Abby Burns (00:16):
From Advisory Board, we are bringing you a Radio Advisory, your weekly download on how to untangle healthcare's most pressing challenges. I'm Abby Burns.

(00:25):
Today, we're going to talk about what's happening with value-based care. Where does VBC stand right now in early 2025 and where do our experts see it going next? Listen, I am mindful that there's a lot happening at the national and state levels that affect care and payment transformation. So you might be listening and thinking when the payment landscape has this many question marks, is now really the time for a conversation about VBC. I'm thinking about what's going to happen with Medicaid in my state. How are Medicare physician payment cuts going to shake out?

(00:57):
Here's what I'd say. One of the things we talk about a lot at Advisory Board and on radio Advisory is this idea that leaders can't afford to focus on short-term needs at the expense of long-term success and sustainability. We know our care delivery and payment systems need a lot of work. We want incentives that put patient health at the center. So we have to keep pushing the conversation about how we make that happen, especially when it feels hard to do so. So today we're talking value-based care and I'm bringing back friends of the podcast, Clare Wirth from Advisory Board and Erik Johnson from Optum Advisory.

(01:35):
Hey, Clare. Hey, Erik.

Erik Johnson (01:36):
Good afternoon. Hi, Abby.

Clare Wirth (01:36):
Hey, Abby.

Abby Burns (01:39):
Clare, you just wrapped a study where you spoke with 65 leaders at 44 organizations, all about their value-based care journeys. Erik, as the lead of value-based care practice within Optum Advisory, you are working day-in, day-out with organizations that are actively trying to grow in their value-based care strategies. You've both also been on the podcast several times talking about value-based care. So I want to start our conversation today by asking a question I'm guessing you all are probably very used to hearing. What is the state of value-based care?Clare, what is the pulse on VBC across the industry?

Clare Wirth (02:22):
Ooh, I actually have two very different answers to those questions.

Abby Burns (02:26):
Okay.

Clare Wirth (02:26):
So for the state, VBC is growing, not shrinking. So about 14% of healthcare payments in the United States are tied to capitated risk, which is about-

Abby Burns (02:38):
Wow.

Clare Wirth (02:38):
... yeah, 14%, which is about twice what it was just a few years ago in 2021 when it was at 7%. And that's a lot further along than a lot of people realize and that's the state of VBC.

Abby Burns (02:50):
I have to admit, I am part of that camp of people that didn't realize, but keep going.

Clare Wirth (02:55):
I think that's because the pulse is so different. So there's a lot happening in healthcare right now, got new administrations, slim provider margins, high medical expenses, just to name a few, and that all creates a lot of uncertainty. So that uncertainty has leaders concerned about the future of risk-based models. But what I would say to those people is that for all the potential setbacks, the root causes that created initial momentum for value-based care, so things like higher medical costs, sicker patients, dis-aligned incentives, all of those root causes are not only still here, but they've exacerbated.

Abby Burns (03:32):
Right.

Clare Wirth (03:33):
And so that suggests more VBC in the future.

Abby Burns (03:36):
Erik, what would you add?

Erik Johnson (03:37):
Yeah, I wouldn't add much. I've actually been pretty impressed with the comeback of the value-based care market post-pandemic. The pandemic threw a lot of this in a doubt whether this was a movement that was going to regain any momentum when we got on the other side of the public health emergency. The fact that we've doubled the share of the population in something that looks like value-based care in four years, really three years, that's impressive. We're not anywhere close to being done with this journey by any stretch of the imagination, but we are making, I think, fairly significant and meaningful steps towards making this a standard payment model.

Abby Burns (04:10):
Yeah, so I have to admit, this is not where I thought our conversation was going to start. I'm pretty surprised that we are starting on such an optimistic note because as somebody that doesn't spend as much time in this space, the narrative I hear more often in the market has a lot more healthy skepticism, verging on pessimism where people are saying value-based care is moving so slowly, is it even moving at all?

(04:38):
Erik, help me understand the disconnect here because that feels pretty meaningfully different from what you just told me, which is that in fact it's actually growing and growing pretty quickly.

