Forbes Insights recently released “Getting From Volume to Value in Health Care: Balancing Challenges & Opportunities,” a study examining health care professionals’ opinions about value-based purchasing (VBP). At its most basic, value-based purchasing (VBP) asserts that buyers should hold providers of health care accountable for both cost and quality of care.
As one widely used definition puts it: “Value-based purchasing brings together information on the quality of health care, including patient outcomes and health status, with data on the dollar outlays going towards health. It focuses on managing the use of the health care system to reduce inappropriate care and to identify and reward the best-performing providers.”
Medicare’s Value-Based Purchasing program under the Affordable Care Act (ACA) goes into effect on Oct. 1, 2012, the start of the government’s FY 2013. Under the program Medicare will withhold a small part of hospital reimbursement each year and then redistribute it as incentive payments based on specific groups of quality measures.
VBP is now widely seen as a replacement for traditional fee-for-service reimbursement. A crucial unanswered question is how quickly VBP will go from accepted concept to actual contracts. Allscripts Healthcare Solutions, Inc. sponsored the study.
The responses of more than 200 hospital and health system senior executives in the survey reflect the balancing act that’s necessary to get their organizations from the-way-things-have-always-been to the-way-things-will-be without tumbling into a financial chasm because of the-way-things-are now. The executives’ concerns focused on three broad areas: the speed, scope and synchronization of VBP-related change.
“Physicians have been paid on a fee-for-service basis since Hippocrates made his first house call,” said Michael L. Millenson, president of Health Quality Advisors LLC and the author of the report. “Value-based purchasing represents a true paradigm shift to paying for value instead of volume.” Key findings of the study included:
- An Imminent Shift: Almost three-quarters (73%) of the C-suite executives surveyed completely or somewhat agreed that providers must immediately begin shifting their focus from volume to value.
- Disruptive Potential of Value-Based Purchasing: Nearly four in ten respondents (38%) completely or somewhat agreed that VBP is likely to become a truly disruptive innovation.
- Crucial to Win Hearts and Minds: Fully engaging their doctors was seen by surveyed C-suite executives as the top barrier to VBP participation, selected by half of respondents.
- A Warning on Consumer-Driven Health Plans: About two-thirds of surveyed executives believed that consumer financial incentives are key to making VBP successful (64%). However, about the same percentage (67%) also thought that consumers won’t know when that success arrives, since they can’t judge the value of medical care accurately. That’s a flashing warning sign for those who believe that the high-deductible health insurance arrangements known as consumer-driven health plans will automatically drive value-based purchasing on the part of the patient.
- VBP Will Require Seamless Communications: Nearly half of respondents chose system integration across all applications (49%) and health information exchange (47%) among their top IT spending priorities for VBP over the next three years.
- The Critical Role Played by Health IT in Both Financial and Clinical Preparedness: This can be seen by what C-suite executives single out as its most important uses, such as identifying patients who generate high costs within the hospital (66%) and in the ambulatory environment (56%); ensuring evidence-based protocols are available to nurses and doctors (61%); and getting complete and current information across the care continuum (58%).
- Vital to Manage Chronic Disease: Asked to choose which three clinical, financial or patient engagement challenges are most important for a successful VBP transition, hospital executives most often picked “effective use of intervention strategies for chronic disease patients” (60%). Almost as many (55%) chose “improve patient education and engagement.”
- Executives also said that challenges to VBP include reducing preventable readmissions (49%); improving patient/family experience and satisfaction (47%); and improving transitions of care through better coordination (45%)
Despite the challenges, executives interviewed in greater depth shared a common optimism. As Dr. Robert Margolis, CEO and managing partner of Torrance, Calif.-based HealthCare Partners, put it: “You manage by having a strong vision people believe in, mission and values, and lots of communication.”
“We are committed to helping our clients through this change, which is why we sponsored this survey,” said Glen Tullman, Chief Executive Officer of Allscripts. “The results make it clear that the industry sees some hurdles to making value-based purchasing work. We’re continuing to develop tools and solutions to help our clients make the shift successfully.”
Somewhat surprisingly, 63% of those surveyed are either participating in a Medicare ACO already or expect to do so eventually—though it’s unclear how long it will be before those “expectant” ACOers give birth to a fully formed risk-bearing entity. The majority of survey respondents also said they’d been approached by private payers and/or state and local payers regarding VBP.