Over the last decade, payment for health care has transitioned to some extent from fee-for-service to “value-based” payment models. These models generally incentivize providers to deliver higher-quality care at lower costs. However, value-based payment models often favor larger, corporate-consolidated organizations. These organizations often have more resources and infrastructure to effectively manage data, monitor patient outcomes, and engage with patients. 

In a recent article in JAMA led by Hayden Rooke-Ley, JD, of Brown University, Associate Professor of Health Care Policy and Medicine, Zirui Song, MD, PhD, joined Jane M. Zhu, MD, MPP of Oregon Health and Sciences University, examined the potential role of value-based payment models in an increasingly consolidated delivery system.

Larger, corporate-consolidated organizations can more effectively meet the requirements of value-based contracts, such as having a large number of attributed patients and assuming financial risk. These requirements pose challenges for smaller, independent practices, which often struggle to meet them due to the costs and infrastructure related to:

• Technology: Investing in electronic health records and other necessary technology can be expensive.
• Expertise: Acquiring the expertise needed for population health management and data analytics can be difficult.
• Financial Risk: Value-based payment models often involve taking on some degree of financial risk, which can be challenging for smaller practices.

The authors suggest that policymakers implement measures to support independent practices in the era of value-based payment. These measures include providing financial assistance to help smaller practices meet the requirements of value-based contracts, simplifying the administrative burdens associated with these models, and exploring alternative payment structures that toggle the exposure to financial risk for smaller practices. By taking these steps, policymakers may be able to help sustain independent practices and maintain a more diverse set of provider options for patients. 

It is also possible that provider consolidation would have occurred to a similar extent—and will continue to occur—even in the absence of payment reform, as the incentives to consolidate are prevalent under fee-for-service as well. Therefore, efforts to maintain and promote provider competition will likely need to go beyond addressing the role of payment reform.