If you are in healthcare you are aware of the transition from fee for service to value-based care. Under value-based care, providers are rewarded for helping patients improve their health, reduce the effects and incidence of chronic disease, and live healthier lives in an evidence-based way.[i]

According to one report[ii], almost half (47 percent) of providers—and payers—have made the transition to some sort of value-based model. Those numbers continue to rise steadily.

Providers need to innovate more than ever under value-based care to better serve their patients, and that requires evolving their technology. Making the transition from fee-for-service payment models to performance-based arrangements requires a lot of change, and change is never easy. Delivery models and care coordination must change, and so must the technology that helps gather and transmit the data to provide evidence that valuable care has been provided. Providers looking to gain competitive advantages in the market must get this right.

Providers may find themselves with a sense of inertia as they stare down the need to take advantage of new technologies that can provide better interoperability while realizing their IT limitations and precarious operating margins. But delaying digital transformation initiatives can delay success for providers as they develop value-based business objectives.

Eight challenges rise to the top and are most often faced by providers as they struggle with digital transformation in the era of value-based care:

  1. Controlling costs
  2. Engaging patients
  3. Using technology effectively
  4. Lack of interoperability and legacy systems
  5. Mastering data management
  6. Access and information sharing
  7. Meeting compliance requirements
  8. Recruiting and retaining necessary IT staff

Controlling Costs

New payment models, like bundled payments and ACOs, are expected to play a larger role in healthcare, but many providers have been reluctant to embrace them because of concerns about their ability to manage significant financial risk. Present fee-for-service models won’t be sustainable under new regulations. Changing reimbursement structures mean providers will need better insights. This requires better analytics infrastructure [iii] that can integrate into existing workflows and establish cost controls for value-based payments. [iv]

Engaging Patients

Under value-based care, patient engagement becomes even more important, both morally and financially. Provider compensation depends on preventing adverse healthcare events, so making sure the patient is an active participant in their own healthcare is key to maximizing value-based reimbursements. Providers must work with patients to take part in self-management, wellness and prevention, chronic disease management, follow-up and monitoring. This mean moving from fairly static portal communications to real-time patient engagement. Providers also need to recognize their audience are now increasingly digital natives who expect the kind of user experience they find in other industries. From watches to Fitbits, they are using mobile devices with great UX interfaces to engage with their fitness and health. Providers need to meet them on that path, and be a partner in those health-focused conversations. That takes technology, security and compliance and a team who can understand how to glean insights from the growing mountain of data all these devices create.

Using Technology Effectively

Many providers are weighed down by legacy systems and CapEx budget concerns that block necessary agility and scalability. As their needs change, their legacy systems are not changing with them. The cost to maintain and or replace these can take away necessary funds to innovate and move into digital transformation that provides better agility, scalability, security and the all-important access to the data needed by providers under value-based care.

Lack of Interoperability and Siloed Data

The transformation of the healthcare reimbursements is being slowed by limited capabilities for sharing clinical information among hospitals, physicians, and health plans.[v] Most of the healthcare industry is built and operates in silos, where information cannot easily be shared across systems. These current systems are also firmly rooted in the fee-for-service model.

While there are pockets of success with interoperability, it has not swept the nation and many areas still struggle. With healthcare data’s diversity in format, type, and context, providers are having a tough time merging healthcare data into conventional databases, making the data enormously challenging to process and hard for industry leaders to harness its significant promise to transform the industry.[vi] In fact, A Humana-Healthcare Financial Management Association study on value-based payment readiness found interoperability to be a critical focus among the majority of 117 senior hospital financial executives surveyed. [vii] 

Mastering Data Management

Provider data, both structured and unstructured, is prone to errors. This is complicated further by unreliable and unclean data resulting from organizations lacking effective data management protocols.[viii] The transition can get complicated when it comes to managing and making sense of all this data growing at an overwhelming pace that needs to be factored into value-based care initiatives.

Access and Information Sharing

And as these organizations pile up more data than ever before, many are left struggling with how to extract valuable insights. Big data on its own is not going to transform healthcare, big data insights can. Patient data is often spread across many payers, hospitals, administrative offices, government agencies, servers and even file cabinets. Pulling it together and arranging secure access to all who need it to provide patient care can be a daunting task.

Meeting Compliance Requirements

Once data is validated and aggregated, various process- and policy-related issues need to be addressed. The Health Insurance Portability and Accountability Act (HIPAA) demands that policies and procedures protect health information. However, HIPAA is not prescriptive, and organizations struggle to interpret regulations to maintain compliance.

Recruiting and Retaining Necessary IT Staff

Realizing the promises of big data analytics in healthcare requires organizations to adjust their ways of doing business. As little as ten years ago providers were likely not concerned about their success recruiting digital experts and data scientists, but they are today. These teams must work side-by-side with compliance experts to run the analytics, glean the insights, and protect patient privacy all at the same time.

Benefits of Digital Transformation in Value-Based Care

Digital transformation can help providers better meet—and even exceed—value-based care requirements. These are just a few of the benefits of implementing a successful digital transformation program under the new value-based care model:

  • For Patients – Ultimately, the benefits to patients include lower healthcare costs and better health outcomes. Using digital transformation technologies to support the delivery of value-based care also can help patients change their behavior to take better care of themselves. For example, providers can better leverage data to share timely and relevant treatment and preventative care information with patients. Digital transformation tools also can help with transparency by providing patients with more information about health care expenses, as well as recommended treatments.[ix] As a result, patients may face fewer doctor’s visits, medical tests, and procedures, and they spend less money on prescription medication as both near-term and long-term health improve.
  • For Providers – Providers who can leverage digital transformation to generate higher value per episode of care stand to be rewarded under a value-based care model. The benefits to providers include higher patient satisfaction rates, better patient treatment outcomes, and more efficient care.
  • For Society – Much of society is already struggling under the weight of continuously rising healthcare costs that few can afford, particularly when a major health crisis occurs. Digital transformation programs can help society better achieve the benefits of value-based care, such as reduced healthcare spending and improved overall health. In a country where healthcare expenditures account for nearly 18 percent of the United States’ gross domestic product, value-based care has the promise to significantly reduce overall costs spent on healthcare.


Digital transformation technology can help providers better meet the challenges and new requirements brought by transitioning to a value-based healthcare system.

Providers may see short-term financial hits before longer-term costs decline as the healthcare industry continues to evolve and providers increase their adoption of value-based care. However, the transition from fee-for-service to fee-for-value has been embraced as the best method for lowering healthcare costs while increasing quality of care and helping people lead healthier lives. To be successful and viable in the long term, healthcare must continue to shift its focus from a system focused on sick care to well care — a system that promotes health and wellness. [x] Digital transformation can help ease the pain of the transition.