Create a Value Analysis Program That Impacts Your Healthcare Organization’s Reimbursement, Delivers Even Greater Value, and Enhances Patient Care

Now that U.S. healthcare systems report that 29% (and growing by 6% annually) of their payments are from alternative payment models, not fee-for-service,  we in the value analysis community need to realize that the reimbursement game has changed in healthcare forever, so we must change too. With this change in reimbursement in mind, I have listed three VA goals and objectives that you should be considering as a survival strategy in 2018.

1. Hold Your Vendors Accountable for Their Promises and Guarantees: It’s not enough to accept a vendor’s projected savings estimate, or even your own, with a clinically acceptable product, service, or technology. Value analysis teams must now hold their vendors accountable with audits for their promises and guarantees. This is because your hospital, system, or IDN, in almost a third of your third-party contracts (and growing every year), will be held accountable for cost, quality, and outcomes.

2. Ensure That Your Value Analysis Process is Value-Based: This means that your value analysis process is built on incentives, penalties, and rewards for your vendors for improving your quality care. For instance, if a product, service, or technology professes to reduce urinary tract infections by 30% and it delivers a 45% improvement, your vendor should be rewarded for this achievement. Likewise, if your vendor missed their target of 30%, then they should be penalized for their failure. This value-based approach should all be stipulated in your contract terms and conditions for all of your commodity groups.

3. Have Your Vendors Assume Some Ownership in Your Patient Outcomes: No longer should you accept a vendor’s claims or promises at face value, especially if they are related to your patient outcomes. They now need skin in the game! As an example, as part of a new drug contract with Aetna, Merck assumed some financial risk for its type 2 diabetes medications Januvia and Janumet. If Aetna members with type 2 diabetes taking those drugs don’t meet certain goals, such as hitting their A1C or blood-sugar targets, Merck will pay a rebate to Aetna that increases depending on the number of patients who miss the targets. However, if patients hit those goals, which are measured by analyzing data from Aetna’s claims database, Merck will not make any extra payments to Aetna. That’s how you tie your vendor’s performance to your outcomes.

As you can imagine, if your hospital, system, or IDN is now being reimbursed based on alternate payment models (e.g., value-based, bundling, or fixed cost per procedure) for 29% of their volume, just getting a better price for the commodities you are buying isn’t going to improve your bottom line. Your value analysis program will need to be more strategic to survive. These three goals and objectives we believe will be a good starting point for you to create a value analysis program that impacts your reimbursement, delivers even greater value, and enhances patient care.