Value Gets a Fresh Spin

The Affordable Care Act is loaded with references to "Value-based Purchasing," which means, colloquially, that you got a good deal on what you bought.  The Act urges providers to become clinically integrated and share risk for outcomes in accountable care organizations (Section 3022), episode-based payments (Section 3023), and medical homes (Section 3502).  It also discourages providers that are unwilling to share results publicly (Section 3002) or take responsibility for avoidable readmissions (Section 3025).

The name of the Act uses the word "affordable."  The Act itself is wrought with "value" verbiage.  OK, we're starting to get the idea of the purpose of the Act.  But in order to make health care affordable, and something clearly of value, then we'll have to go well beyond choosing just the right words to weave into an unwieldy tome.  So if we were to look closely into "Value-based Purchasing," in terms of what it really means, we might be a little disappointed.  In fact, the etymology of this phrase could be traced back to a government study conducted in 1996 by the Agency for Health Care Policy and Research (AHCPR).  It provides a nice walk down memory lane, referring to "pioneers" that no longer exist (e.g., DEC) and defunct consulting firms (e.g., Foster Higgins) in place to assist.  More importantly, it highlights the lack of evolution in the clarity of the phrase in terms of meaning and application.  Because if you were to search further, in terms of how much the concept has developed in the last 15 years, you won't find much.  Those few employers that were leading the initiative then are either no longer in business or have abandoned the effort in favor of more employee cost sharing.  Health care claims/premiums spiraling out of control?  Hire less people and make sure the employees in place assume responsibility for any forthcoming cost increases.  To some extent, employers backed into this strategy because managed care and "flexible benefits" failed to stem the rising tide.  And employee consumerism failed to take hold on any grand scale because the "pass the buck" approach to risk factors was just as strong then as it is now.

So "let's forget all the hyperbole and hit the employees with the increases" strategy is actually reasonable if you are willing to dismiss the relationship between reward/penalty and motivation, and the underlying "value" of motivation in terms of financial results in a given organization.  But if you see a relationship between pay cuts, which is what increased employee cost-sharing represent, and employee performance, which has been proven to depend on a reliable system of rewards, then as an employer it would behoove you to put some meat on the bones of the "Value-based Purchasing" spin coming out of Washington, D.C.  To a large extent, at least conceptually, the Federal government has meated that bone with 4 distinct provisions of the Act talking about Value-based Purchasing.  But this is the same government that gave Grumman $659 for an airplane ashtray back in 1985, and given the current Federal budget deficit, it is difficult to determine how much they've been spending on ash trays lately.  What isn't difficult to determine is that ideological outbreaks expressed legislatively bear no relationship to fiscal responsibility; this much the Federal government has proven.  The message? "Do as I say, not as I do."  If you are not hampered by hypocrisy, then the task before you -- the design and execution of a legitimate Value-based Purchasing system -- awaits.

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