A reason to renovate: The association between hospital age of plant and value-based purchasing performance

Value-based purchasing (VBP) is increasing in influence in the health care industry; however, questions remain regarding the structural factors associated with improved performance. This study evaluates the association between age of hospital infrastructure and VBP outcomes.

Data on 1,911 hospitals from three sources (the American Hospital Association Annual Survey Database, the American Hospital Association DataViewer Financial Module, and the Centers for Medicare & Medicaid Services Hospital VBP Total Performance Scores data set) were evaluated. Age of health care facilities was represented by the "average age of plant" financial ratio. VBP performance was measured by an aggregate Total Performance Score composed of four equally weighted domains, including Efficiency and Cost Reduction, Clinical Care, Patient- and Caregiver-Centered Experience, and Patient Safety. We hypothesize that average age of plant is negatively correlated with each of these measures.

Hospitals within the lowest quartile of average age of plant (0-8.13 years) were found to have a total Performance Score of 2.35 points higher than hospitals with a an average age of plant in the fourth quartile (14.63 years and above; R = 21.5%; p < .001) while controlling for hospital ownership, size, teaching status, geographic location, service mix, case mix, length of stay, community served, and labor force relative cost. Comparable results were found within the VBP domains, specifically for Clinical Care (β = 4.09, p < .001) and Patient Experience (β = 3.41, p < .001). Findings for the Patient Safety and Efficiency domains were not significant. A secondary and more granular examination of capitalized assets indicates organizations with higher building asset accumulated depreciation per bed in service were associated with lower total performance (β = -.25, p < .001), Clinical Care (β = -.31, p < .05), and Patient Experience scores (β = -.45, p < .001).

The results of this study provide evidence of an inverse association between a hospital's age of plant and specific elements of VBP performance.

To date, no studies have investigated the relationship between hospital age of plant and value-based care. The results of our study may serve as supportive foundational evidence for health care leaders to target future capital investments to improve VBP outcomes.