Adapting to Change: How Shifting Reimbursement Models Are Reshaping Health Organizations

Discover proven financial strategies that help healthcare organizations thrive amid changing reimbursement models and increasing payer demands.

 

At BHS Connect, we partner with top healthcare organizations through our Release of Information services. That connection gives us a firsthand look at how leading teams are responding to the financial challenges brought on by shifting reimbursement models and the move toward value-based care.

From those observations, the BHS Connect team has gathered a set of actionable insights to help finance leaders navigate this transition. The organizations making real progress are leaning into data-driven decision-making, refining their workflows, and staying focused on delivering the kind of care that keeps communities strong.

What’s clear is that adapting to new payment models isn’t optional—it’s essential. The right strategies can help organizations preserve financial stability while continuing to deliver high-quality, patient-centered care that defines their mission.

Understanding the Shift in Reimbursement Models

As we all know, reimbursement is no longer a simple transaction for services provided. Instead, both government and private payers are linking payments to patient outcomes, cost efficiency, and care coordination. In other words, getting paid now depends on more than just delivering care—it’s about delivering the right care, at the right time, in the most efficient way possible.

• From Fee-for-Service to Value-Based Care The shift from FFS to VBC means providers are being reimbursed based on quality and efficiency rather than the volume of services. Programs such as the Merit-Based Incentive Payment System (MIPS) and Alternative Payment Models (APMs) reward organizations for improving care while controlling costs.
• The Rise of Bundled Payments and Risk-Based Contracts With bundled payment models paying providers a fixed amount for an entire episode of care, efficiency and coordination is typically the goal. Meanwhile, risk-based contracts, such as those found in Accountable Care Organizations (ACOs), require providers to assume financial responsibility for patient outcomes. In 2022, 41.3% of payer payments flowed through advanced payment models (Categories 3-4), underscoring the healthcare sector’s commitment to value-based care. (AHIP)
• The Role of Government and Private Payers Medicare and Medicaid are leading the charge in restructuring payments, but private insurers are also adopting similar models. Understanding these payer trends is critical for organizations to negotiate favorable contracts and align financial strategies accordingly. For more on payment models, take a look at the AHA’s article, Current and Emerging Payment Models.

Organizations that embrace these new reimbursement models, optimize care coordination, and use data-driven insights will be better positioned to thrive.

Financial Pressures on Health Organizations

With the multiple challenges health organizations are juggling, they must adapt to shifting payment models while managing operational costs, staying compliant with regulations, and handling the growing administrative burden of performance reporting. Unlike large hospital systems with deep financial reserves, organizations often operate on thinner margins. That makes cash flow a real concern—especially since value-based care models delay payments until quality and cost metrics are assessed.

This lag can put financial strain on organizations, making it harder to cover payroll, invest in technology, or keep up with compliance costs.

Of course, the administrative workload isn’t getting any lighter, either. Compliance with programs like MACRA and MIPS demands extensive data tracking and reporting. Many organizations are forced to invest in new technology and staff training just to keep up. And while these requirements are meant to improve care, they often do the opposite—pulling attention away from patients and adding to overhead costs.

On top of that, consolidation pressure is mounting. Large healthcare systems and private equity firms are actively acquiring organizations, offering financial stability in exchange for ownership. While selling may provide short-term relief, it often comes at a cost: less autonomy, higher patient loads, and reduced flexibility in care decisions. The big question for many healthcare organizations is whether they can stay financially viable without merging into a larger network—or if independence is still worth the fight.

Strategies for Financial Stability in a Value-Based World

To stay financially strong in this changing environment, organizations need to take a proactive approach to financial management. One of the most powerful strategies? Using data analytics to optimize reimbursement. By tracking performance metrics, organizations can pinpoint gaps in care, improve efficiency, and ensure they meet the benchmarks needed for value-based payments. Strong data management also provides leverage in contract negotiations with payers. When an organization can demonstrate its ability to deliver high-quality care at a lower cost, it’s in a much stronger position at the bargaining table. For more guidance on Best Practices, refer to AHIP’s A Playbook of Voluntary Best Practices for VBC Payment Arrangements.

Expanding revenue streams is another smart move. Many organizations are looking beyond traditional office visits, adding services like diagnostic imaging, outpatient procedures, and in-office medication dispensing. These offerings create alternative revenue sources that aren’t entirely dependent on insurance reimbursements. Some organizations are even adopting direct primary care or concierge medicine models, offering subscription-based services that provide predictable income while reducing reliance on third-party payers.

Efficiency is just as critical as revenue. Automating revenue cycle management with artificial intelligence and machine learning can streamline billing, reduce errors, and speed up reimbursements. Outsourcing back-office functions can cut costs and free up time for patient care. For insights and use cases, explore the AMA’s Future of Health: The Emerging Landscape of Augmented Intelligence in Health Care. Most importantly, improving patient outcomes through coordinated care and preventive measures helps ensure that organizations receive the maximum possible reimbursements under value-based care models. In the end, financial sustainability isn’t just about cutting costs—it’s about working smarter, leveraging data, and finding new ways to deliver great care while staying independent.

Navigating Regulatory and Compliance Challenges

Regulatory compliance is often seen as a major hurdle, but it can also be an opportunity. Understanding the details of programs like MIPS and ACO requirements allows organizations to align their financial strategies with government incentives. Instead of viewing compliance as just another administrative burden, organizations can treat it as a roadmap to maximizing reimbursement.

