Value-Based Purchasing (VBP) might be the ultimate game-changer in healthcare reform. We know that our old methods of physician compensation just haven’t proven to be sustainable – and because of that, not only have healthcare finances suffered, but the quality of care has too. You’d think if we’re spending enormous amounts of our national expenditures on healthcare that it would be above-average in performance anywhere in the U.S. – but not so. While some hospitals, who have developed innovative and comprehensive care and payment infrastructures have done well, others who have either resisted change, or, haven’t been able to afford the upfront costs of such major overhaul have been more or less left in the dust. Now, with the pressure on from Medicaid and Medicare for healthcare systems to reevaluate how they’ve compensated physicians for services, and challenging them to really look at what patients are saying about the quality of their care, some hospitals probably feel like they’re in a bit of a sink-or-swim situation.

VBP – The Life Preserver

Value-based purchasing almost seems to have roots in industrial psychology. The reward system of positive reinforcement was what allowed Pavlov to train his dogs in the famous bell-ringing experiment. We know that with children, pets and often times adult humans, positive reinforcement really works.

The idea is simple – reinforce the behavior you want so that it keeps happening and become far more appealing than the behaviors that you don’t want. You might be thinking “sure, that works with kids or dogs but it would never work with adults because they’re smarter than that!” I’d beg to differ – it’s not a matter of intelligence, but rather, a matter of motivation.

Healthcare systems are motivated, to an extent, by survival. Often, survival comes down quite simply to money. A hospital can’t run if it doesn’t have enough money. A healthcare system can’t keep its community healthy if it doesn’t have the endowment. Doctors can’t treat patients without money, or the means to be reimbursed. Quality suffers. Patients stay sick. No one’s happy.

We can punish healthcare systems, doctors and even patients when something doesn’t go well – but that does little to remedy the behavior. Chances are, if a hospital is in debt, if doctors are working on a shoe-string budget and patients feel that they aren’t getting quality care, already no one is feeling especially good about that! Further punishment does something very unfortunate to the entire system – it dampens spirits, lessens morale and makes people defensive. These things to not breed a healthy healthcare system.

Instead, reinforcing or rewarding good behavior boosts morale, gives a vote of confidence to patients, payers and physicians, and allows healthcare system administrators to be “the good guy” – instead of looming, which they are often universally accused of doing. The difference between guiding, oversight and looming all comes down to attitude.

With value-based purchasing, the idea is that if you reward healthcare organizations and providers for staying within a budget and providing quality care that keeps patients happy and healthy all at the same time, the system will continue and flourish – and serve as a remedy for the well-run-dry system currently in place. In order for it to work, however, healthcare systems have to be prepared to look closely at the data they have about how their system currently works – and be ready and willing to make changes to it. Also, they need to embrace transparency and share those outcome measures with other hospitals, other healthcare systems and most importantly, patients. When patients know that they have options, they’ll be more discerning about their care – they want the “most bang for the buck” too. A little healthy competition bred among providers, healthcare systems and payers is an age-old method of preventing stagnation in any industry. Competition breeds innovation. Physicians naturally want their patients to be well, but now, the added challenge of achieving that while at the same time being cost-effective will no doubt create some new lines of thought in the healthcare landscape.

Payers and providers aren’t alone, however. They now have a new ally: the patients themselves. If the three sides of the healthcare reform triangle can work together to innovate, boost confidence and achieve the spendthrift request of the government, then healthcare reform might be closer than we think.