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Value-Based Purchasing Model Waits for No One

Philip Betbeze, for HealthLeaders Media, February 7, 2014

For a variety of reasons, many healthcare organizations have delayed the necessary operational moves they need to make to be able to compete on value. There's still time, but not much.

I promised to come back this week with some solid recommendations for those of you who have delayed the transformation of your business model from a volume-based one to one based on value. It's the current holy grail of healthcare to make this transformation, yet many obstacles stand in the way, not the least of which, for many of you, is survival.

Let's be honest: It can cost a lot to transform. Changes in labor, internal and external incentives, possible loss of volume, bad IT engagements—all must be factored into a transformation of this magnitude. CEOs like to tell me it's like turning a battleship—slow. Wouldn't it be nice to just have to turn it once? I'd argue it's more like navigating a clipper ship around the Cape of Good Hope—lots of twists and turns, with strong winds and storms likely. Subtle and sometimes not-so-subtle course corrections will be required.

Many organizations are hoping to navigate this transition by forming or joining an ACO. But that's just a destination. Getting there is the bigger challenge. Some hospitals and health systems are way down this road. They've spent precious capital on hardware and software and labor to better coordinate care and, ideally, provide less costly interventions before more costly ones are required.

But many, perhaps most, have not.

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