Value-Based Purchasing

On April 28, 2011, the U.S. Department of Health and Human Services (HHS) formally launched a new initiative designed to adjust Medicare reimbursement on the basis of quality measurements.

The Hospital Value-Based Purchasing (VBP) program, administered by the Centers for Medicare & Medicaid Services (CMS), marks an unprecedented change in the way Medicare pays healthcare providers for their services.

Under the new program, hospitals will receive incentive payments based on how well they perform on 12 clinical process measures and nine patient experience measures or on how much their performance improves relative to a baseline performance period.

It is estimated that:

  • There will be an average Hospital VBP revenue risk of $500,000 to $800,000 annually, which will approach $7M over five years
  • Only a small percentage of hospitals will keep 100% Medicare payment
  • Over the next five years, higher performing organizations need to cut existing costs by 25%, and lesser performing facilities need to cut 50% to maintain the same margins as today

The cost of supplies, medical devices and equipment will be directly tied to cost reduction, as a decision will be made as to whether the hospital should purchase generic and non generic drugs, medical devices and equipment.

Building a sustainable, strategic supply chain requires understanding an organization’s short-term and long-term objectives. Every facility should complete an assessment. Advanced technology can help in these cost saving measures, such as utilizing the Synthium Health online platform for purchase of medical devices and supplies.

Synthium Health’s Value-Based Supply Chain Platform delivers the following benefits to hospitals:

  • Renders supply cost savings
  • Meets the VBP requirements for Quality Measures
  • Offers the infrastructure to track real time price purchasing accuracy
  • Provides a proven clinically integrated sourcing process