Erik Johnson (04:47):
It's growing quicker than it was before, let me put it that way. It is hard. It does take time. It's not particularly complicated, hard. And I think one of the things that the industry, the consultants, the researchers, all of us who work in this field have had to come to grips with over the last 10 years is that this is a long narrative arc. There's not going to be one dominant payment model. We're going to live in a world where there are multiple payment models that providers have to deal with, but value-based care is going to be one of them. You just have to sort of roll your sleeves up and lean into it a little bit and take the long view. That's the thing that may be adding to this sense that things are moving too slowly is that we thought we could just flip the model. It doesn't work that way.

Clare Wirth (05:34):
It all comes down to execution. That's how a football team wins the Super Bowl. You've got coaches, coordinators, owners, athletes, all of whom need to execute and not just once, but time and time again. We need to get people aligned to the right goal, executing consistently and going beyond when others may stop. That's what differentiates those who do this really well is they continue to go. They do face adversity, just like anybody else, but they don't let that stop them.

Abby Burns (06:03):
Yeah. So this is interesting to me because one of the things that I was wondering is is the reason that the perception in the market is so much more negative than the reality that you all are telling me about, is the disconnect just because people don't actually know how to make the transition and therefore, there's a little bit of a black box problem happening? But it kind of seems like you're saying to me that's actually not the challenge that we are seeing.

Clare Wirth (06:29):
There's a playbook, Erik and I both know this from our separate work. There is a playbook, there's good news there that others have done it.

Erik Johnson (06:35):
Yeah, that's right. We know what works in this marketplace. I think one of the things that's adding to the perception maybe, Abby, is the regulatory and administrative environment has changed over the last four years with the new constraints around HCC coding and Medicare Advantage, which I think accurately Medicare Advantage was looked at as tip of the spear for value-based care arrangements. And I think the changes in the regulatory environment in which MA plans operate has created a little bit more uncertainty and a little bit more trepidation about getting into these models. They haven't gone away. I think the question that MA payers and providers on the other side of that equation have to come to grips with is what has changed, which parts of the playbook do we need to double-down on, which parts of the playbook may not be as important today? And I think there is sort of this moment of reckoning going on in MA where we're [inaudible 00:07:29] up for the next challenge.

Abby Burns (07:31):
Yep. And I want to talk about that in a little bit, but I'm glad you actually brought us to a specific line of business, Erik, because that begs another question, which is if we have a playbook for how value-based care works, which side note that feels like a pretty big deal, we kind of glossed over that, do we know what works across lines of business or is the playbook really line of business specific, meaning what works in commercial is going to be different from what works in Medicare Advantage is going to be different from what works in Medicaid?

Clare Wirth (07:58):
I think there are consistent themes, and Erik, if you want to hit another from your work, I'd say that the organizations that do this well make VBC more than a side hustle. So organizations that are languishing, treat VBC as a side project, it's adjacent to the work and then they're surprised when it doesn't take flight. So back to this theme of execution, they align VBC to the core tenets and the organizational fabric of what they're trying to do, so they make it core to the academic mission, core to improving the health of their community, core to operational integrity. They say we do this not because it's VBC, we do this because it's core to our business, and that matches up with the empirical data that we tend to see. Number one indicator of success in VBC is experience. Number two indicator is how much risk you take on because if you are more committed, you're more likely to succeed. And we've seen a couple examples of organization do that well.

Abby Burns (08:57):
I'm curious what a couple of the examples are that jump to mind for both of you, Clare, from your research, and Erik, from your work with organizations that are advancing their value-based care strategies.

Clare Wirth (09:07):
One is Advocate Health. They've made their Operations department equally accountable for VBC as their population Health Department.

Abby Burns (09:16):
Their Operations Department?

Clare Wirth (09:17):
Yeah. So they make it core to the everyday work of what everybody is doing. Another example is an academic health system, UNC Health. So many would say that VBC is harder for academic medical centers, but what UNC has done has said we want to be on the cutting edge of care, framing VBC as being part of the cutting edge of care, tapping into that culture of innovation. That's how they've made VBC sustainable.

