The Actuary Magazine

Value-Based Care


April 2020


The Society of Actuaries (SOA) identified value-based care (VBC) as a topic that required further exploring in relation to actuaries and the work we perform for health care organizations. The term “VBC” was introduced in the decade and subsequently has become widely accepted in the health care industry to encapsulate the theorized ideal future state of aligned delivery of health care services, which includes payment reform for these services, although VBC represents different things to different people and various health care stakeholders.

Since the VBC topic is broad, complex and sometimes abstruse in nature and would require an in-depth investigation from each stakeholder to address the various applications and meanings that could fill multiple volumes of books, we have limited much of the subsequent discussions to that of a provider, more specifically to that of a health care actuary’s support of a provider within the context of VBC.

Given this background, we developed a series of articles that will provide foundational information as well as explore some aspects in greater detail. In particular, in the first article, we describe how actuaries can support providers by using a VBC defined strategic framework. The last two articles in this series highlight provider actuarial support that falls under the subset we’ve identified as “enterprise and financial risk management.” These articles describe how actuaries support providers in their short- and long-term VBC strategies by monitoring and forecasting performance on an ongoing basis and evaluating the provider’s enterprise-wide objectives, the organization’s willingness to change and its risk appetite. Note that these topics are not an exhaustive list of the ways in which actuaries can provide support in this domain.

The Health Section’s Strategic Planning Committee is charged with selecting topics of emergent and significant interest to health actuaries, as well as organizing strategic initiatives to research these topics and report on them to the section’s membership. For more than a year, there has been an initiative focused on VBC. This series is centered around the findings of this initiative. Contributors to this initiative and the articles produced thereby include:

Value-Based Care Framework

A high-level overview exploring topics under the VBC umbrella
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The Cost of Value-Based Care

A look at enterprise and financial risk strategy development and support
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Financial Performance Management and Contracting

Actuaries can help refine value-based care objectives and obligations
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