Value-Based Care

HNI FYI #1: What is the Goal of Value-Based Care?

Value-based care links care quality to payment, incentivizes efficiency, and supports improving care, reducing costs, and enhancing patient experience.

Enhancing Patient Outcomes and Reducing Costs 

“Value in health care is the measured improvement in a patient’s health outcomes for the cost of achieving that improvement. Because value is created only when a person’s health outcomes improve, descriptions of value-based healthcare that focus on cost reduction are incomplete.

Reducing costs is important but not sufficient: If the real goal of value-based health care [was] cost reduction, pain killers and compassion would be sufficient.” (National Center for Biotechnology Information)


Value-based care (VBC) is a healthcare payment and reimbursement model that incentivizes physicians and facilities to improve patient outcomes while lowering unnecessary spending on superfluous treatments. 

However, this model was not created solely to reduce healthcare costs. If that were the case, patients would not see an improvement in their health, and their readmission rates would skyrocket. This is why the “value” portion of value-based care is integral to achieving this model.

By educating providers on evidence-based treatments in value-based care versus a fee-for-service model, they can eliminate unnecessary tests, avoid high-cost prescriptions when possible, and deliver more personalized treatments. This inevitably results in overall cost reduction and a higher quality patient care experience.

At HNI, we are focused on value and centered on patients. When we align patients, providers, and hospitals under a value-based model, everyone wins. The goal is to focus on quality of care and not on volume within a value-based care (VBC) and associated value-based payment (VBP) system.

Shifting Focus from Volume to Value

Traditional fee-for-service payment models incentivize the volume of services rather than their quality. The current healthcare strategy is shifting towards evaluating and compensating healthcare providers based on the value of care they provide. This shift is evident in state contracts with Medicaid managed care organizations (MCOs) and dental maintenance organizations (DMOs), which now require the development of alternative payment models (APMs) to encourage innovation, quality improvement, and efficiency.

Implementation and Progress of Value-Based Care

Since 2012, the Health and Human Services Commission (HHSC) has required MCOs and DMOs to submit annual reports on their APM contracts and activities. Significant progress has been made, with targets for these models increasing each year. For example, starting in calendar year 2018, 25% of MCO and DMO payments to providers had to be APMs, increasing to 50% by 2021. Additionally, a portion of these APMs includes downside financial risk for providers, fostering accountability and encouraging better health outcomes.

Data-Driven Approach and Stakeholder Collaboration

To support these initiatives, HHSC has established data-sharing processes, developed Provider Performance Reports, and dedicated resources to evaluate the impact of APMs on utilization, quality, and cost. The use of the nationally recognized Healthcare Payment Learning and Action Network (HCP LAN) APM Framework guides these efforts, aligning definitions and concepts to ensure a cohesive approach to value-based care.

The Texas Healthcare Learning Collaborative (THLC) portal serves as a public reporting platform and contract oversight tool, providing up-to-date performance data on key quality measures. This transparency is crucial for engaging providers in value-based contracting and driving continuous improvement.

Supporting Innovation through Incentives and Connectivity

Programs like the Delivery System Reform Incentive Payment (DSRIP) and the Health Information Exchange (HIE) Connectivity Project further support value-based care initiatives. The DSRIP program rewards healthcare providers for achieving specific outcomes, while the HIE project enhances the exchange of clinical data, improving coordination and quality of care for Medicaid clients.


Value-based care represents a fundamental shift in how healthcare is delivered and reimbursed. By prioritizing patient outcomes and cost-efficiency, value-based care models not only improve the quality of care but also ensure sustainable healthcare systems. At HNI, we remain committed to advancing these principles, aligning patients, providers, and hospitals towards a future where everyone benefits from high-quality, cost-effective healthcare. 

What does value-based care mean to HNI?



Teisberg, E., Wallace, S., & O’Hara, S. (2020). Defining and Implementing Value-Based Health Care. →Academic Medicine,95(5), 682-685. doi:10.1097/acm.0000000000003122,based%20payment%20(VBP)%20system.

Updated May 17, 2024


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