Erik Johnson (09:42):
Yeah, I'll give a couple of anonymous examples. One is an academic medical center. I think these academic medical centers are disproving the adage that academic medical centers are not well-suited for this.

Abby Burns (09:52):
Yeah.

Erik Johnson (09:53):
It does depend a little bit on the population that they serve, the geographies that they operate in. But the AMC I have in mind, to Clare's point earlier about this is not a side hustle, has established a business unit that is responsible on a penal basis for their value-based contracts.

Abby Burns (10:07):
Wow.

Erik Johnson (10:08):
They have ambitious goals around lives that they want to have under management. They have ambitious goals around the margins that they want to create out of those lives and that is dictating a lot of the investments.

Abby Burns (10:20):
And Erik, is that a unique model, as in do a lot of systems have a business unit dedicated to VBC?

Erik Johnson (10:28):
It's rare. I think it is distinct. Negotiating those types of contracts, measuring your performance against those contracts, understanding what the CIN or the affiliated physician groups need to do in those contracts is different than negotiating on rates. And we see it happening more. I wouldn't say it's common. I wouldn't say it's even all that easy to find in nature, but I think it is increasingly something that, again to Clare's point, this is not a side hustle. Somebody has to care about this when they get to their desk at 8 o'clock in the morning and that's all they care about. And that is more than anything, it's an executive commitment.

Abby Burns (11:09):
Yeah.

Erik Johnson (11:10):
And that's what I think really matters.

Abby Burns (11:13):
That is in keeping Erik with something Clare that you said earlier, which is succeeding under value-based care also means pushing past when you think you're "done." And that's an underlying point that I'm hearing from both of you, folks that are making value-based care work that are succeeding under value, don't look at value-based care as a destination that you get to and then you can kind of call it good, move on to other things.

Erik Johnson (11:35):
You're never done, which is kind of the point. I mean that's what the impetus for VBC is is continuous improvement in the management of populations. And if you're going to delegate that down to providers, there's always going to be opportunities to improve because you're always going to have new populations, you're always going to have new lives, you're always going to have new quality measures. So it's just what you do, to Clare's point earlier, as opposed to, "All right, we're done."

Abby Burns (12:02):
So let's look at what's coming next. Hopefully, listeners now have a good grip on what VBC looks like right now in early 2025. Where are we headed next?

Clare Wirth (12:14):
What people should be asking themselves right now is if the current administration will keep, decrease or increase the amount of value-based care. Based on the last Trump administration, they did a lot in VBC actually and especially in the independent primary care space. So based on that, I think we're likely to see similar levels or even an increase in VBC. And one thing I'm interested to see what happens in is the team model, the new mandatory bundle model.

Abby Burns (12:44):
Which we talked about in the podcast back in November. And I'm glad you did start us at the policy landscape, it is a little bit of the elephant in the room. Erik, do you agree? What's your read on that?

Erik Johnson (12:54):
Oh, yeah. Clare and I agree on a lot, we disagree on a lot too, so hopefully we'll get to some of that. But yeah, I think if past is prologue, the past Trump administration did advance a great deal of interest in moving, at least in Medicare, a lot of value-based care models forward to varying degrees of success in the four-year window that they had.

Abby Burns (13:12):
Yeah.

Erik Johnson (13:12):
We'll see whether they continue that trend. I don't see anything to lead me to believe that they won't. Clare brought up the team model and I don't know whether the team model is all that innovative or not because we've done bundles before, but I think what we are seeing with that model is one, it's mandatory in these markets and it is making, I think, a significant bet on integrating specialty and procedural care into these models. And that is part of the playbook that is not well tested at this point.

Abby Burns (13:43):
The procedural and the specialty are two places that I'd love to dig into a little bit because I think these are important parts of what comes next in value-based care. And maybe let's start with bundles because to your point, this is by no means new, but it does seem like there is interest in doubling down on bundles as a lever.

Clare Wirth (14:02):
Well, speaking of areas that Erik and I sometimes agree and sometimes disagree, I think this might be a point of disagreement between us.

Abby Burns (14:09):
All right, let's unpack it.

