can cultivate a degree of purpose, direction, and achievement, therefore promoting greater cohesion and morale throughout the facility or hospital. This may help providers avoid burnout.


Another potential non-financial reward is increased accreditation. The Board of Certification offers value-based care accreditation, allowing healthcare providers to advertise their focus on positive outcomes.

How Can Companies Save Money With Value-Based Care?

Because health insurance is a cost-sharing system, even the healthiest employees benefit from a value-based approach that improves outcomes for the least healthy employees. In addition, companies can reduce expenditures on health insurance premiums when fewer patients encounter serious, chronic conditions. Finally, employees with fewer health issues are less likely to be absent, allowing companies to get the most out of their teams. Both employees and employers can benefit from value-based care.

Strategies for Promoting Value-Based Care Among Employees

The shift toward value-based care has shown notable changes among workforces across the United States. These changes may involve healthier work culture, faster healthcare reactions, preventative medicine, and symptom management. Here are a few examples:

Holistic Medicine

Holistic medicine aligns with value-based care because it addresses both psychological and physical issues associated with each patient. The goal is to help the patient achieve an overall sense of well-being. Holistic medicine for employees may involve mental health treatment, nutrition plans, and environmental factors.

Care Coordination

Care coordination is another strategy that aligns with value-based care, as it helps patients navigate the often-complex healthcare system in the United States. With this approach, providers work together, share information, and provide better overall communication. With coordinated care, employees may find it easier to take advantage of services offered by numerous healthcare providers as they pursue more positive outcomes.

Personalized Care

Many healthcare organizations recognize that a “one-size-fits-all” approach is not conducive to effective treatment. The most efficient healthcare treatment considers each patient’s unique attributes. This aligns with value-based care because employees can receive treatment that they actually need.

Preventative Care

Preventative care has especially significant cost-saving potential. Under this approach, employees are encouraged to make simple, affordable, and effective lifestyle changes to improve their overall health. Employers can participate by implementing a wellness program to their employees which could include incentives to employees that exercise regularly or complete a certain number of steps each day, among other items.

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