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Educating Employers About the Value-based Purchasing of Health Care Services

"Value-based purchasing can help shift the paradigm of why employers offer health benefits from seeing it as an employee recruitment and retention tool, to seeing it as a chance to improve population health and increase productivity, and ultimately the employer's bottom line."

"Savvy employers and health plans both know that buying health care on price alone is a quick fix, and might save some money in the short-term, but is neither a sound nor sustainable strategy in the long run if we want to bend the cost curve. Value-based purchasing is the necessary catalyst for transforming the health care delivery system and getting us to the goal of a high quality affordable system."

-NBCH Value-based Purchasing Council

What is Value-based Purchasing?

Value-based Purchasing: A strategy used by employers and the Federal government to maximize their market power as a force to promote quality and value of health care services. The overarching goal is a health care system, built on value, with a clear return for every dollar spent.

The NBCH Value-based Purchasing Council, a group of purchasers, coalitions, health plans, and other stakeholders, offers a more detailed definition: a demand-side strategy to measure, report, and reward excellence in health care delivery, taking into consideration access, price, quality, efficiency, and alignment of incentives. Effective health care services and high performing health care providers are rewarded with improved reputations through public reporting, enhanced payments through differential reimbursements, and increased market share through purchaser, payer, and/or consumer selection.

It is important to note that VBP is different from limited efforts to negotiate price discounts, which historically have reduced costs but did little to ensure that quality of care was improved.

Key elements of value-based purchasing:

 measuring and reporting comparative performance
 paying providers differentially based on performance
 designing health benefit strategies and incentives to encourage individuals to select high value services and providers and better manage their own health and health care

Examples of value-based purchasing programs that NBCH and its purchaser-member coalitions have either participated in or developed:

To learn more about the Value-based Purchasing Guide, please check out the About the VBP Guide” page.

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