Key Takeaways:
The global value-based care (VBC) market, initially valued at $12.2 billion in 2023, is projected to reach $43.4 billion by 2031, marking a 14.6% compound annual growth rate.
Value-based care is currently generating about $500 billion in enterprise value, with projections indicating this could potentially reach $1 trillion as the sector advances.
The Center for Medicare and Medicaid Innovation aims for 100% of Medicare beneficiaries to participate in accountable-care relationships by 2030.
In 2022, value-based care patients experienced 30.1% fewer inpatient admissions compared to those on Original Medicare, showcasing VBC's effectiveness in reducing hospitalizations.
Private capital investments in value-based care companies expanded more than fourfold from 2019 to 2021, reflecting growing investor confidence.
1. Growth and Adoption of Value-Based Care (VBC)
The global value-based care (VBC) market, initially valued at $12.2 billion in 2023, is forecasted to surge to $43.4 billion by 2031, marking a 14.6% compound annual growth rate.
Over the last ten years, the number of patients benefiting from value-based care arrangements has expanded by 2.3 million.
The growth in lives under value-based care arrangements is anticipated to increase by 10–15%, while lives in fully or partially capitated contracts could see a growth rate of 20–30%.
The number of patients receiving care through value-based models could potentially double within the next five years, with an estimated annual growth rate of 15%.
According to CMS data, healthcare provider participation in value-based care models has risen by 25% from 2023 to 2024.
In the field of nephrology, value-based care models have gained traction, supported by CMS programs, which report reduced hospital admissions, fewer readmissions and decreased rates of dialysis crashes.
From 2019 to 2021, private capital investments in value-based care companies expanded more than fourfold.
The share of private capital investment in value-based care assets within the healthcare sector jumped from 6% in hospitals to nearly 30% over just two years.
Fewer than half of primary care physicians in the United States have reported receiving payments via value-based care arrangements.
2. Cost Savings and Financial Impact
Companies active in value-based care created around $500 billion in enterprise value in 2022, with estimates pointing to a possible rise to $1 trillion by 2027.
With continued momentum in value-based care, the market valuation for payers, providers, and investors could reach $1 trillion in enterprise value.
The Healthcare Payment Ties to Value and Quality rate of 60% illustrates the significant shift from fee-for-service models to value-based care reimbursement within the U.S. healthcare landscape.
In 2022, Humana Medicare Advantage value-based care arrangements achieved 23.2% savings in medical costs when compared to Original Medicare.
Savings within value-based care are estimated to range from 3% in models with limited quality metrics to as high as 20% in high-touch primary care groups assuming fully capitated risk for Medicare Advantage members.
Humana reinvests cost savings into additional member benefits, averaging $527 per year for members who utilize value-based care providers.
3. Medicare and Government Initiatives
The Center for Medicare and Medicaid Innovation has set a bold objective: by 2030, 100% of Medicare beneficiaries should be participating in accountable-care relationships.
Enrollment Goals by CMS for 2030 underscore its dedication to shifting Medicare and Medicaid patients into value-based care (VBC) models, with the aim of enhancing both healthcare quality and cost-effectiveness.
In Southern California, 90% of commercial and Medicare lives are now under value-based contracts, alongside nearly 50% of Medicaid lives, reflecting significant regional adoption of VBC models.
CMS spending on End-Stage Renal Disease highlights targeted resources in value-based care initiatives, such as the End-Stage Renal Disease Quality Incentive Program, which ties payment to the quality of care provided.
The Hospital Value-Based Purchasing Program uses a 2% withholding as a financial incentive for hospitals to meet performance metrics, illustrating how value-based payment systems are employed to drive quality improvements.
Since 2010, Congress has mandated systematic reductions in Medicare Advantage risk scores, resulting in lower per-patient payments even when health conditions remain constant.
In 2026, the Health Equity Adjustment will introduce a new factor in value-based care payments, aiming to directly address and reduce health disparities.
The 2027 deadline for interoperability and data sharing underscores a push toward coordinated, outcome-focused care across healthcare providers, supporting the goals of value-based care.
4. Patient Outcomes and Quality Improvements
In 2022, value-based care patients experienced 30.1% fewer inpatient admissions compared to those on Original Medicare, demonstrating the effectiveness of VBC in reducing hospitalizations.
Humana's research found that patients treated by value-based care physicians had notably lower levels of acute care usage and fewer potentially avoidable events.
Preventive screenings were completed at a 14.6% higher rate among value-based care patients compared to Medicare Advantage members outside of a VBC arrangement.
Risk-bearing primary care groups in value-based care frequently employ a high-touch care model with smaller patient panels, contrasting with the larger panels typical of traditional fee-for-service primary care.
The 2022 expansion of the Home Health Value-Based Purchasing Model sets a standard for quality-driven healthcare and reinforces value-based reimbursement practices across the sector.
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