This piece originally appeared on HIStalk. You can read it here.
Without a Subscription Revenue Model, Hospitals and Health Systems Will Cease To Exist
By Matt Lambert, MD
Matt Lambert, MD is chief medical officer of Curation Health of Annapolis, MD.
Two of the most common current topics in conversations with our provider and payer partners are speculating when we might emerge from the pandemic and what effect it might have on the future of value-based care.
With the decreasing number of COVID-19 cases, hospitalizations, and deaths intersecting with the rising number of vaccinations, I think we will be in a manageable place in the very near future. In a similar analysis, the differing trendlines for payers and providers in the last year may give us insight into the future of value-based care.
The providers, with a model based on episodes of care, find themselves challenged by diminished revenue from decreased volume. On the other hand, payer organizations are well poised for the coming years, primarily because their revenue has been consistent since people have continued paying their monthly health insurance premiums during the pandemic.
I find it ironic that providers find themselves behind the payers in recurring revenue or subscription revenue models since that is what hospitals were seeking when they invented health insurance almost 100 years ago. While researching my book, “Unrest Insured,” I learned that Blue Cross was founded by Justin Ford Kimball in 1929 basically to keep the lights on at the hospital. Upon taking an executive role at Baylor, Kimball found himself unable to pay the bills and decided to seek some recurring revenue. He leveraged his relationships as a former education leader and negotiated a deal with the local teachers’ union — 50 cents a month payment in exchange for 21 days of hospitalization annually. Describing it in today’s terms, he established a per-member, per-month reimbursement model between a patient population and a provider that had established its own payer. This desire for steady revenue, which allows for any organization to plan much further ahead, is what created our current healthcare system.
Many things have changed over the passing century. Payers became less aligned with individual hospitals and more judicious in how much they paid for certain services. Reimbursement became increasingly complex and codified. The Baylor model clearly incentivized hospitalization (which explains why early in my career I could still admit patients for exhaustion), while new medical techniques allowed for advanced outpatient treatment. But 90 years of divergence may be corrected by the accelerated pace of change brought on by one year of a pandemic, change that may bring us back to the original intent of health insurance.
Value-based care means a lot of things. It favors value over volume and outcomes over throughput. It puts a premium on information sharing and coordination of care, which can be made even more robust with new technology. But let’s be clear, it also provides recurring revenue, which makes it easier to plan for providing care and weathering the unknown.
COVID-19 taught me, as a clinician, many lessons. The pandemic has also reinforced the very real reality that fee-for-service continues to break healthcare, and in this current antiquated system, healthcare providers continue to be hit hardest. In order to stabilize our healthcare system, providers need more support and resources in order to prioritize the transition to value-driven care. More so, we need to not shy away from the critical need for recurring revenue for providers.
Without this recurring revenue model — or what has been called value-based care now for years — hospitals and health systems will not be able to survive the next storm, and clinicians like me may no longer have a job.