Consider electronic health record (EHR) systems. Many organizations are adopting EHR platforms that sync effortlessly with payer reporting systems, making it easier to submit quality data accurately and on time. These systems aren’t just about record-keeping—they play a crucial role in ensuring compliance and streamlining operations. A great example is the collaboration between MultiCare Connected Care, Regence, and MCG Health. By leveraging HL7 FHIR interoperability standards, they automated the prior authorization process, reducing administrative burden and accelerating approvals.

Case Study: Automating Prior Authorization to Enhance Compliance

The prior authorization process has long been a time-consuming burden, demanding significant effort from both providers and payers—often at the expense of timely patient care. To tackle these challenges, MultiCare Connected Care partnered with Regence and MCG Health to streamline the process. By integrating prior authorization submissions directly into their EHR system, they enabled electronic requests that include all necessary clinical details. This automation not only reduced administrative workload but also allowed for near real-time decision-making, ensuring faster approvals and better patient outcomes.

The automation resulted in several compliance-related benefits:​

• Reduction in Manual Errors: Automating the process minimized the potential for human errors associated with manual data entry, thereby enhancing the accuracy of submissions.​
• Improved Documentation: The EHR system ensured that all required clinical information was consistently included in authorization requests, meeting payer requirements and reducing the likelihood of denials due to incomplete information.​
• Enhanced Timeliness: Near real-time decisions expedited patient access to necessary care, aligning with compliance standards related to timely treatment.​

This initiative not only streamlined operations but also demonstrated how EHR systems could be leveraged to improve compliance and administrative efficiency in healthcare settings.

Staying ahead of payer rule changes is just as critical. Private insurers frequently adjust their reimbursement policies, and failing to keep up can lead to costly revenue disruptions. Finance professionals benefit by making it a priority to stay informed—whether that means ongoing education, collaborating with industry groups, or leveraging technology to track policy updates. Here are some practical strategies that successful organizations use to stay ahead of constantly shifting regulations:

• Subscribe to Policy Change Notifications: Sign up for email updates and policy change alerts through payer websites to receive timely information on modifications. ​
• Schedule Regular Reviews: Establish a routine schedule to review payer websites and bulletins, ensuring that the organization remains informed about the latest requirements. 
• Prioritize High-Volume Payers: Focus monitoring efforts on payers that constitute the largest portion of the organization’s revenue to mitigate the risk of significant financial impacts due to policy changes. ​
• Invest in Staff Training: Provide continuous education and training to staff members on regulatory updates and payer policies to maintain compliance and optimize reimbursement processes.

By integrating these strategies, independent organizations can transform regulatory compliance from a challenge into a strategic advantage, aligning their operations with financial incentives and enhancing overall organization sustainability.

Building Strategic Partnerships

Staying independent doesn’t mean going it alone. Strategic partnerships can provide financial stability without forcing a full merger with a hospital system. Many organizations are teaming up with other groups, sharing resources, negotiating better payer contracts, and cutting costs through group purchasing agreements. These alliances help level the playing field, giving smaller organizations the bargaining power of a larger network while maintaining their autonomy.

Collaboration with payers is another key strategy. Instead of passively accepting standard reimbursement terms, organizations can take a more active role in negotiations. Some are even entering into risk-sharing agreements, where they receive financial incentives for meeting specific cost and quality benchmarks. By engaging directly with payers, organizations can secure better contracts and position themselves for long-term financial success.

Technology partnerships can also be a game-changer. By working with specialized tech providers, organizations can implement advanced billing and analytics solutions that optimize revenue cycle management, track performance metrics, and simplify compliance reporting. These investments don’t just reduce administrative burdens—they also help organizations maximize reimbursements, improve cash flow, and stay financially strong in an increasingly complex healthcare system. Take this case study for example: Atrium Health’s “Hospital at Home” (AH-HaH) program demonstrates how strategic partnerships with technology companies can transform care delivery. By integrating in-person and virtual consultations, remote patient monitoring, and seamless electronic health record integration, Atrium Health improved patient outcomes and reduced hospital costs.

The Future of Independent Healthcare Organizations in a Changing Financial Environment

Looking ahead, reimbursement models will keep shifting, and organizations will need to stay agile to keep up. Value-based care isn’t going away—it’s expanding. Organizations that proactively adapt will be in the best position for long-term success. At the same time, artificial intelligence and automation are reshaping healthcare finance, streamlining everything from revenue cycle management to expense tracking. Those who embrace these technologies will gain a competitive edge.

Consolidation pressures will only grow stronger, making financial strategy more important than ever. The organizations that thrive will be the ones that innovate, diversify their revenue streams, and build strong relationships with payers. Independence doesn’t have to mean vulnerability. With the right strategies in place, organizations can remain financially strong while continuing to provide the high-quality, personalized care their patients trust.

Final Thoughts

Organizations are at a financial crossroads, but they are far from out of options. Shifting reimbursement models demand adaptation, but they also open the door to growth and innovation. Finance professionals play a critical role in helping organizations navigate these changes, ensuring they stay financially stable while continuing to deliver top-quality care.

BHS partners with leading healthcare organizations with a full range of Release of Information services. If someone on your team would like to explore how we can support your facility, feel free to reach out for more information.