By now, everyone is generally aware that the model for healthcare delivery in the United States is moving away from “pay-for-service” and will focus in the long run on so-called “value-based care.” Dr. David Feygin of Becton Dickinson (a major international supplier of medical devices and biological research) sees this change as “abrupt” and, perhaps more interestingly, the basis for greatly enhanced revenues.

Addressing an investment forum at the September 16^th Boston meeting of Sky Ventures Group, Dr. Feygin generally outlined the hallmarks of value-based care: a focus on the patient and not the provider; payments to providers based upon the general wellness of the population being served rather than the number of procedures being performed.

His definition of “abrupt,” he noted, should be taken within the context of healthcare: he was talking about a seven to ten year window. But the process has already started, and healthcare providers are now reorganizing to meet the challenge; restructuring through mergers or organizational transformation. The mindset that needs to be addressed is the inherent tension between pay-for-service (fill the beds and perform services) against the standard of general wellness (how can we keep patients out of the beds and healthy). He observed that the Medicare model has been redesigned to reward overall positive clinical experience, with an Alternative Payment Program that will provide revenue boosts for favorable clinical performance which avoids providing service, devices or medications.

While change is often said to be good, we all know that it is not always good; however, based upon Dr. Feygin’s projections, the net revenue for healthcare providers can increase fivefold, over pay-for-service, for those healthcare providers who can “figure it out.”