Value-Based Purchasing Comes to Healthcare

Although value and quality may be an old cliché that always turns up in car ads, for a patient paying the bill, shouldn’t they have the same mindset for a new knee or hip that costs as much as a car?  Starting Oct. 1, 2012, CMS will institute the national hospital value-based purchasing (VBP) program as mandated by the Patient Protection and Affordable Care Act (PPACA).  It’s amazing how some hospitals really get the connection that technology can have a large impact on value and patients’ outcomes.

I was planning for an emerging technology webinar with the corporate vice president of innovation for a large hospital chain, and one of his concerns was technology and the upcoming value-based purchasing legislation.  So, what is at stake?  Hospitals face a loss of 1% of their Medicare DRG payments in 2013 and 2% by 2017 if they do not meet the quality incentives.   According to estimates, the average hospital will lose over $888,000 per year if they do not meet the quality criteria.

I spoke with Michelle Y. Pieterse, RN, musculoskeletal service line coordinator, University Medical Center in Tucson, AZ, whose facility has already addressed quality and value by looking closely at implants and their orthopedic service line as a whole.  She said, “Quality and value is huge.  When focusing on orthopedics, I concentrate on some of the complications that we have had, which allows us to see what we are doing wrong and where the complications arise.”

Ms. Pieterse also noted the connection between technology and length of stay.  She stated, “We are trying to decrease our length of stay and trying to follow Medicare guidelines because they dictate how long you can stay in the hospital.  We have found that some implants and practices are better than others.  This is good because the longer you stay in a hospital, the greater the chance of getting an infection.”

We know what’s at risk, but what’s the benefit of this initiative?  Based on CMS’ pilot project (Hospital Quality Incentive Demonstration), providers can improve their quality scores by 17.2% across five clinical areas, which enables an estimated $4.5 billion in savings.

So, what should a hospital do?  First, make sure your IT infrastructure is in place for the outcomes reporting.  Then, invest in technologies and adopt practices that reduce hospital-acquired conditions and promote better patient follow up.  AHRQ has an excellent resource that will help with the process.

James Laskaris, EE, BME
James Laskaris, EE, BME, Clinical Analyst — Mr. James Laskaris is a senior emerging technology analyst at MD Buyline and has been with the company since 1994. With over 30 years of experience in the healthcare field, Mr. Laskaris is the primary analyst of high-end OR technology. He also covers issues related to the legislative and reimbursement effect on healthcare and authors a bimonthly “Issues that Matter” publication. Mr. Laskaris received his biomedical engineering degree from Southern Illinois University. His work has been published in hfm Magazine, Radiology Manager and Healthcare Purchasing News.