Value-based care revenue to grow, but risk is a challenge

Most healthcare organizations anticipate more revenue from value-based care arrangements over the next year, despite ongoing financial and operational challenges with the alternative payment models.

Value-based care models are an alternative to the traditional fee-for-service healthcare payment system. The healthcare industry has been transitioning fee-for-service revenue to value-based care models, particularly those with downside financial risk, for over a decade now.

The transition has been more of a marathon than a sprint. However, a new survey from Innovaccer Inc. and the National Association of ACOs (NAACOS) finds 64% of healthcare organizations expect higher revenue from value-based care models in 2025 compared to 2024.

Additionally, 30% of organizations have at least a quarter of their revenue tied to value-based care contracts, according to the survey. Meanwhile, 13% of organizations have already surpassed the 50% revenue mark.

The survey polled 168 healthcare professionals from 142 provider-oriented organizations, including hospitals, academic medical centers, accountable care organizations (ACOs), federally qualified health centers and specialty care providers. The results show building momentum toward value-based care, although most respondents reported their organizations in the early-to-mid stages of value-based care adoption.

Only about a fifth of organizations represented in the survey have over half of their revenue from fully capitated or downside risk contracts, which survey authors said is a "strong indicator of advancing maturity" in value-based care adoption.

Financial risk is a major barrier to the adoption of value-based care contracts, the survey showed. About 87% of respondents cited financial risk as a primary factor contributing to the slow adoption of value-based care across the healthcare industry.

Most respondents also cited provider readiness (80%), lack of data interoperability (75%) and regulatory complexities (69%). High technology costs and lack of standardized quality measures also contributed somewhat to value-based care adoption rates, respondents said.

Greater financial support and incentives would move the needle with the value-based care transformation.

Almost three-quarters (74%) of respondents thought financial support would accelerate healthcare's adoption of value-based care contracts, while 59% selected improved data-sharing capabilities with payers.

About 57% also said better technology solutions would increase value-based care momentum.

Technology supports value-based care participation, according to the survey. Respondents generally agreed that previous technology investments (e.g., advanced data analytics, interoperability and care management solutions) have positively impacted their organizations' capacity to adopt value-based care models.

The survey showed that organizations are more likely to succeed in value-based care models when they have unified platforms that integrate clinical, financial and operational data.

Additionally, researchers said successful organizations are more likely to invest in advanced analytics capabilities to deliver actionable insights at the point of care and technology that supports proactive care management.

"At the foundation of accountable care and population health management lies the strategic use of integrated data that drives insights and action," Emily D. Brower, president and CEO of NAACOS, said in a news release. "This comprehensive approach enables a deeper understanding of community, population, and individual patient needs. This report highlights how technology, collaboration, and infrastructure can support providers in accountable care to drive innovation in care delivery."

Jacqueline LaPointe is a graduate of Brandeis University and King's College London. She has been writing about healthcare finance and revenue cycle management since 2016.