Clare Wirth (14:10):
So our bundles, in fact VBC, it's a worthy debate. Erik, do you want to hit on your view?

Abby Burns (14:17):
Clare, what's the last word? That's what that means.

Erik Johnson (14:20):
I am dubious that bundles are a strategy for VBC.

Abby Burns (14:26):
What do you mean by that?

Erik Johnson (14:27):
I think tactically it's important to get episodic costs down. There's a danger in bundles that if you get good at them, you'll do more of them. And I understand the impetus there, but that doesn't get you to the total cost of care challenge that value-based care is ultimately meant to address. So I think from a tactical standpoint, it couldn't be part of a larger portfolio of things that you do, but I don't think in and of itself it stands up to scrutiny as something that will lower the overall total cost for a population.

Abby Burns (14:59):
Yeah.

Clare Wirth (14:59):
Why not? They don't achieve the fundamental goal of value-based care. They don't change us becoming more proactive or preventive.

Abby Burns (15:07):
Ah-ha.

Clare Wirth (15:07):
Ultimately, bundles still incentivize volumes. Doing them more efficiently and better, but ultimately they're still incentivizing that. Erik and I have talked about this. So are bundles flawed? Yes. Can we all agree that we need something better than bundles? Yes.

Abby Burns (15:23):
Okay.

Clare Wirth (15:23):
Do we currently have that something better? No. And so if bundles are a way of engaging proceduralists and hospitals in value-based care, until we have something better than bundles, this is what we've got.

Erik Johnson (15:36):
That's fair. I will concede the point to Clare on that one. I think ultimately what we want, whatever that new model looks like, is we want to get to the orthopedic surgeon having an incentive not to do the marginal knee replacement.

Clare Wirth (15:51):
Yeah.

Erik Johnson (15:51):
Just to send that person out for physical therapy. We're not there yet. We don't have that model yet.

Abby Burns (15:55):
Yeah, no.

Clare Wirth (15:56):
No. But I think bundles are more popular than many realize. So 68% of provider executives said that their organization participates in episode-based arrangements, 68%.

Abby Burns (16:08):
Yeah.

Clare Wirth (16:08):
So they're a lot more prevalent than people realize. And now with the team model launching, I think that is leading health system executives to wonder is this a place that we should play in more? If so, where should we be doing that? Is it a place where if we have a service line that's underperforming and needs kind of a shot in the arm, is that a place that we could do it or an area where we're doing really well, a disease state or a procedure type that we're strong in and thus could have a bundle contract with the payer and this could be a differentiator for us in the market? So spotlight is on procedural risk for sure. It's an opportunity for interested health systems.

Abby Burns (16:43):
Well, and as we've been talking, you all have mentioned specialists a number of times and I want to turn our attention there because it has felt for a while, particularly population-based value-based care has by and large eluded specialty care. We've been much more focused on preventive population health management in primary care, especially if we think about all the risk-backed primary care groups that have gone gangbusters over the past several years. Think about Iora, which sold to One Medical for $2 billion. Think about Oak Street, which sold to CVS for over $10 billion, ChenMed. Given this track record, why is specialty one of the main places that keeps coming up in this conversation as what's next in value-based care?

Erik Johnson (17:29):
It's the Willie Sutton problem, right, why do you rob banks? That's where the money is. Specialty care and hospital care is where the money is in all of this. And you're right, Abby, primary care was the first hill that we needed to conquer in order to get there-

Abby Burns (17:41):
Hmm.

Erik Johnson (17:42):
... We needed to figure out what attribution looked like. We needed to figure out what quality measures to put in front of primary care because they are the tip of the spear to all of this. But the money is in the inpatient bed, the money is in what happens in that inpatient bed in the OR, in the ED. And if we're really going to make significant progress against total cost of care, we've got to start figuring out how to address the hospital's role and the spectrum's role in all of this because that's the bulk of the dollars right now.

Abby Burns (18:11):
Can I ask a practical question about that? Does that scale down to an organization level? I'm hearing what you're saying in terms of an industry. As an industry, we first needed to conquer primary care. Does that translate as well to an organization? They need to know how to do value-based care and primary care before they can try and do it in specialty?

