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Can VBP Put Healthcare on Right Track?

Margaret Dick Tocknell, for HealthLeaders Media, February 20, 2013

Cost control
As reimbursements change, reducing costs will play a prominent role for healthcare organizations. Process improvement (80%), labor efficiencies (62%), and supply chain efficiencies (57%) were the top three areas that respondents expect to focus on in the upcoming year to reduce costs.

A number of advisors mentioned their adoption of programs like Toyota Lean, which implements processes to optimize resources, assets, and productivity while improving quality. Vonderfecht notes that according to some literature there is 40% waste in healthcare processes.

At MSHA, a consulting firm has embedded full-time workers into the system to teach the Lean process and make it part of the culture. MSHA expects to have 2,000 of its employees involved in "rapid improvement events" associated with various value streams by midyear.

The key is "involving frontline people in process improvement" and moving quickly, says Donna Poduska, vice president and chief nursing officer at Poudre Valley Hospital, a 270-licensed bed regional medical center in Fort Collins, Colo. She explains that hospital officials might agree to change staffing for a few days to see whether the change is worthwhile. "We do it really fast. It could be a bust, so we don't wait and watch for a few months. Our decisions are faster."

Fueling growth
As the delivery of acute care medical services moves beyond hospital walls, it is not surprising that survey respondents identify among their top five methods to fuel growth expanding outpatient services (first, with 57%), entering into joint ventures (fourth, with 41%), and acquiring physician practices (fifth, with 38%).

Louis Papoff, vice president and CFO of ambulatory operations in the Chicago market of Nashville-based Vanguard Health Systems, credits accountable care organizations with the interest in outpatient services. The ACO approach of improving the quality of outcomes while cutting costs is "a value proposition. The objective is a reduction in bottom-line costs for the patient pertaining to an unnecessary or avoidable hospital admission." He points to the consideration of service lines for behavioral health and nutritional counseling as "a confluence of multiple approaches that are beginning to gel into one prevailing trend."

As for joint venture and physician practice acquisition, Papoff says both actions are "tried and true" and reflect the need to get all the parties in a care continuum as closely aligned as possible.

"It's relatively straightforward to assess a practice and to assess how we could improve operations." He says the medical home, which tries to provide for most, if not all, patient medical needs at one location with one coordination team, is "the more interesting approach," but without the track record "it's harder to get your mind around it. There's a level of uncertainty."

Reprint HLR0213-3


This article appears in the January/February 2013 issue of HealthLeaders magazine.


Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.
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1 comments on "Can VBP Put Healthcare on Right Track?"


Richard Newell, MD (2/22/2013 at 12:58 PM)
Although CMS and the federal government have high-hopes for value based purchasing (VBP), it is truly a work in progress. While it will most likely improve performance on specific clinical process measures, it remains too early to tell if it will actually improve long-term quality patient outcomes. It is refreshing to see that many hospital administrators are optimistic, however for hospitals to excel at VBP and beyond, they will clearly need to partner with physicians and physician groups who are already committed to quality improvement and who readily align themselves with hospital-wide goals across the acute care continuum.