March 29

Beyond Healthcare Value Analysis: Integrating Cost and Quality Measures Into Your VA Studies

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I hope you are aware that Medicare is planning to increase their quality reimbursement measures from 30% to 50% over the next few years. That means that your value analysis program, too, needs to look at your cost and quality measures to ensure that they are aligned with your healthcare organization’s revenue cycle strategies to survive and thrive in the 21st century. For this purpose, here are three new measures to integrate additional cost and quality elements into your value analysis studies.

Measure #1: What Is the Reimbursement for This Commodity?

The first question that needs be asked when a new product, service, or technology is requested is, “What is the reimbursement for this commodity?” In many cases, your reimbursement will fall behind your DRG schedule or bundled payments, which would negate buying this new commodity. For instance, if a newly requested product will add $75.00 in cost to each of your appendectomy cases, is there enough margin left for your hospital to make money? If not, you must reject this new commodity unless it will be costing less than a comparable product in a kit, tray, or test that you are now buying. 

Measure #2: Will This Commodity Improve Our Quality by 5% or More?

Quality too often is in the eye of the beholder, but in fact, not a reality. Therefore, you need to measure the outcomes of any new product, service, or technology that claims to improve your healthcare organization’s quality. I think that everyone who is reading this today could think of a product, or in our case, numerous products that claim to improve quality. Yet in reality, we aren’t seeing this improvement in our empirical trending data. So take our word on this; if you can’t prove a 5% or more quality increase over what you are doing now, don’t do it! You are just wasting your money.

Measure #3: What Is the Utilization Value of This Commodity?

As we have espoused for 15 years, it’s not about the price at the pump that matters any longer, but how much mileage or utilization you can obtain from a new product, service, or technology over its lifecycle. Our Healthcare Value Analysis and Utilization Magazine has a case study in just about every issue, showing how a new product price is the smallest cost element in any and all buying decisions. If you aren’t applying this test to every product, service, and technology you are buying, you are likely losing hundreds of thousands of dollars annually.

Healthcare reimbursement is becoming more and more complicated now because Medicare is tying 30% to 50% of its reimbursement to its quality measurements. Your value analysis teams, too, need to study up on these changes in reimbursement at Medicare’s website so that they can relate them to your hospital, system, or IDN’s supply value analysis mission. No longer should the best price win your contracts, but only the products, services, and technologies that pass these three new measurements.  


Tags

bundled payments, commodity, cost and quality, DRG, healthcare, healthcare organization, hospital, Medicare, reimbursement, revenue, utilization, value analysis


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