Erik Johnson (18:29):
Yeah, I think so. Yeah, I think that is where you start to generate momentum. And I think part of the challenge in all value-based care contracts is visibility, knowing who we're accountable for and what their longitudinal needs are going to look like over the next 12 months.

Abby Burns (18:49):
Who in terms of patients?

Erik Johnson (18:51):
Patients, correct. And primary care groups, primary care physicians are the ones who have the greatest positional advantage in understanding what that visibility will reveal. Now, what that might reveal is a lot of specialty needs, and that's when you need to cascade it through the rest of the organization.

Abby Burns (19:10):
Why is it so hard to scale it to specialty?

Clare Wirth (19:14):
I think two primary reasons, incentives and variety. In terms of incentives, specialty care is pretty much entirely tied to traditional fee-for-service reimbursement and so they don't really care about total cost of care reduction. And then it's also a very diverse space. So how you would engage a cardiologist in VBC is different from how you'd engage a neurosurgeon.

Erik Johnson (19:38):
Yeah, that's a great way to put it. The heterogeneity of specialty care is a big challenge. Where we're seeing it is in a lot of the high-spend categories like oncology, but even oncology, there's 50 different cancers and they all require different protocols, they all require different clinical decision support. The other challenge I think the specialists have is the thing, just to Clare's point, they're transactional in nature. They don't own the patient except for the time the surgery starts and the time they scrub out. And that's the way it's set up, and nobody's at fault for that, but that is the way the system is. And so if you're an interventional cardiologist, you're not going to know what really preceded that patient's needs and what their needs might look like after they're done. And so wrapping something around that to either make them care or make somebody else care who's responsible on either end of that procedure, that's hard. It's complicated to figure out what those incentives need to look like.

Clare Wirth (20:33):
So to Erik's point on making them care, one interesting finding from the research last year, do you guys want to guess what percentage of specialists said they wanted more of their compensation tied to risk?

Abby Burns (20:44):
This is frontline specialists?

Clare Wirth (20:46):
Yeah.

Abby Burns (20:46):
Frontline providers?

Clare Wirth (20:47):
Correct.

Abby Burns (20:47):
I would guess 25%.

Clare Wirth (20:48):
Erik?

Erik Johnson (20:49):
10.

Clare Wirth (20:52):
38%.

Erik Johnson (20:54):
Okay. Hold on. When you say risk, what kind of risk do they want?

Clare Wirth (21:00):
Yeah, I think we left it kind of broad in terms of what kind of risk is tied to your compensation. So in fairness, there's a little bit of broad there, but I do think that it's interesting that their percentage was higher than PCPs. So specialists, more specialists said that they wanted to increase their total comp tied to VBC than PCPs, although you could argue PCPs have more-

Abby Burns (21:20):
Oh, they have more?

Clare Wirth (21:21):
... Than specialists to start with, but that's a pretty dramatic shift. Even if it's more directional, that specialist attitudes towards risk are evolving. I think we have this tendency to assume physicians don't want to engage in this and there might be more an opportunity now than ever before.

Erik Johnson (21:37):
Yeah, I think that's well said. This is why I reacted so strongly to that 38% number because they might want more risk, but I'm curious what kind of risk. And when we think about risk, we think about it in terms of there's actuarial risk, there's efficiency risk or episodic risk, and then there's quality risk. And I could see where specialists would want greater exposure to quality because they do care about quality.

Abby Burns (21:58):
Yeah.

Erik Johnson (21:58):
They all think they're above average. And if they can tie more of that to their payment rates, then they will be much more likely to engage in those contracts. The challenge becomes a little bit how do you start to incorporate total, not episodic, but total cost of care into that? How do you get to the point where the specialist is choosing the least expensive option patient because that's what's appropriate as opposed to something that's just going to fill their slate? And that's where we need to get creative.

