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Value-based care's sticking points

Illustration: Gabriella Turrisi/Axios

Health care providers clinging to a fee-for-service model to retain revenue streams and profits continue to stymy the adoption of value-based care, according to a Lazard Healthcare Services study.

Why it matters: Value-based care is the future of health care, but provider reticence to adopt it could be a sticking point for future investments made in the space.

  • The study fielded responses from 150 leaders across many of the largest health care services companies, and from smaller public and private companies and prominent investment firms.

Zoom in: Asked about top factors that have most limited the penetration of value-based payments to date, 63% cited provider preference for fee-for-service.

  • 47% said suboptimal design of value-based programs (e.g., provider compensation insufficiently linked to outcome quality, ineffective assignment of members to ACOs, etc.)
  • 46% cited insufficient data analytics capabilities (e.g., inability to measure value created or quantify risk)

What they're saying: "The journey to VBC is real and is not just a tagline," says Ian Wijaya, managing director in Lazard's global health care group.

  • "Large, midsize and small are allocating so many resources towards VBC."

Zoom out: Big tech continues to penetrate health care — Amazon's acquisition of primary care operator One Medical closed today — but not every target has a total addressable market that's scalable.

  • "If these big companies are going to make a deal, it better move the needle," Wijaya says. "The driving force for Big Tech is the available market that can be addressed and raw scale and how they can apply tech advancement."

💭 Thought bubble: Given private equity's interest in value-based care, we expect to see continued innovation in how to incentivize providers away from fee-for-service.

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