The Business of Healthcare Podcast · Center for Healthcare Leadership and Management

The Business of Healthcare Podcast, Episode 120: The Challenges in Transitioning to Value-Based Pricing in Healthcare

·49 min·3 clips

Rita says DRGs removed any connection between payment and outcomes, then pushed hospitals to cut services.

1. The Business of Healthcare Podcast episode 120 focuses on the challenges in transitioning to value-based pricing in healthcare. 2. Host Daniel Carnuta, Director of the UT Dallas Professional Program in Healthcare Management, interviews Rita Numerov, an internationally recognized consultant, author of six books, and co-founder of Numerov & Associates in St. Louis. 3. The episode asks why value-based pricing, or VBP, is easy to describe but difficult to implement across providers, payers, and policymakers. 4. Carnuta contrasts fee-for-service billing with VBP by using a car-repair example and then shows how healthcare billing can produce separate charges from a doctor and an anesthesiologist. 5. Numerov describes her firm as working with "industries in transition" when regulation, competition, technology, or market expectations force a business model rethink. 6. She says healthcare is an "industry in transition on steroids" because all four transition pressures are happening at once. 7. Numerov says her work falls into three buckets: strategy and implementation, organizational infrastructure, and economic and clinical value analytics. 8. She argues that cultural resistance matters because people are comfortable with the way they have been successful before. 9. Carnuta frames value-based pricing as paying for quality and efficiency, while Numerov says the current system still rewards volume and episodic care. 10. Numerov says patient-consumers should have transparent information about cost, quality, outcomes, and provider fit before making care choices. 11. She says the healthcare system has become more provider-centered than patient-centered, citing long waits in physician offices and the need to advertise five-minute or 10-minute ER waits. 12. She explains that CMS moved decades ago from usual and customary charges to DRGs, or diagnostic related groups, to control costs. 13. Numerov says DRGs had no connection between payment and outcomes and created incentives to cut services that were not directly reimbursed. 14. She points to the reduction of social work, psychology, psychiatric nursing, and community-based support for housing, food, and financial issues. 15. She links that history to the current concern over mental health services, which she says were "decimated" in part because they were treated as non-core. 16. Numerov argues that the ACA's rules tying quality to payment were predictable in theory but have not reshaped the incentives inside many institutions. 17. Carnuta explains Medicare, DRGs, and patient-centered medical homes as fixed-fee models that aim to reward coordinated care and population health. 18. Numerov says many institutions still struggle with data, internal processes, and the difficult conversations needed to manage outliers and variation in cost and quality. 19. The tone is analytical and policy-heavy, with Carnuta repeatedly translating the mechanics into plain language for listeners. 20. Healthcare leaders, policy readers, and finance teams tracking Medicare reform will get the most out of it, while casual listeners wanting light conversation may skip it.

As heard by us

A candid read on why hospital payment incentives and patient outcomes rarely point the same direction.

The conversation circles a familiar gap: what healthcare institutions say they value and how their payment behavior actually runs. Professor Daniel Carnuta and Rita, who writes a biweekly Forbes column and is associated with Numeroff and Associates, trace how Diagnosis Related…

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Decades of healthcare reform, and hospitals still don't get paid based on whether patients actually improve.

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