Abby Burns (23:25):
Clare, Erik, I want to round out our conversation by talking about what populations we should be keeping our eye on in terms of where value-based care is happening next. Erik mentioned earlier, we really need to keep in our minds the patient groups that we are focused on when thinking about designing, implementing, scaling value-based care programs. If I'm asking this from a health plan point of view, I'm thinking which lines of should I be pursuing? There's no question, to your point earlier, Erik, conversations about value-based care over the past few years have indexed pretty heavily on the Medicare Advantage space. Should we expect more of the same going forward?

Erik Johnson (24:01):
I don't think we're going to expect more of the same. I think we should hold the industry to a higher standard and expect something different. I think what the previous measurement regime did was create a top-line incentive on Medicare Advantage where we're driving up the premium funding that MA plans were getting because we're coding. And I'm a believer in risk adjustment, we should risk-adjust for these patients. As that has been narrowed, I think now the emphasis is going to be more on bottom line, total cost of care management. And in the long run, I think it's good for the hygiene of MA because it's going to force plans and providers who are taking delegated risk to get a lot more intentional about managing care, getting very specific and creative around high risk and emergent risk populations and how do we head off some of the unnecessary spend that we would otherwise incur.

Abby Burns (24:50):
Yeah.

Erik Johnson (24:51):
So to your question about whether we should expect more of the same, I hope not. I hope we are going to see more investment in care models, pop health, care navigation for the patients who have ongoing longitudinal needs.

Clare Wirth (25:03):
But I do think that a lot of providers are looking at the MA space right now and wondering if it's more trouble than it's worth.

Abby Burns (25:09):
That is coming up in conversations that I'm having. And we're seeing that in the headlines around the number of providers that are dropping one or all of the MA plans that they contract with.

Clare Wirth (25:19):
You know that phrase, when one door closes, another opens. That's kind of what I'm seeing with Medicare Advantage and commercial risk, funny enough. So as Medicare Advantage is a space that people are frustrated, we're seeing this renewed interest in commercial risk despite how difficult it is to succeed in that space.

Abby Burns (25:39):
Yeah, that's sort of what comes to mind. Whenever I hear commercial risk, it seems like it's really hard to get a foothold and actually succeed in commercial risk. So talk to me about what this actually looks like and what your outlook is on commercial risk.

Clare Wirth (25:54):
We've talked about the challenges in commercial risk before on this podcast. I'd say that a lot of it just comes down to the high churn rate that you have in the commercial patient population. So you just don't have the time to reduce the costs and to incentivize behavior change.

Abby Burns (26:08):
Right. It's not like with Medicare Advantage where you might have a patient from 65 through the end of life.

Clare Wirth (26:12):
Yeah, but there's demand from purchasers, especially employers to control costs right now. And we're seeing more openness and interest in models like centers of excellence and advanced primary care more than ever before.

Erik Johnson (26:26):
Yeah, this is a tough nut to crack, but I remain firmly convinced that it can be cracked. And it's interesting, I think in the pandemic and immediately post-pandemic we had such a tight labor market that employers really needed to compete for workers on a variety of fronts, including benefits. And so there really wasn't any interest in constraining the medical benefit or the healthcare benefit. Bigger networks, richer benefits, all of that. It's still a pretty tight labor market, I don't want to suggest that it's not, but a lot of people disagree with me on this, I think maybe Clare does as well.

(27:01):
But I think this return to the work, return to the office movement in employers is a little bit of a canary in the coal mine around employers getting a little stricter about what they are going to offer their employees, that they are feeling somewhat empowered to pull people back into the office. Does that mean they're going to feel more empowered to narrow the networks that they contract with through their TPAs, narrow the benefit packages a little bit more specifically to the populations that they employ? Are employers going to get a little bit more rigorous around employee benefits? And if they are, then I think you still have all of the problems Clare just said. You're still going to have churn, but you might end up in a situation where employers and the TPAs that support them, particularly in the self-funded space, can experiment with some value-based models that can start to bring costs down.

Clare Wirth (27:50):
Yeah, and a place that you can experiment is your own employee population. I think that providers we work with often under-utilize their own employee population. That can be a great testing ground for putting these VBC principles into practice and then measuring that result and even taking it to potential employer partners, assuming a direct-to-employer strategy for a provider there. But I think that that's something we tend to under-utilize.

