Moving from Volume to Value with Hospital Funding Policies in Canada.

Canada's two most populous provinces are moving toward activity-based funding (ABF) of hospitals. Although ABF may encourage greater value by improving cost-efficiency, it may decrease value in other respects. To address this trade-off, many jurisdictions have implemented value-based payment programs that modify ABF payments based on hospital performance on other aspects of value, such as outcomes and patient experience. In this article, the design and implementation of two value-based programs are reviewed: Australia's Pricing for Safety and Quality Program and Medicare's Hospital Value-Based Purchasing Program. The contrasts of these programs highlight key questions facing provincial payers in Canada to increase value from hospital spending.

Should I Buy This? A Decision-Making Tool for Surgical Value-Based Purchasing.

Many considerations affect the value that a new instrument or product may generate in a surgical practice. This review serves as a guide for surgeons considering new purchases and/or wishing to advocate for hospital acquisition of new items. A summary of data from academic and industry practices is presented, with pertinent examples using relevant surgical devices such as disposable devices, laparoscopic trocars, and otologic endoscopes. Surgeons considering incorporating a new instrument or technology within their practice should weigh the following factors before decision making: patient and clinical care factors, surgeon and care team factors, and hospital factors such as cost, revenue, and sourcing. A surgeon well-versed in stakeholder interests who is involved in the purchase of a new instrument may have significant influence in value-based decision making that not only affects his or her practice but ultimately maximizes value for the patient.

A Comparison of Costs: How California Teaching Hospitals Achieved Slower Growth Than Nonteaching Hospitals in Operating Room Costs From 2005 to 2014.

PURPOSE: Historically, teaching hospitals have had higher costs than nonteaching hospitals, introducing potential financial risk in value-based payment models. This study compared risk-adjusted operating room (OR) costs between California teaching and nonteaching hospitals. METHOD: Using 2,992 financial statements from fiscal years (FYs) 2005-2014, the authors extracted data for OR total costs, components of direct costs, and indirect costs. Cross-sectional and longitudinal models estimated OR costs per minute of surgery by teaching status, ownership, case mix index, and geographic area. RESULTS: Risk-adjusted cost was $9.44 per minute less in teaching than nonteaching hospitals in FY 2014 (95% CI, 3.03-15.85, P = .004). Between FY 2005 and FY 2014, OR costs grew more slowly at teaching hospitals because of slower wage growth and indirect costs per minute (-$0.13 and -$0.77 per minute per year, respectively, P = .005 and P < .001). Hourly pay rose more at teaching hospitals ($0.26 per hour per year, P = .008) but was offset by slower full-time equivalents growth (-0.002 per 10,000 OR minutes per year, P = .001). Between FY 2005 and FY 2014, operative volume increased at teaching hospitals and decreased at nonteaching hospitals. CONCLUSIONS: By 2014, California teaching hospitals had lower OR costs per minute than nonteaching hospitals because of relative labor productivity gains and slower indirect cost growth. The latter likely resulted from a volume shift from nonteaching to teaching facilities. These trends will help teaching hospitals compete under value-based models. Implications for patients and nonteaching hospitals warrant evaluation.

Payer Type and Low-Value Care: Comparing Choosing Wisely Services across Commercial and Medicare Populations.

OBJECTIVE: To compare low-value health service use among commercially insured and Medicare populations and explore the influence of payer type on the provision of low-value care. DATA SOURCES: 2009-2011 national Medicare and commercial insurance administrative data. DESIGN: We created claims-based algorithms to measure seven Choosing Wisely-identified low-value services and examined the correlation between commercial and Medicare overuse overall and at the regional level. Regression models explored associations between overuse and regional characteristics. METHODS: We created measures of early imaging for back pain, vitamin D screening, cervical cancer screening over age 65, prescription opioid use for migraines, cardiac testing in asymptomatic patients, short-interval repeat bone densitometry (DXA), preoperative cardiac testing for low-risk surgery, and a composite of these. PRINCIPAL FINDINGS: Prevalence of four services was similar across the insurance-defined groups. Regional correlation between Medicare and commercial overuse was high (correlation coefficient = 0.540-0.905) for all measures. In both groups, similar region-level factors were associated with low-value care provision, especially total Medicare spending and ratio of specialists to primary care physicians. CONCLUSIONS: Low-value care appears driven by factors unrelated to payer type or anticipated reimbursement. These findings suggest the influence of local practice patterns on care without meaningful discrimination by payer type.

The Role of Incentives in Changing the Behavior of Spinal Care Providers: A Primer on Behavioral Economics in Health Care.

As spinal care transitions from individual practitioners working in a volume-based reimbursement system toward multidisciplinary health care organizations working in a population-based model with value-based reimbursement, it is critical that insurance companies, administrators, and spine care provider have a clear understanding of how incentives change physician behavior. This article will introduce the concept of behavior economics, and discuss 9 principles relevant to physician decision-making.

Value-Based Reimbursement: Impact of Curtailing Physician Autonomy in Medical Decision Making.

OBJECTIVE: In this article, we define value in the context of reimbursement and explore the effect of shifting reimbursement paradigms on the decision-making autonomy of a women's imaging radiologist. CONCLUSION: The current metrics used for value-based reimbursement such as report turnaround time are surrogate measures that do not measure value directly. The true measure of a physician's value in medicine is accomplishment of better health outcomes, which, in breast imaging, are best achieved with a physician-patient relationship. Complying with evidence-based medicine, which includes data-driven best clinical practices, a physician's clinical expertise, and the patient's values, will improve our science and preserve the art of medicine.

How Can Health System Efficiency Be Improved in Canada?

Improving value for money in the health system is an often-stated policy goal. This study is the first to systematically measure the efficiency of health regions in Canada in producing health gains with their available resources, and to identify the factors that are associated with increased efficiency. Based on the objective elicited from decision-makers that the health system should ensure access to care for Canadians when they need it, we measured the efficiency with which regions reduce causes of death that are amenable to healthcare interventions using a linear programming approach (data envelopment analysis). Variations in efficiency were explained in part by public health factors, such as the prevalence of obesity and smoking in the population; in part by characteristics of the population, such as their average income; and in part by managerial factors, such as hospital readmissions.