“Price is what you pay. Value is what you get.” While Warren Buffett may not have been talking about purchasing healthcare benefits, I think he would agree that for too many years, employers, as the largest purchasers of healthcare outside of the federal government, have put too much focus on price and not nearly enough on value.
Looking beyond prices
Employers can use their buying power to push value-based purchasing
So it is apropos that once again Modern Healthcare's Healthcare Purchasing Power Survey results are released the same week as the National Business Coalition on Health's annual conference. This week, nearly 500 healthcare industry stakeholders, including purchasers from across the nation, will convene in Washington to collaborate on value-based purchasing strategies to improve health and transform healthcare, and in so doing, better control costs.
Value-based purchasing strategies can have positive and profound effects on improving the quality and efficiency of healthcare services. Indeed, it is the ignition for broader healthcare delivery reform. Building on the pillars of value measurement, full transparency, provider payment reform, and consumer choice and engagement, value-based purchasing represents a number of activities in which public and private purchasers measure, report and reward healthcare value.
Much has changed in the year since the last survey, yet the significance of value-based purchasing is stronger than ever. Along with many other Americans, I spent a considerable amount of time monitoring the prospects of federal healthcare legislation. Coupled with the massive pressures put on U.S. businesses because of the recession, the issue was engaging and contentious and the stakes enormous. Would health reform pass?
Clearly, the question has now been answered, and it appears that reform is here to stay. Moreover, value-based purchasing as a driver of delivery system reform is embedded within the landmark Patient Protection and Affordable Care Act and now an important part of the health policy lexicon. The healthcare community is faced, however, with a series of more pragmatic questions. How will we implement the various changes? What can we do to manage related costs? How can we help ensure that healthcare quality and the health status of Americans improve? How can we help push payment reform and provider performance transparency? What are the implications for our current benefits? What do we need to do to prepare, especially in light of current economic pressures?
The federal government can't reform the healthcare system on its own. It can be only a catalyst for reform. The real driver still has to be active public and private partnerships established in communities throughout the nation. Like politics, all health and healthcare is local.
To really effect change in the marketplace, purchasers need to have a common request and collaborate on what is most important to move the market. Examples of not-for-profit programs where this is taking place include Bridges to Excellence, an initiative that recognizes and rewards physicians for providing high-quality care; the Leapfrog Group's annual Hospital Survey, which assesses the quality and safety practices proven to reduce preventable medical mistakes; and the NBCH's eValue8, an annual survey and evaluation used by healthcare purchasers to assess and manage the quality and efficiency of their health plans.
The eValue8 survey involves collaboration among the NBCH, the regional coalitions that manage it, the employers that use it and the health plans that accept the challenge of accountability and motivation within their networks of doctors and hospitals. Every time a report is produced, a business coalition, several employers and several health plans are involved. The health plan-customer dialogue leads to improvements in the plan's structure, process and outcomes, and helps to answer the critical question: What are plans doing to advance the value-based purchasing agenda?
The 2010 findings are being shared this week by the NBCH with conference participants, and they indicate significant opportunities to:
- Reduce waste, including decreasing overused procedures and avoidable admissions.
- Address gaps in care such as lack of medication compliance or preventive care/
- Structure payment reforms for programs including pay-for-performance and accountable care organizations.
- Improve consumer engagement through the use of incentives and provider performance transparency.
Undoubtedly, the health of a community at large has significant impact on purchasers. If an employer does everything right with respect to keeping its employees healthy, only to send them back home at night to unhealthy communities, its efforts will fail. By the same token, a single employer does not have the purchasing leverage to transform healthcare delivery.
As more employers recognize the importance of collaboration and use their collective buying power to advance value-based purchasing, they'll have a significant effect on their healthcare markets and the improved health status of the American population.
Andrew Webber is president and CEO of the National Business Coalition on Health, Washington.
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