Medtech value-based contracting will have a significant impact on hospitals and health networks. DRG Partner Adrienne Lovink reviews the challenges and opportunities these agreements will bring providers.
The impact of value-based contracting on providers is really around the administrative complexity of managing these types of agreements. So there are a lot of potential benefits for them in assuming this type of agreement because it can align incentives around provision of the best care at the lowest cost. It can share risk with the manufacturer. And in general, they're set up to offer better care so there is an outcome where you just get better care because of this alignment of incentives.
The downside for the provider is that they are administratively difficult and it will be hard for providers to figure out how to manage all of the administrative complexity of these contracts, especially when you consider that they could have to manage certain terms for one contract, totally different terms for another contract. They could have to manage some with the med device manufacturer and some direct with the payer.
There is an administrative trade-off that is going to exist. And there will be a lot of impact for them on how do they balance the clinical and potential for economic value with the increased complexity and the increased administrative requirements.