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Survey: Healthcare Industry Managers Expect Value-Based Contracts to Hurt Profits

June 20, 2014
by Rajiv Leventhal
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Healthcare industry managers and executives are expecting profits to be hurt from the introduction of value-based contracting, according to a survey conducted by KPMG the New York-based audit, tax and advisory services firm.

The survey, which polled 240 representatives from hospitals, physician practices, health plans and pharmaceutical companies, found that approximately one third of healthcare managers said they expect value-based contracts to dampen operating results. In fact, more than 12 percent of the respondents expect operating income to fall 10 percent or greater from these agreements. 

"Ultimately, all stakeholders who drive their organizations to achieve efficiency in operations, quality outcomes, adoption of supportive technology, and a patient-centric culture, will not only survive but see their margins grow in the future. Building the bridge to that future is the key now," Cynthia Ambres, M.D., partner and member of the KPMG Global Healthcare Center of Excellence, said in a statement.

Respondents from hospitals, health systems and large physician groups appear especially pessimistic about the impact of value-based contracts, with 49 percent expecting lower operating profits. 

Greater use of disease management, which places a greater emphasis on helping patients manage chronic illnesses such as diabetes and cardiovascular disease, is the most significant change to result from value-based contracts, according to 28 percent of survey respondents.  Another 19 percent project a greater reliance on nurse practitioners and physicians assistants as the most significant change.   

Additionally, the survey found that nearly a third of executives and managers (31 percent) expect clinical information technology to have the biggest impact on the quality of care and patient outcomes—ahead of financial performance (15 percent), clinical operations (13 percent) and patient engagement (7 percent) among other factors. 

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