Over the last three decades, the healthcare financial circle has been influenced by technological progress, policy changes, and varying patient requirements (Li & Carayon, 2021). The shift to value-based care reimbursement models, the growth of healthcare consumerism, and the escalating focus on cost containment strategies are the three main trends in healthcare finance over the last 30 years.
Firstly, the transition from fee-for-service (FFS) to value-based care reimbursement models marks a fundamental shift in healthcare finance (Edmiston, 2022). Historically, the FFS model rewarded healthcare providers based on the number of services rendered, and, as a result, healthcare became overutilized and fragmented (Edmiston, 2022). Edmiston (2022) outlines that, unlike the fee-for-service models which focus on provider productivity, value-based care models put an emphasis on quality and efficiency as well as cost-effectiveness, and the financial incentives are directly linked to the health outcomes achieved. The motivator behind this shift has been combined efforts of initiatives (Joynt Maddox et al., 2020) such as the Affordable Care Act (ACA) and Medicare Access and CHIP Reauthorization Act (MACRA). (Joynt Maddox et al., 2020) point out that these initiatives promote care coordination, preventive services, and population health management that lead to the reduction of costs and improvement in patient outcomes.
Secondly, the increasing trend of healthcare consumerism is contributing to the changing financial aspect of the healthcare industry (Iliffe & Manthorpe, 2020). The situation is changing dramatically as patients are starting not only to participate actively but also to make the decisions themselves, becoming information-empowered and more centered on patients. This transition toward the consumer side of the healthcare industry has resulted in increased price transparency, more demand for value-based services, and the wide adoption of high-deductible health plans (HDHPs) (Iliffe & Manthorpe, 2020). At the same time, healthcare providers and payers are shifting focus to personalized, convenient, and cost-effective care models, including telemedicine, digital health tools, and retail clinics. Besides, healthcare institutions nowadays are introducing patient engagement and satisfaction measures like patient portals, mobile apps, and virtual care platforms that are advantageous as they aid in revenue growth and competitive advantage.
Lastly, the last thirty years have been characterized by the growing interest in cost containment and cost efficiency in healthcare finance. Healthcare spending is moving up, so the public finances and customers’ growing needs are becoming a challenge for hospitals’ management. Thus, healthcare providers face the necessity to rectify their operations, eliminate waste, and optimize resource allocation. In the healthcare sector, organizations have adopted different techniques to bring down expenditure while maintaining or improving the quality of healthcare, including lean management, value stream mapping, and the use of technology such as telemedicine and electronic health records (EHRs) (Atasoy et al., 2019; Bardhan et al., 2020). Consequently, apart from options aimed at decreasing administrative expenditures, negotiating more beneficial contract terms with suppliers, and regulating clinical pathways logically, financial sustainability has been in the spotlight (Bardhan et al., 2020).
In conclusion, the financing of healthcare has seen massive transformations in the last three decades, brought about by the adoption of value-based reimbursement models, healthcare consumerism, and strategies aimed at reducing costs. These reforms are part of broader trends to improve quality, efficiency, and affordability in the healthcare system which undoubtedly impact all those who are involved in the field. As healthcare finance goes through a profound change, it is important for policymakers, providers, payers, and patients to be flexible and team up to ensure that health services delivery as well as financing are sustainable.
References
Atasoy, H., Greenwood, B. N., & McCullough, J. S. (2019). The digitization of patient care: a review of the effects of electronic health records on health care quality and utilization. Annual review of public health, 40, 487-500. https://www.annualreviews.org/doi/pdf/10.1146/annurev-publhealth-040218-044206
Bardhan, I., Chen, H., & Karahanna, E. (2020). Connecting systems, data, and people: A multidisciplinary research roadmap for chronic disease management. MIS Quarterly, 44(1), 185-200. https://www.researchgate.net/profile/Elena-Karahanna/publication/344065115_Connecting_systems_data_and_people_A_multidisciplinary_research_roadmap_for_chronic_disease_management/links/6050ccb9299bf173674ab3c5/Connecting-systems-data-and-people-A-multidisciplinary-research-roadmap-for-chronic-disease-management.pdf
Edmiston, K. D. (2022). Alternative Payment Models, Value-Based Payments, and Health Disparities. Center for Insurance Policy & Research Report at the National Association of Insurance Commissioners.https://content.naic.org/sites/default/files/cipr-report-alternative-payment-methods.pdf
Iliffe, S., & Manthorpe, J. (2020). Medical consumerism and the modern patient: successful aging, self-management and the ‘fantastic prosumer’. Journal of the Royal Society of Medicine, 113(9), 339-345. https://journals.sagepub.com/doi/full/10.1177/0141076820911574.
Joynt Maddox, K., Bleser, W. K., Crook, H. L., Nelson, A. J., Hamilton Lopez, M., Saunders, R. S., … & American Heart Association Value-Based Models Learning Collaborative. (2020). Advancing value-based models for heart failure: a call to action from the value in healthcare initiative’s value-based models learning collaborative. Circulation: Cardiovascular Quality and Outcomes, 13(5), e006483. https://www.ahajournals.org/doi/full/10.1161/CIRCOUTCOMES.120.006483.
Li, J., & Carayon, P. (2021). Health Care 4.0: A vision for smart and connected health care. IISE Transactions on Healthcare Systems Engineering, 11(3), 171-180. https://www.tandfonline.com/doi/full/10.1080/24725579.2021.1884627
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