HCM FPX 5314 Assessment 3 Value-Based Purchasing and Shared Risk Models

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Capella University

HCM-FPX5314 Driving Health Care Results

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Optimizing Healthcare with Value-Based Purchasing Models

In the past, hospitals primarily utilized fee-for-service or volume-based payment models. These traditional methods incentivized quantity over quality, with financial benefits tied to the number of services provided. This approach, however, led to escalating healthcare costs without necessarily improving patient outcomes. The shift toward value-based purchasing models represents a significant change in the healthcare landscape, focusing on quality rather than volume. This transformation aims to control costs and enhance patient care by rewarding providers based on the value of care delivered.

Transition to Value-Based Purchasing Models

The value-based purchasing (VBP) model is designed to improve healthcare quality and efficiency. Unlike the fee-for-service model, which compensates providers based on the quantity of services, VBP emphasizes the quality and outcomes of care. This model is a response to the need for more patient-centered care and cost-effective practices.

Key Domains of Value-Based Purchasing

The Centers for Medicare & Medicaid Services (CMS) have established four essential domains that healthcare organizations must meet to qualify for incentive payments and avoid penalties:

Patient and Caregiver-Centered Experience/Care Coordination: This domain focuses on enhancing the overall experience for patients and their caregivers, ensuring effective coordination of care.
Safety: It emphasizes reducing medical errors and ensuring patient safety.
Clinical Care: This involves the quality and effectiveness of the clinical care provided.
Efficiency and Cost Reduction: This domain aims to minimize unnecessary costs and improve resource utilization.

Organizations adhering to these guidelines can potentially maximize their incentive payments and deliver higher-quality care.

Impact of Value-Based Purchasing on Healthcare Management

Implementing a value-based model requires significant adjustments from healthcare providers and managers. The transition from a fee-for-service model necessitates a shift in focus toward improving patient outcomes and managing costs effectively.

Healthcare managers play a crucial role in this transition, collaborating with physicians and other stakeholders to make informed decisions on budgeting, policy, and patient care. The value-based model demands that managers prioritize patient experience, clinical efficiency, and adherence to CMS guidelines. Building a collaborative culture and fostering teamwork are essential to navigating these changes successfully.

Shared Risk Models in Healthcare

Shared risk models introduce a different approach by linking financial rewards and risks with healthcare outcomes. Under these models, providers share savings with insurance companies if they successfully reduce costs and improve patient outcomes. Conversely, if costs exceed expectations or outcomes fall short, providers share in the financial losses.

Benefits of Shared Risk Models

Evidence suggests that shared risk models can lead to substantial cost reductions and improved clinical performance. For instance, in 2017, shared risk models contributed to a 3.5% decrease in total care costs and improved clinical quality performance by 9.2% in California. Additionally, patients in these models experienced significantly lower out-of-pocket costs compared to those under fee-for-service arrangements.

Challenges and Strategies for Managing Shared Risk Models

Managing shared risk models requires healthcare organizations to carefully monitor and balance their financial risks. Providers must demonstrate that they meet quality standards while maintaining low operating costs. Failure to achieve these standards can result in negative financial impacts.

To address these challenges, healthcare managers need to focus on maximizing reimbursement potential, improving care quality, and controlling costs. Effective decision-making and strategic planning are crucial for success in a shared risk environment.

Developing a Strong Organizational Culture

A robust organizational culture is fundamental to the success of value-based and shared risk models. Building a culture that aligns with the organization’s values and goals can drive better performance and outcomes. Key strategies for fostering a strong organizational culture include:

Promoting Communication and Collaboration: Encouraging open communication and teamwork among employees helps align the organization’s vision and values.
Leading by Example: Leaders should model the behaviors and attitudes that reflect the organization’s culture and goals.
Focusing on Results and Accountability: Setting clear goals and performance standards and holding teams accountable can drive success and align efforts with organizational objectives.
Prioritizing Employee Well-being: Ensuring employees are supported and satisfied in their roles contributes to a positive work environment and overall organizational success.

Conclusion

The shift from fee-for-service to value-based and shared risk models represents a significant transformation in healthcare management. These models emphasize quality, efficiency, and patient-centered care, aligning financial incentives with improved outcomes. Effective implementation and management of these models require strong organizational culture, strategic planning, and a commitment to continuous improvement. By focusing on these areas, healthcare organizations can enhance their performance, reduce costs, and deliver exceptional care to patients.

References

Beheshti, N. (2018, September 17). 3 Strategies To Build A Strong Company. Forbes. Retrieved from https://www.forbes.com/sites/nazbeheshti/2018/09/17/3-strategies-to-build-a-strong-company-culture/#37a95bd32732

Brown, B. (2018, May 15). Value-Based Purchasing: Four Need-to-Know Domains for 2018. Health Catalyst. Retrieved from https://www.healthcatalyst.com/insights/value-based-purchasing-4-need-to-know-domains-2018

Brown, B., & Crapo, J. (2017). The key to transitioning from fee-for-service to value-based reimbursement. Retrieved from https://downloads.healthcatalyst.com/wp-content/uploads/2014/07/The-Key-to-Transitioning-from-Fee-for-Service-to-Value-Based-Reimbursement.pdf

Damberg, C. L., Sorbero, M. E., Lovejoy, S. L., Martsolf, G. R., Raaen, L., & Mandel, D. (2014). Measuring Success in Health Care Value-Based Purchasing Programs: Findings from an Environmental Scan, Literature Review, and Expert Panel Discussions. Rand Health Quarterly, 4(3), 9.