Report: Hospitals need to get ready for value-based purchasing

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Beginning Oct. 1, 2012, Medicare will link financial payments to hospitals to quality outcomes and patient satisfaction under a value-based purchasing model (VBP). An analysis of U.S. hospital performance indicates a median VBP score of 53, when hospitals likely will need scores higher than 70 to maximize their Medicare reimbursements, according to VHA, which conducted the analysis.

The analysis showed that patient satisfaction scores acted as a drag on the overall score.

"Many hospital executives are shocked to see their overall performance score, and they are concerned when we begin to explain the potential impact on their organization in a value-based purchasing environment," said Trent Haywood, MD, VHA's chief medical officer and the former deputy chief medical officer at the Centers for Medicare & Medicaid Services (CMS). "Hospitals are doing well across the board relative to their clinical core measures, but their [patient satisfaction] scores will place them at risk."

Haywood noted that hospitals will receive CMS reimbursement incentives for either achieving the baseline performance score or for achieving a specific level of improvement relative to their baseline score. This means that taking action now is important even for hospitals that are performing poorly and for whom top decile performance seems unattainable.

Related to VBP is the Hospital Value Index. The 2009-2010 Data Advantage Hospital Value Index ranked hospitals by an independent analysis of each hospital's quality, affordability, efficiency and patient satisfaction performance. Out of the more than 4,500 hospitals that were analyzed, 747 were identified as providing the Best in Value care. Representatives of Data Advantage presented the study last year to members of Congress as they mulled over VBP.

"The Hospital Value Index is the first-ever and only benchmark to analyze these components to help hospitals understand their value proposition," said Hal Andrews, CEO of Data Advantage, at the time.

According to the Irving, Texas-based VHA, key findings in the Hospital Value Index include:

  • The highest value hospital care is often provided by community-based hospitals, suggesting that consumers may find high value close to home and that policymakers should expand their search for models of reform beyond "name-brand" teaching hospitals.
  • If all hospitals in the U.S. performed at the average benchmark for the Best in Value hospitals, 9.3 perecent of costs, or approximately $60 billion, could be eliminated from annual hospital spending on an all-payer basis.
  • The highest ranked hospitals in the study are geographically diverse, with the top 10 hospitals located in Dothan, Ala.; Minden, La.; Tawas City, Mich.; Clarksburg, W.V.; Gastonia, N.C.; Maysville, Ks.; Elmira, N.Y.; Mechanicsville, Va.; Holland, Mich.; and Winston-Salem, N.C.
  • Of the 100 largest metropolitan areas in the U.S., the highest ranked markets are Charlotte, N.C., Rochester, N.Y., Grand Rapids, Mich., Pittsburgh, Pa., and Knoxville, Tenn. Markets with a population of less than 2,000,000 outperformed markets with a population of more than 2,000,000.
  • There was no appreciable difference in performance between teaching hospitals and non-teaching hospitals.
  • The study found the gaps in hospital value can be dramatic. In one example, the study found the cost for the same medical procedure provided with the same quality of care at hospitals less than two miles apart can be more than $10,000.