Value Based Purchasing
Value is the relationship between the price of a product and the quality of the product. While value-based purchasing is not a new concept to other industries, it has not been applied to health care until recently because of the unique and personal nature of health care.
Traditionally, hospital financial departments and clinical quality staff had very little interaction probably because their department goals seemed in conflict. While the finance department focused on keeping costs down, the clinical quality staff was viewed as wanting to make sure that every possible test and procedure was performed for every patient.
But we have come to realize that in health care more is not always better. Unnecessary procedures and tests needlessly expose the patient to the risk of hospital-acquired medical problems, which can be very dangerous to the patient and very costly to treat. On the other hand, sending a patient home too early can result in a costly readmission. In some cases, insurers and government programs have stopped paying the hospital for treatment of preventable health-acquired conditions and readmissions, making a strong business case for aligning the goals of finance and clinical quality departments. Their goal should be making sure the patient gets the right treatment at the right time at the right price. The "right treatment" should be standard and based on scientific research, not the way any one physician has always treated certain conditions.
To help South Carolina hospitals move to value-based purchasing, SCHA and the University of South Carolina Educational Foundation have created a pilot program to bring hospital finance and quality experts together to identify the best ways to align quality and cost, assess the financial risk associated with payment rules and regulations, and develop a dashboard of measures to help hospital CEOs and governing boards determine the value of the care their hospitals provide.