Shared savings

Definition

Shared savings is a financial incentive model used in healthcare where providers and organizations share in the savings achieved through improved efficiency and better patient outcomes. This approach aligns the interests of providers with those of payers, encouraging the delivery of high-quality care while reducing unnecessary costs. By sharing a portion of the savings generated, this model fosters collaboration and innovation in care delivery.

5 Must Know Facts For Your Next Test

1. Shared savings programs aim to reduce healthcare costs while improving quality by incentivizing providers to focus on preventative care and efficient treatment strategies.
2. These programs often require providers to meet certain quality benchmarks before they can receive their share of the savings.
3. Shared savings models are commonly associated with Accountable Care Organizations (ACOs), which collaborate to manage patient care and share financial risks and rewards.
4. The savings generated can come from reduced hospital readmissions, fewer unnecessary tests, and improved management of chronic conditions.
5. Shared savings arrangements are becoming more prevalent as healthcare systems shift from fee-for-service to value-based payment models.

Review Questions

• How does shared savings align the interests of healthcare providers with payers in a value-based care model?
  • Shared savings aligns the interests of healthcare providers with payers by creating financial incentives for providers to reduce costs while maintaining or improving patient care quality. When providers succeed in cutting unnecessary expenses and enhancing patient outcomes, both parties benefit financially. This collaboration encourages providers to innovate and adopt practices that lead to more efficient care delivery, fostering a system where everyone is focused on achieving better health results at lower costs.
• Discuss the role of Accountable Care Organizations (ACOs) in facilitating shared savings within the healthcare system.
  • Accountable Care Organizations (ACOs) play a crucial role in facilitating shared savings by bringing together various healthcare providers to coordinate patient care effectively. ACOs are designed to manage a population's health, focusing on preventive measures and efficient use of resources. By working collaboratively, ACOs can identify areas where cost savings can be achieved without compromising quality, thus enabling them to share in the financial benefits that result from improved patient outcomes and reduced healthcare expenditures.
• Evaluate the impact of shared savings models on healthcare outcomes and system efficiency, considering both benefits and challenges.
  • Shared savings models significantly impact healthcare outcomes and system efficiency by promoting a focus on value rather than volume. These models incentivize providers to implement best practices, enhance preventive care, and reduce unnecessary services, which can lead to improved health outcomes for patients. However, challenges include ensuring accurate measurement of cost savings and quality improvements, as well as addressing potential disparities in access to care among different populations. Balancing these factors is essential for maximizing the effectiveness of shared savings initiatives within the broader shift toward value-based care.

Related terms

Accountable Care Organization (ACO): A network of healthcare providers that work together to provide coordinated care and are held accountable for the quality and cost of care delivered to patients.

Value-Based Care: A healthcare delivery model that prioritizes patient health outcomes and satisfaction over the volume of services provided, emphasizing quality over quantity.

Pay-for-Performance: A payment model that rewards healthcare providers for meeting specific performance measures for quality and efficiency in care delivery.