""Shared savings contracts are a really great mechanism for getting people to start to pay attention to value - but their structure is, by definition, not overall how we're going to get paid for our care," said Patrick Runnels, chief medical officer of University Hospitals in Cleveland, during an interview last month at Reuters' Total Health conference in Chicago. He pointed out that University Hospitals earned about $50 million in shared savings last year, but that was still less than 5% of its total revenue."
""Most systems are going to be reluctant to shift their economic engine to a value-based payment mechanism that is actually going to make them less money and be less sustainable. As a caveat to that, certainly part of the idea behind value-based contracts is that we reduce overall spending and overall costs - and health systems have work to do to figure out how to reduce costs," he explained."
Shared savings programs help nudge providers toward value but are not a sustainable payment model for health systems. University Hospitals earned about $50 million in shared savings last year, under 5% of total revenue, so even doubling or tripling that amount would not become a major revenue driver. Meaningful shifts in incentives require greater downside risk, more capitated contracts, or substantially larger shared savings. Value-based dollars frequently require foregoing more lucrative fee-for-service revenue, so lower utilization only improves finances if costs are reduced. University Hospitals raised colorectal screening from roughly 40% to 75%, cutting surgeries by half.
Read at MedCity News
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