How Value-Based Care Improves Outcomes and Reduces Costs for Chronic Conditions

Six out of every 10 adults in the United States have a chronic disease, while four out of every 10 adults have multiple, according to the Centers for Disease Control and Prevention. These conditions — such as heart disease, cancer, chronic lung disease, stroke, Alzheimer’s disease, diabetes and chronic kidney disease — are among the nation’s leading causes of death and disability. They’re also the driving force behind more than $3.5 trillion in annual health care costs. By 2027, these costs are expected to reach nearly $6 trillion.

The goal of value-based care is to improve health outcomes and lower costs, and there’s no better place to start than with these high-cost diagnoses, which often require a complex and expensive web of office visits, tests, medications, labs, medical devices and surgical procedures.

Why is outcome-based care effective at targeting chronic conditions? One feature common to all value-based care models is that they incentivize providers to form a cohesive team with one goal in mind: Keep patients healthy and thriving. The older fee-for-service reimbursement model doesn’t hold providers financially accountable for negative patient outcomes. Instead, they generate revenue by simply billing more services.

Now, providers are shifting their attention to coordinating care, reducing duplication, promoting patient engagement and improving patient outcomes. Providers who generate the most revenue are those who communicate regularly with the patient’s entire care team and check in frequently with patients to ensure they’re on the right track.

But what does this look like in practice? Here are three examples of how outcomes-based care helps patients succeed.


$245 billion — that’s the total direct and indirect cost of diagnosed diabetes in the United States. The average person who’s been diagnosed with diabetes can expect to incur approximately $13,700 in medical care annually, $7,900 of which stems from the diabetes itself. Adjusted for age and sex, average medical expenditures for people diagnosed with diabetes are approximately 2.3 times higher than they are for people without diabetes.

The good news is that value-based care provides financial incentives for providers to help patients achieve and maintain a healthy hemoglobin A1C. Under a VBC model, doctors may be more likely to talk with patients about diabetes management and where they may be struggling.

VBC also encourages doctors to connect with a care coordinator or behavioral liaison as well as to refer patients to diabetes educators in the community. New models of care financially incentivize physicians to prioritize care coordination with specialists and obtain documentation that details patients’ exams or treatments, such as diabetic eye exams for retinopathy or neurological screening for neuropathy.

This coordination increasingly occurs through voluntary networks of providers who are part of accountable care organizations, which are tasked with care coordination and cost containment for a population of patients. Diabetes-related performance measures cover approximately 75% of the required quality performance measures for ACOs. This all bodes well for patients, since they can expect to receive more comprehensive diabetes care from providers who are well-informed and in touch with one another about treatment goals and progress.

Ultimately, new care models could improve the lives of thousands of people with diabetes, prevent costly hospital admissions for health complications and reduce costly emergency department visits for blood sugar crises.

Heart Disease

The national economic toll of heart disease amounts to roughly $219 billion each year — a figure which should be unsurprising, considering the condition causes 1 out of every 4 deaths. Value-based care seeks to improve outcomes for patients with heart disease and reduce these costs. When doctors feel motivated to focus on heart disease management and prevention — rather than just treatment — patients benefit from more in-depth conversations about their medical history, their risk and the potential for them to use new tools, such as wearables, to help detect heart problems. With patient data on their side, doctors may also be more likely to create specialized clinics within their practice, staffed by nurse practitioners, physician assistants and ancillary staff with advanced training in heart disease to help patients achieve positive outcomes while driving down costs.

Another way to contain costs is to help patients make cost-conscious decisions about where they receive cardiology procedures, including heart catheterizations, peripheral vascular procedures and electrophysiology studies. Procedures performed in ambulatory surgical centers and office-based catheterization labs typically cost much less than if the same procedure were performed in a hospital’s inpatient or outpatient facility.


Direct medical costs for cancer amount to more than $80 billion annually. Just above half these costs (52%) are linked to hospital outpatient or doctor office visits, and 38% for inpatient hospital stays. The rising cost of novel cancer therapies is another major contributor: Patients can pay up to about $16,000 per year for some specialty-tier cancer drugs.

Oncologists can be more successful when they’re mindful of costs, as they’re more likely to opt for lower-cost, less toxic therapies that are just as effective as their higher-cost counterparts. They’re also able to look to payers for help with making informed decisions about which drugs provide the most value to patients. In addition, oncologists may extend their office hours and assign patient navigators to reduce hospitalizations and emergency department visits.

Oncologists who work within VBC models also increasingly use clinical pathways that offer a personalized approach to care, incorporating collaborative decision-making with the patient’s own voice. Patient education and engagement is a large component of this — helping patients proactively manage chemotherapy symptoms such as nausea and dehydration can significantly reduce unnecessary ED visits and spare patients costly hospitalizations. Together, each of these interventions contributes to higher-value oncology care at a lower cost.

Value-based care models create opportunities to advance patient care without driving up costs. For their part, health systems are left with better ways of delivering care — and, ultimately, patients benefit from receiving high-quality care at a lower cost.

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