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The Problem With Value-Based Purchasing
AHLA Weekly (2014)
  • Craig B. Garner
From its inception on October 1, 2012, the Hospital Value-Based Purchasing (“VBP”) Program shifted Medicare’s paradigm to emphasize performance over costs in determining hospital reimbursement. Reducing the overall Medicare reimbursement to hospitals by an estimated $1.4 billion for Fiscal Year (“FY”) 2015, the VBP Program was quick to secure the attention of the nation’s health care providers. Technically “budget neutral,” the VBP Program will return this same $1.4 billion to hospitals the following year in the form of performance incentives. As the Federal Government waits to assess the accuracy of its prediction, the FY 2015 reduction of 1.50% will finally level off at two percent (2.0%) in 2017. An additional two years, however, are unnecessary to evaluate the VBP Program under fundamental accounting principals when using a general overview into the ways in which successful and profitable companies operate. Viewed from this perspective, the VBP Program is fundamentally flawed, and data from 2015, 2016 or 2017 will not present opportunities for correction. This article suggests that while smaller hospitals may bear the greatest collateral damage from the VBP Program, larger systems will suffer as well. The number of hospitals forced into financial distress or insolvency by the Hospital VBP Program remains to be seen, although consideration should be given to the number of hospitals lost to their communities it would take to undermine the projected benefits relating to outcomes, safety, and the overall patient experience.
Publication Date
October 30, 2014
Citation Information
Craig B. Garner. "The Problem With Value-Based Purchasing" AHLA Weekly (2014)
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