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Is There a Relationship Between Value-Based Purchasing and Hospital Profitability? An Exploratory Study of Missouri
Jason S Turner1, Kevin D Broom1, Michael A Counte1
1Department of Health Management & Policy, Saint Louis University, Saint Louis, MO, USA.
Summary
The value-based purchasing (VBP) program for Medicare inpatient payments shows minimal adjustments (±0.18%) and no correlation with hospital financial performance. This small incentive may not drive hospitals to improve patient care and efficiency.
Area of Science:
- Health Policy
- Healthcare Economics
- Hospital Administration
Background:
- US legislation is shifting Medicare inpatient payments to a value-based purchasing (VBP) program.
- This pay-for-performance (P4P) system incentivizes hospitals for improved patient satisfaction, health outcomes, and clinical protocol adherence while managing costs.
Purpose of the Study:
- To evaluate the impact of financial performance on VBP adjustments.
- To determine the correlation between VBP adjustments and the financial performance of Missouri hospitals in the program.
Main Methods:
- Analysis of VBP adjustments for Missouri hospitals.
- Correlation assessment between financial performance and VBP adjustments.
Main Results:
- VBP adjustments to the inpatient base rate are minimal (±0.18%) and centered around zero.
- No significant correlation was found between VBP adjustments and hospital financial performance.
- Prior financial performance and improvement did not correlate with VBP adjustments or their components.
Conclusions:
- The current VBP adjustment is too small to provide adequate financial incentives for hospitals.
- CMS may be avoiding penalizing less profitable facilities, but the program's incentive structure is questionable.
- The costs associated with improving performance metrics may outweigh the minimal VBP financial benefits.
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