Value-based Purchasing: Start with These Patients

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Value-based purchasing According to the Healthcare Incentives Improvement Institute, at present in the US, only 11 percent of CMS reimbursement dollars are tied to value-based purchasing. The same number, 11 percent, applies to commercial payer contracts. Translated, almost 90 percent of our healthcare insurance dollars are associated with an economic model that we know, without a doubt, encourages wasteful and harmful healthcare delivery.

The CEO of the Health Services Authority in the Cayman Islands, Ms. Lizzette Yearwood, might be the best all-around, natural leader I’ve ever seen or worked with, in any industry and setting. That topic alone is worth another blog. Indicative of her leadership, she proactively approached the national and commercial health insurance companies in the Cayman Islands with the idea of converting from a fee-for-service economic model, to a fixed-fee economic model (i.e., per diagnosis and per procedure contracts) with quality incentives for treating patients. The insurance companies were, of course, stunned, and then thrilled by the idea, especially when Ms. Yearwood also voluntarily committed to an immediate 3 percent reduction in costs, across selected diagnoses and procedures, as an incentive for all parties to participate in the project with commitment and the right motivations (we analyzed nine years of Cerner data to determine the costs and establish the 3 percent goal). The most important initial question for all parties was:  With which patients do we start, first?

Borrowing from excellent work already achieved in the Bridges to Excellence consortium, and comparing that work to the local environment in the Cayman Islands, these were the conditions and procedures that were finally identified, to get started:

Inpatient procedures

  • Knee replacement
  • Hip replacement
  • Hip and knee replacement revisions
  • Hip and knee arthroscopy

Outpatient procedures

  • Cataract removal
  • Perinatal care
  • Hysterectomy
  • Maternity

Chronic conditions

  • Asthma
  • Diabetes
  • End stage renal

Acute conditions

  • Upper respiratory infection

Let’s stop waiting for federal mandates and the experiment of Accountable Care Organizations. There’s nothing stopping US healthcare CEOs from following Ms. Yearwood’s leadership style and proactively converting to value-based purchasing contracts. Let’s set a national goal in the US of converting 80 percent of our federal and commercial healthcare dollars to fixed-fee contracts by the year 2019.

Read more about how to prepare for value-based purchasing or learn the best way to make payer and provider healthcare data accessible.

What do you think about the Cayman Islands’ approach to tackling quality incentives for healthcare delivery? What’s stopping us from doing the same?

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