Value-based Care Can Make Healthcare More Affordable for Patients
For patients, healthcare affordability is about more than the price of an individual service. It is also about whether the healthcare system meets their needs. Does the system help them find the right care at the right time to better treat or manage their conditions — or does it leave them to navigate a maze of appointments, specialists and disconnected information on their own, which can lead to more costly care needs in the future? In other words, patients experience affordability both through their direct financial obligations and through their ability to access timely, coordinated care.
Value-based care is a critical tool for achieving this aim and a core strategy in AHA’s recent report Making Health Care More Affordable: A Blueprint to Lower Costs, Improve Access and Enhance Quality.
Value-based care is a way of structuring and paying for care that can improve affordability through a better patient experience, improved health outcomes and stronger alignment across the services a patient needs and what will be covered. Instead of paying providers based primarily on the volume of services they perform, value-based care gives hospitals, physicians and other caregivers flexibility to change how they deliver care and shifts payments toward ensuring that care delivery better aligns with patients’ needs. The goal is to help patients receive the care they need while reducing fragmentation, avoidable complications and services that do not improve their health by enabling healthcare providers to be innovative in redesigning care.
Accountable care organizations are proving to be a leading example of successful value-based care. An ACO offers flexibility to hospitals and other healthcare providers as they work together to take responsibility for the quality and cost of care furnished to a defined patient population. Participating providers may share in cost savings they achieve when they deliver high-quality care for patients assigned to the ACO. Importantly, many ACO programs offer varied participation options for assuming financial risk, thus organizations can select the arrangement that makes the most sense for their providers and patients.
What Better Care Coordination Can Look Like
Consider an older adult returning home after a hospital stay for heart failure. In a fragmented system, that patient might leave with several new medications, several sets of follow-up instructions and the responsibility for arranging appointments with multiple clinicians. Yet, a missed prescription or delayed follow-up visit could lead to worsening symptoms — and another trip to the hospital.
In a well-designed value-based care model, the experience would be very different. For example, a care coordinator would help review medications, arrange a timely visit with the patient’s physician and ensure the patient understands which symptoms require attention. The care team can share information and work from a common plan that reflects the patient’s full health history and personal recovery goals. In other words, healthcare providers would collaborate to help the patient avoid unnecessary or repeated services and prevent serious health problems or hospitalizations. Value-based care makes this possible by ensuring providers have the necessary flexibilities and resources to collaborate and focus on the patient’s entire care journey, which often is not possible with the piecemeal design of a fee-for-service system.
In another instance, consider a patient seeing several specialists for multiple chronic conditions. Without coordination, the patient may repeat the same history at every appointment, undergo duplicative testing or receive treatment recommendations that do not fit together. Under ACOs or other alternative payment models, where providers are encouraged to align on care pathways and build the necessary infrastructure to communicate across settings, they would treat the patient more holistically. For patients and families, this can mean fewer loose ends, clearer guidance and more confidence that someone is helping connect the dots.
Hospitals and health systems are essential to this work. They serve as leaders by convening acute, primary, specialty, post-acute and community-based providers and making the necessary infrastructure investments to enable forward-looking care delivery. Hospitals are also often best positioned to invest in multidisciplinary care teams, data systems, digital tools, patient navigators and programs that help manage chronic and complex conditions. These capabilities can help identify patients who need additional support, improve transitions between care settings and reduce unnecessary variation in care. Moreover, hospitals often help ensure that smaller, independent and other community-based providers can tap into these infrastructure assets.
Improving Affordability and Patient Experience
Value-based payment models such as ACOs are specifically designed to reward providers who collaborate to improve the quality of care while reducing spending as compared to a historical benchmark. Indeed, the Centers for Medicare & Medicaid Services reports that Medicare Shared Savings Program ACOs saved the Medicare program approximately $2.5 billion in 2024, with participating hospitals and other providers earning $4.1 billion in shared savings. Additionally, these ACOs continued to deliver high-quality care with an average quality score of 81% and improved performance on blood pressure and diabetes measures. Commercial insurers also increasingly are moving beyond fee-for-service in contracting for accountable care arrangements, population-based payments and capitation, and advanced primary care models.
Program and payer savings alone, however, do not automatically translate into lower costs for patients at the pharmacy counter or the doctor’s office. The next generation of alternative payment models should more directly consider how patients experience affordability — including through premiums, deductibles and copayments. Emerging model designs such as the Long-term Enhanced ACO Design (LEAD) Model demonstrate that value-based care can include incentives with direct financial value for patients, such as cost-sharing support and premium buy-downs.
To sustain progress, models must offer hospitals and other healthcare providers stable and workable pathways into value-based care. Organizations need sufficient time and support to build care teams, establish partnerships and invest in technology that makes coordination possible. Models should also accommodate hospitals and communities at different stages of this transformation — including rural and other resource-constrained providers — through flexible participation options, upfront resources to support initial investments and an appropriate glidepath for taking on financial risk. And to ensure value-based care is sustainable, models should include guardrails so providers do not compete against their own best performance.
The promise of value-based care is a healthcare system that feels less like a collection of separate transactions and more like a connected journey centered on each patient. No single payment model can solve every affordability challenge. But providers, policymakers, payers and patients can build on what is working — strengthening existing models such as ACOs, scaling innovations in care coordination and ensuring that the models’ financial incentives are meaningful for patients. When value-based care is designed around patients, better care coordination and greater affordability can reinforce one another.