Beyond EHRs: Positioning Hospitals For The Pay-For-Performance Era

Steve Riddle | Government Health IT | October 9, 2012

Fierce competition ahead. That’s what hospitals can expect in the pay-for-performance landscape that is already unfolding on the national regulatory scene. Medicare’s Value-Based Purchasing (VBP) and Readmissions Reduction programs officially began on October 1, while the Hospital-Acquired Conditions program will follow in a few short years. Similar programs are already being launched by commercial payers.

Collectively these initiatives have the potential to impact hospital revenue in a significant way, and rising to the top of the heap will require constant improvement. Yesterday’s industry leaders can easily become today’s poor performers as hospitals are judged relative to one another across a broad array of quality and cost measures.

Data on current quality measures reveal that a small performance gap or missed opportunity may dramatically impact a hospital’s ranking and payment. The current VBP process of care measures are an excellent illustration. National averages published by the Centers for Medicare and Medicaid Services (CMS) indicate that many hospitals have measure compliance rates at or very near 100 percent, and more than half of hospitals report scores that are above 93 percent compliant. When numerous competing hospitals have performance scores separated by hundredths of a percentage point, there is not much room for error.