Abby Burns (28:16):
Well, Clare, Erik, I want to end with some advice for our listeners. How do we want to empower folks to go forth and successfully drive value-based care at their own organizations?

Erik Johnson (28:29):
I'd say a couple of things about that from a provider standpoint. I think payers have the ability to do this more easily than providers who can take on risk, but they really do need to understand what does the community need and what is the community not been given? And that is an intensely analytical exercise that claims analysis can help with, but you should do more than just claims analysis. I think being able to aggregate and analyze clinical data out of the EHR is going to give you some visibility in all of that, and that can help the shape of the risk, if you will, that is manageable in a population by product line, Abby, to your point earlier. I think you really need to understand before you do anything.

(29:15):
There are a couple of things that I do worry about that is drug spend, I think is something that we are having a lot of discussions around and I don't think we've gotten anywhere close to a solution with the advent of GLP-1s. That is going to be a problem if drug spend gets included. Now, we're increasingly seeing drug spend get excluded from some of these contracts, delegated risk contracts. That is going to be a challenge for the industry for the foreseeable future.

Abby Burns (29:45):
And it's not just GLP-1s, right? It's all of the high-cost drugs?

Erik Johnson (29:48):
All the high-cost drugs, and all drugs seem to be high cost these days. That's going to be in primary care, specialty care, hospital care, pharmaceutical care. That's going to be a big health plan.

Clare Wirth (30:02):
I'll leave our listeners with this. Providers bearing risk were much more likely to make money than lose it. Only a minority of providers lost money in VBC last year, in fact 10% in each respective contract type. So if you break it down, in upside risk, it was a 90-10 split, 90% made money, 10% lost money. In downside risk, it was a 50-40-10 split, so 50% made money, 40% broke-even, and 10% lost money. In capitated, it was very similar. It was a 50-30-10 split.

Abby Burns (30:37):
Wow.

Clare Wirth (30:38):
Yeah, that one doesn't quite add up to a hundred because some respondents didn't know the answer. But to bring our conversation full circle, this is back to that contrast between the state of VBC and the pulse. The state of VBC and these numbers, dare I say it, are a bit more optimistic than the picture. So when we talk to executives about the barriers to VBC, they always point to the threat of financial loss.

Abby Burns (31:03):
Yes, absolutely.

Clare Wirth (31:04):
Erik, for you too, they always point to that.

Erik Johnson (31:06):
Yeah.

Clare Wirth (31:07):
But the numbers are showing providers are more likely to make money or break-even than they are to lose money by doing this work. And so all of this is to say that success is possible.

Abby Burns (31:18):
Yeah.

Clare Wirth (31:19):
As Erik said, there is a playbook. That doesn't make it easy, so what it requires is taking action and executing consistently.

Abby Burns (31:28):
Well, Clare, Erik, thank you for coming back on Radio Advisory.

Erik Johnson (31:33):
Thanks for having us.

Clare Wirth (31:33):
Thanks for having me.

Erik Johnson (31:33):
It was a pleasure.

Abby Burns (31:41):
We covered a lot in the last 30 minutes or so. From finding out that it turns out value-based care is actually growing, not shrinking, that we do have a playbook. We know what it takes to succeed under value-based care looking at a couple of the places where we see this part of the market going next, which is specialty and procedural care. That's not to say that it's going to be easy to continue to push value-based care forward, but we really are here to help. In fact, this is an area where Advisory Board and Optum Advisory has done a lot of work. We have newly released case studies. We have a whitepaper. We're having conversations at events. So if this is something that your organization is focused on, check out the links in the show notes.

(32:24):
If you like Radio Advisory, please share it with your networks, subscribe wherever you get your podcasts, and leave a rating and a review. Radio Advisory is a production of Advisory Board. This episode was produced by me, Abby Burns, as well as Rae Woods, Chloe Bakst, and Atticus Raasch, with special thanks to Daniel Kuzmanovich. The episode was edited by Katy Anderson with technical support provided by Dan Tayag, Chris Phelps, and Joe Shrum. Additional support was provided by Leanne Elston and Erin Collins. We'll see you next week.