iProtean—Value-Based Purchasing and Cost

The recent study on value-based purchasing compared projected total performance scores (as defined by CMS as part of value-based purchasing) with Medicare cost report data for corresponding measurement periods.  The results of the study suggest that higher routine costs per day result in the highest level of quality.  When evaluating the cost of patient experience/satisfaction, another component of value-based purchasing, the analysis showed similar results. (W. Shoemaker, “The Cost of Quality: How VBP scores Correlate with Hospital Costs,” hfm, December 2012)


The clinical (quality measure) costs used in the study focused on what are typically thought of as “room and board” and nursing services.  William Shoemaker, the study’s author, noted that the value-based purchasing total performance score measurements provided a means to test “whether quality is free or whether it is the result of investing resources in routine patient care.”


Higher operating costs among hospitals that achieve higher levels of quality as measured by value-based purchasing performance scores “present a paradox for hospitals,” Mr. Shoemaker wrote.  Value-based purchasing is intended to encourage higher quality by putting hospitals at financial risk for quality.  Consequently, hospitals should focus on the quality/cost relationship as they seek to meet or exceed quality measures set forth by CMS through the value-based purchasing program.


Another aspect of this study used a state-by-state analysis of projected total performance scores for urban hospitals compared with rural hospitals under the value-based purchasing program.  Study results suggest that while the total performance scores for the two groups are similar, rural facilities tend to score higher on the patient experience/satisfaction measures, but urban hospitals score higher on clinical process measures.


These data are preliminary and not the actual figures CMS will measure during the first year of the value-based purchasing program.  If used as an approximation of actual results, however, hospitals may want to use such data to evaluate their own performance compared with that of their peers, and plan accordingly. (“Urban versus Rural Performance by State Under Value-Based Purchasing,” hfm, 12/3/2012)


In the upcoming iProtean advance course, Value-Based Purchasing and Accountable Care Organizations, Dan Grauman (DGA Partners) and Nate Kaufman (Kaufman Strategic Advisors) discuss both the positive and negative effects of value-based purchasing and offer suggestions on how to put steps in place to perform well under the program.



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