Market Overview

How Insurance Giants Are Pushing Value-Based Healthcare Forward

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Now that the White House has ironed out some of the problems Obamacare faced upon its rollout, the administration is setting its sights on reworking the way the entire industry operates.

At the end of March, President Obama outlined his ideal framework for medical care, saying that medical personnel should be paid for the quality of their care rather than quantity. Instead of insurers paying for each procedure, Obama is rallying support for payments based on patients' final outcome.

In doing so, the President is hoping that healthcare professionals will focus on preventative care as well as quality diagnostics.

Insurers To Reap The Benefits

So far, insurers have been huge proponents of the new model. A reward system that focuses on improving the population's health is a massive help for insurance companies, and without a mandatory barrage of tests, healthcare costs will likely decrease significantly.

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Companies like Anthem Inc (NYSE: ANTM) and Humana Inc (NYSE: HUM) have already shown their support for a quality-based healthcare system by reworking some of their offerings to give doctors the tools they need to make the shift.

Anthem And Humana On Board

Anthem was one of the first insurers to begin using the outcome-based compensation model; the company said that 38 percent of its members have been treated by providers who are paid for patient outcomes rather than per service.

Humana similarly announced on March 24 that it was rolling out two new businesses aimed at helping healthcare providers make the switch.

Still Some Hurdles

While the benefits of such a system are clear for insurers, many worry that healthcare providers won't be capable of transitioning to a quality-based payment scheme.

Determining how to effectively measure the quality of care as well as getting doctors to completely change the way they practice could prove to be an obstacle in getting this initiative off the ground.

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