VBCIndex — Value-Based Care Intelligence

At VBCIndex, we speak with health system leaders every day who are grappling with an increasingly complex financial landscape. You're balancing spiraling costs, workforce shortages, and the imperative to deliver high-quality care, all while trying to navigate the transition to value-based care (VBC). It’s a tightrope walk, and sometimes, tough decisions about services and facilities feel unavoidable.

The Problem: Necessary Cuts, Unforeseen Consequences

Consider the story of Troy, New York. When a multi-billion dollar health system, Trinity Health, announced its plan to close the Burdett Birth Center – the city's last remaining birthing center – it seemed like a straightforward financial decision. Steven Hanks, a physician overseeing Trinity hospitals in the region, articulated the difficult reality many systems face: “We’ve been frantic about trying not to cut the care at the bedside. But, you know, you get to a point where you can only consolidate so much. You can only spread people so thin, and then you have to start taking harder looks at your actual services.”

For large systems, consolidating services to achieve efficiencies and improve margins is a common strategy. Since 2010, hundreds of maternity units have closed across the country. From a corporate headquarters perspective, often far removed from the local community, the numbers on a spreadsheet can seem compelling.

What Changed: The Power of Community and Eroding Trust

What Trinity Health may not have fully anticipated was the immediate and fierce backlash from the Troy community. Mothers, midwives, doulas, and elected officials from both major parties united against the closure. They saw a vital community service, celebrated for its patient-focused care and lower C-section rates, being sacrificed for a “corporate type of atmosphere,” as Troy Mayor Carmella Mantello described the changing hospital scene. Jessica Hayek, a doula and birth educator who helped lead the campaign, articulated the core disconnect: “Trinity Health is in the Midwest, and they are not in the community. So when you’re looking at just the numbers from an office in the Midwest somewhere, they’re not looking at the benefit that this place has on the community.”

This wasn't just local sentiment; it reflected a growing national skepticism. As Lois Uttley, a New York City-based researcher, observed, “The executives of these health systems will tell the community that joining a big health system will be good, that the quality of care will improve, that efficiencies will mean they can keep the costs low. But what I have seen over the last 30 years of work is that those promises often are broken.” Ultimately, with state and political pressure, the closure was reversed, securing $5 million in state funding to keep Burdett open.

Here's What Smart Organizations Are Figuring Out:

The Troy story offers profound lessons for health systems aiming to balance financial sustainability with strategic growth, particularly in a VBC landscape:

Margins Are More Than Numbers on a P&L: A service closure might boost short-term margins, but the long-term costs – reputational damage, loss of community trust, political backlash, and diminished ability to engage patients for future VBC initiatives – can far outweigh initial savings. Smart organizations understand the holistic financial impact.
Community Health is the Bedrock of VBC Scale: Value-based care success hinges on population health management and proactive community engagement. Birthing centers, for example, are crucial for preventative maternal and infant health. Removing such a vital service undermines the very foundation of VBC, making it harder to achieve better outcomes and manage costs across a population.
Proximity and Access are Non-Negotiable for Equity: The Troy survey found 1 in 4 residents lacked car access, highlighting how service closures disproportionately impact vulnerable populations. VBC requires equitable access to care. Distant facilities create barriers that directly contradict VBC goals of improving health equity and reducing avoidable acute care.
Your Community is a Strategic Partner, Not Just a Patient Pool: Engaging with community leaders, patient advocates, and local government before making critical decisions builds trust and can uncover creative solutions. The bipartisan unity in Troy demonstrated the immense power of a united community. Ignoring this stakeholder can lead to costly and reputation-damaging battles.
The "Corporate" Label Erodes VBC Potential: When health systems are perceived as prioritizing profits over people, it creates a chasm of distrust. This makes it incredibly difficult to enroll patients in VBC programs, encourage preventative behaviors, or foster the long-term relationships essential for managing chronic conditions effectively.

Your Action Plan for Navigating this Landscape:

As you strategize for the future, consider these steps to align your financial health with your community mission and VBC objectives:

Embed Community Impact Assessments: Before any major service change or consolidation, conduct a thorough community impact assessment. Go beyond demographics; understand local transportation, socioeconomic factors, and the perceived value of specific services from the community's perspective.
Develop VBC-Centric Financial Models: Re-evaluate traditional cost-benefit analyses. How does a birthing center, while potentially a “cost center” in a fee-for-service world, become a “value driver” in VBC by reducing preterm births, improving maternal outcomes, and fostering long-term patient loyalty?
Proactive, Not Reactive, Community Engagement: Don't wait for a crisis. Establish ongoing forums for dialogue with community leaders, local government, and patient groups. Demonstrate transparency and a willingness to listen. Proactively communicate challenges and explore solutions together.
Leverage Public-Private Partnerships: Explore opportunities for state or local funding, as seen in Troy, or collaborate with community organizations to sustain vital services. VBC incentivizes broader community health, which can attract public investment.
Reaffirm Your Mission through Action: In an era of increasing skepticism, actions speak louder than words. Consistently demonstrate your commitment to community well-being, not just through charity care, but by strategically investing in services that support population health outcomes and reinforce your VBC aspirations.

The Troy story is a powerful reminder that while financial discipline is non-negotiable, the “hospital scene has changed.” Successfully scaling VBC and ensuring long-term viability requires more than just efficient operations; it demands deep community integration and a strategic understanding of how mission-driven care fuels sustainable margins. Learn more about how VBCIndex can help your organization align strategy with community needs and VBC success by visiting our insights page.