President Obama recently announced the formation of the Learning and Action Network to investigate new methodologies for reimbursement of Medicare funds to hospitals and health systems. The initiative is pushing to have 30 percent of funds at risk by 2016, and 50 percent by 2018. The funds at risk would be released as a result of quality and value metrics. This is a very bold attempt to move healthcare away from a fee-for-service environment to a fee-for-value environment – and yours truly couldn’t be happier if we can actually pull it off!
The Learning and Action Network has no shortage of challenges to overcome; benchmarking methods, patient attribution, beneficiary engagement, quality and performance measurement, care coordination, risk adjustment, financial model supporting alternative payment models and shared decision-making.
I am anxious to see what the Learning and Action Network means to the selection and sourcing of products and services. With such a significant amount of reimbursement at risk, it appears supply chain leaders will soon be tasked with sourcing products that truly move the needle on quality and value, and finally getting away from an era of commoditization.
For the last few years as reform has barreled down the track I have been hoping and waiting for the triple aim focus of reform to become a part of the strategic sourcing value equation. Too many suppliers have bet the farm on research, development and innovation on products and services that are designed to increase quality and enhance patient experience, but yes, at a higher price tag. Now with 30 percent, then 50 percent of their Medicare reimbursement at risk, hospitals and health systems will most certainly be looking for ways to find the very best products that influence quality and value.
We recently hosted the Market Insights Supply Chain Forum in Dallas, Texas. One of our Supply Chain leader guests was proud to boast that in 2014 he achieved his budget of reducing his IDN’s spend by $60 million from 2013. With so much reimbursement at risk will we once again start to hear of spend budgets being increased? It sure will be interesting to watch!
Thanks for reading this issue of The Journal of Healthcare Contracting.
John Pritchard
