Your Guide to Value-Based Care: What It Is & Why You Should Care

Providing quality patient care means providing care to maintain health, managing chronic diseases, and working hard to prevent complications and other illnesses. But in a healthcare setting that focuses on quantity, striving for excellence isn’t easy. Thus, value-based care was introduced, marking a new era that seeks to redefine healthcare as a whole.

In a traditional setting, physicians are many times asked to focus on the amount of work they do — primarily within a fee-for-service (FSS) type model. In this model, much of the focus is on how many appointment slots are filled.

This can result in doctors rushing from one room to the next. However, lately, healthcare is beginning to emphasize the quality of care more — setting off a revolutionary shift in how care is provided and how physicians are reimbursed. 

Existing healthcare reimbursement models were challenged and value-based care was born — founded on the idea that quality care is imperative in yielding both, positive patient outcomes and reducing overall healthcare costs. 

Simply put, quality trumps quantity by linking patient outcomes and care-delivery costs to reimbursement. But how does it work? Let’s take a look.


What is Value-Based Care?

The term value-based care was coined in 2006 by Elizabeth Olmsted Teisberg and Michael Porter, a professor at Harvard Business School.¹ In their book “Redefining Health Care,” the two elaborated on the idea of rewarding providers and clinics for delivering “value,” i.e. positive patient outcomes, within the healthcare setting.¹

With healthcare spending on an upward curve and the obesity and diabetes epidemics chewing down massive amounts of healthcare dollars, value-based care was sought as a way to slow down a continuously worsening costs trend while at the same time seeing improvements in overall population health.

Behind value-based healthcare lies the idea of providing “value” to patients, ultimately leading to more patient satisfaction and better quality of care — while simultaneously, reducing costs. 

Monitoring hospital readmission rates and introducing programs, such as the Hospital Acquired Conditions (HAC) Reduction Program and the End-Stage Renal Disease Quality Incentive Program (ESRD QIP),² led to an increase in the quality of services rendered. 

These programs directly link the quality of the provider’s performance to the payment and incentives received.²

The Affordable Care Act (2010) allowed value-based healthcare to grow, establishing the Center for Medicare and Medicaid Innovation (CMMI) to explore the possibilities for more value-based programs.

And with the Medicare Access and CHIP Reauthorization Act (MACRA), which was approved by Congress in 2015, steps have been taken to streamline new programs and make value-based care more accessible to patients.


Healthcare Reimbursement Models & How Value-Based Care Fits into the Big Picture

For healthcare providers and hospitals, it’s imperative to effectively manage payer reimbursement and communication with all parties involved. Value-based care is only one piece of the puzzle an important one, nonetheless.

But in order to understand how value-based healthcare fits into the grand scheme of things and the overall healthcare landscape, let’s explore some of the most common types of value-based models that link value to reimbursement. 

(1) Bundled Payments

This type of healthcare reimbursement model assumes some coordination between providers and advances the payment for one care episode. The payment is “bundled” into a single one as physicians work together to achieve a positive outcome and communicate to avoid redundant services.³

Bundled payments move towards the concept of value-based care — reducing unnecessary services and costs whilst encouraging effective coordination between offices, and providing more efficient care.³

(2) Population-Based Payments

Population-based payments (PBP) strategically aim at moving away from volume and towards providing more value instead.⁴ PBPs focus on population-level targets and incentivize reaching said targets.⁴ 

During a given period of time, providers are, therefore, responsible for meeting patient-centric care goals for a pre-defined population group.⁴

(3) Capitated Payments  

Capitated payments are not uncommon in healthcare and offer payments based on the number of patients covered by a given insurer and seen by a certain provider. This means that providers receive payment per patient seen and per unit of time invested prior to rendering healthcare services to the patient.⁵

Capitated payments, therefore, allow clinicians to focus on the quality of care they provide and successfully navigate cost control by specifying reimbursement parameters ahead of time.

The, by far, most traditional type of payment model, however, is the customary fee-for-service (FSS) model. Let’s dissect FSS a little bit more and see how it differs from VBC.


Value-Based Care vs. Fee-for-Service: What’s the Difference?

The fee-for-service (FSS) reimbursement model is the most commonly used model in our healthcare system. Unlike value-based care, the FSS model focuses on paying for the number of specific services or procedures rendered by clinics or individual providers.

But there is a HUGE concern with this type of payment plan: Cost.

While value-based care aims to improve patient outcomes and reduce the cost of healthcare, FSS may be less efficient to manage.  

Sometimes within the FSS model, providers may potentially:

  • communicate less, 
  • submit for duplicate or unnecessary services, 
  • don’t collaborate with other providers that the patient sees, which leads to an incomplete understanding of the patient’s health. 

Unfortunately, over time, this can result in healthcare dollars being spent on redundancies. 

The intent of value-based care, on the other hand, is to keep the cost of healthcare low while achieving better health for patients.


Important Statistics About Value-Based Care

Value-based healthcare is becoming increasingly available to patients. The Health Care Payment Learning & Action Network (LAN) found in their yearly evaluation of participation in alternative reimbursement models that in 2020 alone, approximately 60% of payments within the healthcare system incorporated the variables quality and value.⁶

This shows significant interest and a key shift towards providing better care quality and keeping patients’ health outcomes at the forefront of any changes occurring in the healthcare environment.

With the trend moving towards value-based care, the American Academy of Family Physicians (AAFP) also noted that 49% of their survey participants indicated that they’re currently participating in some type of value-based care and payments. Another 18% stated they were working towards evolving their bandwidth to get there.⁶


Value-Based Care with Vivlio Health®: Take the First Step

Dedicated to providing value to physicians, nurses, and other healthcare professionals, as well as achieving positive and highly satisfactory patient outcomes, Vivlio Health is joining the front to allow value-based care to flourish in your hospital or clinic.

Vivlio Health is a cloud-based digital healthcare solution that enables providers to request, receive, and view patient clinical data. 

A core component of implementing quality care at your health facility means finding reliable strategies that enable the seamless exchange of medical records between providers and offices, so that “value” can indeed be provided to the patient.

As you can easily filter and search clinical data, providers are able to retrieve the very records they need and avoid redundancies in services. Work collaboratively towards achieving the best possible outcome for your patient — while keeping costs to a minimum and increasing patient satisfaction and care experiences.

Value-based healthcare is growing and becoming more accessible to patients all over the country. It’s time we shift away from traditional care practices to offer our patients as much value as possible.

Ready to transition to value-based care? Vivlio Health can help you take the first step and support you on your journey to providing quality patient care. Schedule a demo with us and we’ll get you started.


  1. Porter, Michael E., and Elizabeth O. Teisberg. Redefining Health Care: Creating Value-Based Competition on Results. Boston: Harvard Business School Press, 2006.
  2. CMS’ Value-Based Programs. CMS, 31 March 2022, Accessed 26 April 2023.
  3. What Are Bundled Payments?, 29 July 2022, Accessed 27 April 2023.
  4. Population-Based Payment Models: Overcoming Barriers, Accelerating Adoption. Health Care Payment Learning & Action Network, 16 May 2016, Accessed 27 April 2023.
  5. Capitation Payments | Understanding Capitation | ACP. American College of Physicians, Accessed 27 April 2023.
  6. Value-based care gains ground. Medical Economics, 30 August 2022, Accessed 27 April 2023.