Get Ready for Value-Based Care

Steve Chenoweth
By Steve Chenoweth, PT

In value-based care, payers are looking to quantify and link patient clinical outcomes with the cost of care, as “bang for the health care buck.”

This concept shouldn’t be a surprise to anyone in the field; it is what we all aim for with any purchase that we make. We all desire and, in fact, demand to know that if we pay for something we are actually getting real, lasting, and effective value for whatever we are purchasing—this is no different for health care payers.

The practical question for therapists, especially those who own private practices, is how can we be prepared to participate in value-based care payment models? To answer this question, we have to first understand the reality and the fact that we (as providers and a profession) really don’t have any idea what a value-based payment system will ultimately look like. Regardless of what we think it should look like, these payment methods are going to be “put upon us” and we will be forced to react. If we look at history we can find multiple examples of these programs at the federal and private payer levels including captitation plans, per diem rates, case rates, and physician quality reporting system (PQRS) incentive programs.

None of these programs fit what we as therapists and a profession would label as “evidence-based” outcomes. Most, if not all, of these programs rely heavily on two principles: cost of care (how much did the episode of care cost the payer) and patient satisfaction (did the patient subjectively report being satisfied). To a lesser extent, some of these programs attempt to measure some kind of clinical outcome, but when it comes down to it, these clinical outcome measures are nothing more than subjective reports of objective clinical data that may or may not indicate “quality.”

heart and money on a scale

Going back over 25 years (since I have been in the profession), we have been talking about outcomes, evidence-based practice, and in some form or another “value-based care.” During that time, I would suggest that there are not many of us, if any, who have ever been asked the question: “Can you show me your outcome data for ACL (anterior cruciate ligament) patients or rotator cuff repair patients?” Payers are not in the business of differentiating who is the best “knee therapy” provider or the best “back therapy” provider. Does this mean that outcomes are not important to payers? No. In fact, they probably know this information, but they measure performance based on what they perceive as value or what they perceive as outcomes. All of this is based on the vast amount of data they are accumulating through claims submissions and, in some cases, through documentation submissions such as OASIS tools in home care or payer-specific documentation and authorization forms.

So what are the things we should be doing to prepare for value-based care payment models? The answer is simple: Know your data! Any information we might be asked for by a payer, a collaborator, or other interested third parties regarding value-based care is the exact same information we should already be keeping up with as good and diligent entrepreneurs. The vast majority of us (if not all of us) are using some form of a practice management system that includes:

  • Patient Registration Modules: demographic, payer, family, and diagnosis data
  • Patient Scheduling Modules: demographic, payer, appointment type, and compliance data
  • Documentation Modules: objective clinical, demographic, payer, diagnosis, clinical results, and satisfaction data
  • Billing Modules: current procedural terminology (CPT), reimbursement, payer mix, frequency and duration, and productivity data

Additionally, the vast majority of us are using some form of financial software to track our overall income and expenses.

With all of this data at our fingertips, we should be using this to manage our practices, make informed business decisions, assess opportunities, and develop our business regardless of what kind of value-based care approach is “put upon us.”

What should you know and manage as a private practice owner?

  1. Volume: How many new patients do you see?
  2. Duration: How long do you see new patients (visits per referral)?
  3. Utilization: How many CPT or billable units are generated each visit (units per visit)?
  4. Revenue: How much income is produced with your volume and utilization (income per visit and income per unit)?
  5. Cost: How much does it cost you to deliver a unit or visit of care (cost per visit and cost per unit)?
  6. Payer Mix: Who is paying you and how much are they paying you?

With this very basic list of key metrics, practice owners should be able to answer all the basic questions that apply to potential value-based care models. Depending on how well you maintain your data, you should conceivably be able to answer all of these questions by payer type, individual third-party payer, body part, primary diagnosis, and therapist:

  • What is your average length of stay?
  • How much will it cost to deliver care?
  • How much do you expect to receive for the delivery of care?
  • What are your productivity standards: visits and units per therapist per day?
  • How much does it cost you to treat a patient?

The reality of the matter is that most value-based care programs are going to measure by very basic sets of data:

  1. Length of Stay or Duration of Treatment: number of visits per episode of care.
  2. Cost of Treatment: either cost per visit or cost per episode; what they are paying you, not what it costs you.
  3. Satisfaction: patient satisfaction and/or outcome satisfaction. Outcome satisfaction will be “their outcomes” that you are measuring, not what we as clinicians might consider evidence-based outcomes.

Most practice owners have this data; however, most practice owners either don’t know they have the data, don’t ask their system for the data, or simply don’t know what to do with the data, but it is there.

Therefore, be prepared.

  • Find out what data you have access to.
  • Make sure the data is organized.
  • Start with a basic key metric–driven data package for daily management of your business.
  • Set benchmarks for your clinic and clinicians to achieve based on those key metrics.
  • Correlate benchmarks with professional and compliance standards.
  • Know and use your data to make better business decisions and decisions on how you will or won’t participate in new payment models going forward.

Steve Chenoweth, PT, is a PPS member and the founder and chief executive officer of Therapy Partnership Solutions in Florida. He can be reached at

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