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Q&A: When it Comes to Value-Based Purchasing, For-Profits Ahead of the Pack

April 10, 2013
by Gabriel Perna
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In a recent study, researchers from the Northwestern University’s Feinberg School of Medicine (Chicago) have determined that under the rules of the Centers for Medicare & Medicaid Services’ (CMS) Hospital Inpatient Value-Based Purchasing Program, for-profit hospitals are more likely than nonprofit and public hospitals to receive bonuses for performance in certain quality measures. However, public hospitals, the researchers found, should be able to earn bonuses for improvement.

Rahul Khare, M.D., one of the study’s authors and an emergency medicine physician at Northwestern Memorial Hospital, said the team of researchers used the most recent performance data from 3,000 hospitals nationwide to make this determination. They looked at how the hospitals had performed in regards to stroke, heart attack, and pneumonia patients.

“We wanted to see what types of hospitals would benefit or be hurt from this program,” Dr. Khare says. “The program is paying for quality and quality improvement, and therefore, incentivizing it.”

In this exclusive interview, HCI Associate Editor Gabriel Perna spoke with Khare on the results of this study, whether there were any variations by patient population, why they looked at stroke, heart attack, and pneumonia patients, and why policymakers should be happy with the results of this study.

Below are excerpts from their conversation.

Rahul Khare, M.D.

Why is hitting on these Value-Based Purchasing measures seemingly a lot harder for the public and nonprofit hospitals than it is for the for-profit hospitals?  Is it strictly a lack of resources?

You can’t tell from the research we did. You can’t pinpoint it, because this is a large database and we didn’t look at the factors into it. But we know some of the differences between for-profit and nonprofit are the amount of resources and funding they get. That might be a reason to believe why the for-profit hospitals have better scores. It also be that they are just concentrating on those values.

 How much of a factor is patient population, and where the hospital is located, in determining who hits on these quality measures?

We looked at geographic region— the Northeast, the South, the Midwest, and the West. Even though there was a statistical difference, there wasn’t a meaningful difference. There wasn’t much variation in there.

In terms of population, we looked at the percentage of patients with Medicare. What we found was that when Medicare was less than 25 percent [of the patient population], there was a pretty big difference [in results] than those that were greater than those 75 percent. If you have more Medicare patients, in truth, you’re getting reimbursed more. So that could play a little bit into why certain hospitals did better.

For-profits, they have interesting rules about, not in hospitalization but in their outpatient clinics, if they don’t take Medicaid, for example,  then the Medicaid doesn’t go to that hospital because their doctors aren’t there. That could play a significant role on the resources and how much they’re getting reimbursed from private insurers.

Overall, the message you implied was that everyone is improving. Will it get to the point where the majority of hospitals, specifically the public and nonprofits, won’t get penalized under Value-Based Purchasing, and may even get bonuses?

That’s the goal, to get the hospitals that don’t do well into a space to where they are doing well. The hope is the group of hospitals that don’t do well will get into a category of doing average or even above average. If you’re doing average, no money is taken from you, if you’re doing above average, you get a bonus, and below average, money is taken from you. We want the ones on the tail end of not doing well to improve.

There’s also the part, where they say, ‘If you’re not doing well, we know you can’t just go from very below average to average. What we can do is give a bonus if you improve a significant amount.’ That’s what I think this formula is very interesting, because it’s helping these public hospitals that aren’t doing well, to improve.

What made your team focus on stroke, heart attack and pneumonia patients?

So even though are a lot of other disease processes, we wanted to look at what the emergency care measures were. I’m an emergency physician, it’s very important to me. We wanted to look at how those in particular in the emergency department within the hospital can improve care.

What were some other findings from this research that you found interesting?

I think the most important thing was our findings were balanced. What I think what the policymakers wanted, was achieved in the study. That surprised me. The results worked as if they were supposed to. Our biggest fear was that because you’re going to give more resources to those that do well, we were alienating the public hospitals [who traditionally don’t do well in these measures] even more. We’re going to give them fewer resources because they’re not doing well. That actually didn’t happen, because they have this improvement [initiative]. It was nice to see we weren’t just giving more money to places that do well and taking more money from that don’t do well.