Value Based Purchasing

What Value-Based Purchasing Means For The Industry

Where do we go next?

If you are in the medical industry, you may have heard of the term value-based purchasing. If you have not heard this term, there is no doubt you will hear of it soon! Introduced in early 2012, Medicare established new policies regarding reimbursement to hospitals—this is known as value-based purchasing (VBP). VBP holds health care professionals accountable for the quality of care provided to patients and the expenses accrued, while tying provider reimbursement to these factors. In itself, this is not necessarily a bad concept because it forces under performing healthcare centers around the country to change the way they do business or face penalties. Whether everyone in the industry can adapt to the reforms within the set timeline is another matter.

The policy established is that Medicare will now reward hospitals that meet and exceed strict new rules set in place regarding hospital-acquired infections and readmission rates. Medicare will also reward hospitals that provide better healthcare and do it on a budget. However, hospitals that cannot meet these strict standards will be penalized, forcing them to reevaluate how they run their hospital. This seems to be the government's version of sorting the “wheat from the chaff,” but the truth is that if you further penalize health services that are already struggling to keep up, they will eventually be deemed uneconomical and will disappear, leaving the local community with nothing. This is why major reforms are needed in to prevent hospitals from essentially going bankrupt.

In 2010, it was estimated that, on average, hospitals needed to reduce expenses by 14% in to meet Medicare standards. With even more reductions required moving forward, the number of changes required seem completely overwhelming for a lot of medical centers. Although there are guidelines and strategies set out to facilitate these new policy changes, the question is whether this is enough not only to pull everybody back within the budget, but also further reduce costs while improving the overall service provided to the patient. The answer is—probably not.

There are a few things that cannot really be argued when carefully examining the evidence. Before 2008, the industry as a whole was a lot more reactive in dealing with cases such as catheter-associated urinary tract infection (CAUTI). In fact, in 2005, a study showed that less than 25% of hospitals had a system in place to record how many patients were catheterized. Today, with greater emphasis on prevention such data are more actively gathered, improving both patient care and budgets. However, there is still a long way to go in order to satisfy Medicare's seemingly paradoxical goals of cutting expenses and improving patient healthcare methodology.

Medicare's assumption seems to be that hospital-acquired infections (HAIs) and readmission rates are mostly due to human error and bad practices. By putting training and systems into place to reduce the number of these errors, the majority of cases—and therefore the costs involved—will be significantly reduced as well. Though this may be true, it is not the only tool at most hospitals have at their disposal.

A good example would be employing innovative products with proven cost-cutting capabilities that can remedy the shortcomings of existing technology no longer able to meet levels of patient healthcare satisfaction the industry must provide. The roadblock to implementing innovation is that the outdated systems that are currently under scrutiny by Medicare are the same lengthy processes and ineffective protocols that hinder the progress in purchasing and integrating these new cost-cutting technologies. However, the landscape is changing and the medical industry is under pressure to come up with solutions. Forward thinking hospitals that are willing to expand past protocol and red tape will certainly reap the rewards.

To learn more about how the new Duette™ catheter is helping lower readmission rates to hospitals, how it can provide preventive measures to lower the risk of infection, and how this coincides with value-based purchasing, please visit our homepage.


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