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Florida health system CEO: 'Value-based care alone won't reduce spending, improve patient outcomes'

Jacksonville, Fla.-based Nemours Children's Health System President and CEO David Bailey, MD, argued that value-based care on its own will not reduce healthcare spending or improve patient outcomes in a column for theHarvard Business Review.

Here's what you should know:

1. Nemours, a hospital system with several locations throughout the southwestern U.S. has found that value-based care decreases care costs for patients with chronic conditions. However, the hidden costs of implementing value-based care create substantial additional costs.

2. Dr. Bailey said for value-based care to truly improve outcomes while reducing spending, the care must be "augmented with a structured approach to eliminate waste and be delivered in conjunction with a broad-based effort to address factors that are outside of the traditional boundaries of healthcare."

3. In 2012, Nemours attempted to improve asthma outcomes through the use of its Health and Prevention Services division. In the study, it became clear that approximately 80 percent of what affects outcomes is outside of the clinical arena.

After the ACA's passage in 2010, Nemours began integrating value-based care pilot programs throughout the health system, supported by a federal grant. Nemour transitioned its primary care clinics to certified patient-centered medical homes and expanded the physician-nurse team for asthma care. The system standardized elements of treatment and incorporated school nurses and community health workers to ensure a continuum of care.

After three years, the system saw a 60 percent-reduction in asthma-related emergency room visits, a 44 percent-reduction in asthma-related hospital admissions and a $2,100-reduction in medical costs. The health system had increased outpatient costs because of the expanded care team, but it also saw a reduction in hospital service utilization.

4. In a fee-for-service environment the model would've been unsustainable because it primarily benefited the payer, while the health system felt the losses. After ending the pilot, the health system began rolling out value-based care models through lean methodology. The system has improved patient outcomes while reducing costs through the use of lean techniques.

One important elimination came from moving preadmission testing from the day before a procedure to the day of a procedure. It decreased cancellations and improved start times without impacting operating room scheduling.

Dr. Bailey concludes by saying, "We believe that value-based care, implemented using lean principles and in conjunction with an ongoing, community-wide effort to address social determinants of health, can reduce health spending and deliver on the promise of better health, for children and for all."

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