Hospital Value-Based Purchasing Conundrum

Investors Business Daily reports on an interesting juxtaposition that is resulting from two separate provisions of the ACA. The Hospital Value-Based Purchasing (HVBP) program in the ACA has identified hospitals that provide patients with the most value. The program rewards hospitals that meet certain quality standards with a small percentage increase in their Medicare payments. Those that fall short face small Medicare payment percentage cuts. Nine of the top 10 hospitals in the first round of HVBP were physician-owned. In fact, doctor-owned hospitals accounted for 48 of the 100 top spots, according to data from the Centers for Medicare and Medicaid Services. More than 3,400 hospitals were included in the program. However, a separate provision in the ACA places limits on existing physician-owned hospitals, and establishes significant barriers to the establishment of new physician-owned hospitals. 

According to the physician-owned hospitals, the ACA has impeded the expansion of the hospitals that may provide patients with the most value, hindering beneficiaries' access to high-quality care. Critics say that the HVBP program measures are dominated by heart care and orthopedic care, which is where physician-owned hospitals are likely to excel; most physician-owned hospitals tend to specialize in one field, such as cardiac or orthopedic surgery. Additionally, hospitals that are newer and smaller do better on patient satisfaction measures, and those differences make it more challenging for general, acute-care hospitals to score as well as their physician-owned counterparts.

While CMS will certainly be monitoring this in future years of the HVBP program, one lesson that emerges is that value-based purchasing programs must be carefully designed to balance the competing interests of all of those involved.