How the VA in Using Value Based Purchasing to Improve Health Care Business Plan

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components of value-based purchasing (VBP) that are most pertinent to the U.S. Department of Veterans Affairs (VA) based on its vital mission to provide high-quality health care services to the nation's veterans while identifying opportunities to reduce costs and improve efficiencies in ways that promote improved clinical outcomes in measurable ways. The study also describes the three departments of a VA medical center that will be most important in implementing VBP, purchasing services, nursing services, and ambulatory care services and provide appropriate goals for this purpose. Because the three selected departments are at different stages of their VBP implementations, the preparation needed to achieve their VBP-related goals will vary, but staff will need to be educated and trained concerning the basics of VBP and how they apply to their unique departmental situations and all three departments must develop appropriate performance measures that can be used to determine the cost-effectiveness of their operations in terms of clinical outcomes. Because the VA funding source is different from non-VA healthcare facilities, the goals of the VA's VBP program to reduce costs, improve efficiencies, and promote improved measurable clinical outcomes will be comprised of the following selected components: adopt and publish relevant metrics for comparison with non-VA facilities; provide accessible means of collecting feedback from key stakeholders; provide individualized treatment planning; add value and eliminate waste along every step of the supply chain; increase value-added opportunities by evaluating and supporting more efficient clinical practices; simplify the VA Leadership Performance Contract; perform a thorough evaluation of the current state of VA health care services; and, conduct a thorough environmental scan to provide the basis for annual veteran service planning. Finally, a discussion concerning the education and training that will be needed to achieve the VA's current VBP-related goals is followed by a summary of the research and important findings concerning these issues in the study's conclusion.

Value-Based Purchasing at the U.S. Department of Veterans Affairs

Introduction

Although the United States continues to spend up to 81% more on health care services per capita than any other country today, the nation continues to compare unfavorably with many other industrialized countries today (Kavanagh & Cimiotti, 2012). In fact, the health care system in the United States continues to suffer from rapidly increasing costs and lower quality care versus other industrialized countries across a wide range of measures (Kavanagh & Cimiotti, 2012). In response to this failure to achieve satisfactory results despite these enormous investments, the Patient Protection and Affordable Care Act (PPACA) mandated that the Centers for Medicare & Medicaid Services (CMS) implement a value-based purchasing (VBP) strategy to improve the quality of health care services while also reducing their costs (Kavanagh & Cimiotti, 2012). Because the PPACA only offers an outline for change, there also remains a need to identify the optimal approaches for implementing and administering VBP solutions (Kavanagh & Cimiotti, 2012).

These are especially important issues for the Department of Veterans Affairs' (VA) which is the largest health care provider in the United States today. This organization's mission to provide the highest quality medical care to the nation's veterans also makes the need to identify the most cost-effective, evidence-based solutions timely and relevant. One strategy that has proven efficacy for this purpose is value-based purchasing (VBP). This paper evaluates the VA's current position and strategy for the implementation of VBP requirements at the medical center level. A discussion concerning the key stakeholders and the critical departments of the VA that will be involved is followed by a strategic plan to fully implement VBP over the next 3 years. Finally, a summary of the research and important findings concerning the foregoing issues are provided in the study's conclusion.

Evaluation concerning the degree to which the VA has embraced VBP

In reality, VBP suffers from some misperceptions concerning its tenets and purposes among some practitioners, due in part to the stress on "purchasing" in the term, but VBP includes a much wider range of activities that are intended to improve the quality of health care services provided by clinicians. For example, according to the definition provided by the National Business Coalition on Health's Value-based Purchasing Council, value-based purchasing (VBP) is "a demand side strategy to measure, report, and reward excellence in health care delivery" (Value-based purchasing overview, 2016, para. 2). Likewise, Burgess (2011) reports that VBP is "a relatively new term in health care that encompasses, at its heart, the idea that the value equation includes both utilization or cost of services, and the quality of care delivered with those services" (p. 2).

Given the recent failures of the national health care system in general and the high-profile failures of the VA in particular to deliver excellence in health care in its nationwide network of 152 medical centers, it is clear that VBP represents a useful framework in which to systematically implement steps that will transform the organization into a world-class health care provider.

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Moreover, the improved clinical outcomes that can be achieved using VBP are also needed by the VA because the organization competes with the private sector for some types of patients (Burgess, 2011). To the extent that the VA succeeds in improving its quality of health care services will likely be the extent to which it is able to more effectively compete for these patients while simultaneously improving the quality of health care services for all of its veteran patients. As the National Business Coalition on Health's Value-based Purchasing Council emphasizes, organizations that use VBP "are rewarded with improved reputations through public reporting, enhanced payments through differential reimbursements, and increased market share through purchaser, payer, and/or consumer selection" (Value-based purchasing overview, 2016, para. 4). In order to the VBP initiative to succeed, however, the VA will require ongoing support from executive leadership and an unwavering commitment to better understand the needs of the healthcare marketplace (Chernof, 2016).

According to Burgess (2011), a senior investigator for the VA Boston Healthcare System, the VA has only partially embraced the tenets of VBP to date and implementation of some components of VBP remain in the planning stages. It is important to note, though, that not all of the components of VBP are applicable to the VA. Since the VA occupies a unique position in the national health care system in terms of being a payer as well as a provider of services, implementing VBP initiatives at the VA requires a full understanding concerning the organization's mandate and operations. On the one hand, some of the requirements of VBP apply to the VA in the same fashion as other health care providers. For instance, Burgess (2011) advises that, "The VA competes with the private sector by offering its own diverse blend of quality, access, and cost within a specific eligible patient population that thereby is offered universal access to health care" (p. 3).

On the other hand, though, the VA's unique role in the national health care system also means that only certain aspects of VBP are applicable. In this regard, Burgess (2011) points out that, "But since the VA operates as both the regulator of health care service provision and the provider of those services, many of the goals that CMS is promulgating apply to VA only in the 'make or buy' decision to provide services directly or contract for those services with the private sector" (p. 3). In addition, other aspects of VBP are also applicable to the VA, including the use of appropriate metrics to measure clinician performance and resource utilization versus the clinical outcomes that are achieved. This means implementing processes that can aggregate performance data in a transparent fashion and comparing these data to other VA medical centers and civilian hospitals to identify areas of deficiency, reduce waste and other opportunities for improving the quality of health care services.

In addition, VA also differs from non-VA health care providers because of the source of its funding; nevertheless, responsible stewardship and management of these scarce taxpayer resources requires that the make-or-buy decisions used by the VA for its purchasing needs achieve optimal outcomes. In this regard, Burgess (2011) emphasizes that, "The VA differs in that it does not operate off of a specific trust fund, so the financial viability of the federal government is not directly at issue, but it does mean that in evaluating 'make or buy' decisions the current Treasury interest rate is the best approximation of borrowing costs for VA" (p. 3). This means that during periods of budget deficits, the VA is in essence borrowing money from the U.S. Treasury for its operational budget (Burgess, 2011). As can be readily discerned from Figure 1 below, the Great Recession of 2009 served to increase federal deficit levels which have only recently returned to near pre-recession levels.

Figure 1. Recent federal deficits: FY 2005-FY 2015

Source: http://www.usgovernmentspending.com/include/usgs_chartDp01f.png

As can be seen from Figure 2 below, the projected federal deficit will continue to increase slightly before leveling off by 2020.

Figure 2. Budgeted federal deficits: FY 2016-FY 2020

Source: http://www.usgovernmentspending.com/include/usgs_chartDp02f.png….....

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