Hospital Value-based Purchasing program 1% incentive is like homeopathic medicine — too diluted to actually work

In the June 15, 2017 issue of the New England Journal of Medicine, Andrew Ryan and colleagues from the University of Michigan published an evaluation of the Medicare Hospital Value-Based Purchasing Program (HVBP).

To summarize, if you offer a 1% incentive, and then dilute it by offering it only for the 40% of hospital patients covered by Medicare, and then dilute it further by spreading it across three domains (clinical process quality, patient experience and mortality), and then dilute each of these by basing them on multiple component metrics, and then dilute it more by choosing metrics that have already been reported for a number of years (and therefore the “low hanging fruit” improvement opportunities may already have been picked), and then further dilute it by offering the incentive mixed in with many other incentives for such things as meaningful use of EMRs…..

Wait for it….

You don’t see impact, even after 4 years.

The thinking behind HVBP is like homeopathy, where the practitioners assert that the more they dilute the homeopathic remedy ingredient, the more powerful the remedy becomes.

Imagine if a company hired a CEO and wanted to incentivize her to achieve growth and profitability. Would they consider a 1% incentive to be meaningful (even without further dilution). No, the board would choose a number 50 to 75 times higher.

How about an equipment manufacturer choosing an incentive percentage for its sales team? One percent sound like enough?

I’ve been exasperated for years that our value-based reimbursement designs – for both government and commercial payers – include an incentive that is far too small to motivate the types of changes they are intended to cause. I fear we are just setting ourselves up for eventually someone saying “well, we tried incentives, and they don’t work.”

Dr. Ward

Richard E. Ward, MD, MBA, CEO of Reward Health. Also physician, health care analytics and informatics innovator, husband, father, tenor & gradually improving swimmer