Volatility and Persistence of Value-Based Purchasing Adjustments: A Challenge to Integrating Population Health and Community Benefit Into Business Operations.

With the passage of the Deficit Reduction Act of 2005 and the Patient Protection and Affordable Care Act in 2010, Medicare's Inpatient Prospective Payment System (IPPS) began a transition to value-based purchasing (VBP) that rewards or penalizes hospitals based on patient satisfaction, clinical processes of care, outcomes, and efficiency metrics. However, hospital-level volatility vs. persistence in value-based payments year-over-year could result in unpredictable cash flows that negatively influence investment behavior, drive underinvestment in community benefit/population health management initiatives, and make management of the factors that drive the VBP adjustment more challenging. To evaluate the volatility and persistence of hospital VBP adjustments, the sample includes VBP adjustments and the associated domain scores for the 2,547 hospitals that participated in the program from 2013 to 2016. The sample includes urban (74%), teaching (29.1%), system affiliated (46.5%), and not-for-profit (63.6%) facilities. Volatility was measured using basic descriptive statistics, relative risk ratios, and a fixed effect, autoregressive, dynamic panel model that robust-clustered the standard errors. There is substantial change in a given facility's total VBP score with an average standard deviation of 10.74 (on a 100-point scale) that is driven by significant volatility in all metrics but particularly by efficiency and outcomes metrics. Relative risk ratios have dropped substantially over the life of the program, and there is low persistence of VBP scores from one period to the next. Findings indicate that if hospitals receive a positive adjustment in 1 year, they are almost as likely to receive a negative adjustment as a positive adjustment the following year. Furthermore, using a fixed-effect dynamic panel model that controls for autocorrelation, we find that only 13.5% of a facility's prior year IPPS adjustment (positive or negative) carries forward to the next year. The low persistence makes investment in population health management and community benefit more challenging.

Assessing the significance of health information seeking in chronic condition management.

OBJECTIVE: To examine the relationship between health information seeking and confidence in performing self-management activities, and to assess the influence of predisposing, enabling, and perceive need factors on confidence to perform self-management activities among adults with chronic conditions. METHODS: The sample included 6724 adults from the 2007 Health Tracking Household Survey who were ≥18 years with a chronic condition. Binary logistic regression examined the relationship between health information seeking, predisposing, enabling, and perceive need factors and confidence in performing three self-management activities; prevent symptoms, tell doctor concerns, and know when to get medical care. RESULTS: Analyses indicated that 63.7% of adults sought health information. Rural residents who sought health information had 50% (95% CI: 0.28-0.89) lower odds of being confident to tell doctor concerns compared to urban residents who did not seek health information. CONCLUSION: The relationship between health information seeking and confidence to perform self-management varies by self-management activity. Rurality, education level, having a usual source of care, and perceived health status strongly predict confidence to perform self-management activities. PRACTICE IMPLICATIONS: Self-management strategies should incorporate health information seeking behavior that will enhance confidence to perform specific self-management activities, and should incorporate predisposing, enabling, and perceive need factors.

What Should We Expect? A Comparison of the Community Benefit and Projected Government Support of Maryland Hospitals.

Designation as a tax-exempt, not-for-profit entity carries with it specific tax benefits. In exchange for tax exemptions, not-for-profit entities are expected to provide benefits to their communities. To evaluate whether hospitals provide community benefits (CBs) equivalent to the financial subsidies and advantages extended to them, tax liabilities and financial support were projected for all Maryland acute care hospitals between 2010 and 2012 and in the aggregate over the 3 years of this study. A comparison was then made between the provision of CBs and the financial support that governments provide to the hospitals. The results indicate that hospitals provide significantly and substantially more CBs than the material financial support they receive. Even after modeling changes in CB activities and the associated tax liabilities that may result from transitioning to taxable status, the benefits that hospitals provide to the communities they serve continue to exceed the potential government tax revenues.

A Decomposition of Hospital Profitability: An Application of DuPont Analysis to the US Market.

OBJECTIVES: This paper evaluates the drivers of profitability for a large sample of U.S. hospitals. Following a methodology frequently used by financial analysts, we use a DuPont analysis as a framework to evaluate the quality of earnings. By decomposing returns on equity (ROE) into profit margin, total asset turnover, and capital structure, the DuPont analysis reveals what drives overall profitability. METHODS: Profit margin, the efficiency with which services are rendered (total asset turnover), and capital structure is calculated for 3,255 U.S. hospitals between 2007 and 2012 using data from the Centers for Medicare & Medicaid Services' Healthcare Cost Report Information System (CMS Form 2552). The sample is then stratified by ownership, size, system affiliation, teaching status, critical access designation, and urban or non-urban location. Those hospital characteristics and interaction terms are then regressed (OLS) against the ROE and the respective DuPont components. Sensitivity to regression methodology is also investigated using a seemingly unrelated regression. RESULTS: When the sample is stratified by hospital characteristics, the results indicate investor-owned hospitals have higher profit margins, higher efficiency, and are substantially more leveraged. Hospitals in systems are found to have higher ROE, margins, and efficiency but are associated with less leverage. In addition, a number of important and significant interactions between teaching status, ownership, location, critical access designation, and inclusion in a system are documented. Many of the significant relationships, most notably not-for-profit ownership, lose significance or are predominately associated with one interaction effect when interaction terms are introduced as explanatory variables. Results are not sensitive to the alternative methodology. CONCLUSION: The results of the DuPont analysis suggest that although there appears to be convergence in the behavior of NFP and IO hospitals, significant financial differences remain depending on their respective hospital characteristics. Those differences are tempered or exacerbated by location, size, teaching status, system affiliation, and critical access designation. With the exception of cost-based reimbursement for critical access hospitals, emerging payment systems are placing additional financial pressures on hospitals. The financial pressures being applied treat hospitals as a monolithic category and, given the delicate and often negative ROE for many hospitals, the long-term stability of the healthcare facility infrastructure may be negatively impacted.

Is There a Relationship Between Value-Based Purchasing and Hospital Profitability? An Exploratory Study of Missouri Hospitals.

Recent US legislation is attempting to transition inpatient Medicare payments to a value-based purchasing (VBP) program. The VBP program is a pay-for-performance (P4P) system that incentivizes hospitals to improve patient satisfaction, health outcomes, and adherence to clinical protocols while simultaneously holding down costs. Our study evaluates (1) the impact of financial performance on the VBP adjustments and (2) whether there is a correlation between the VBP adjustment and the financial performance of Missouri hospitals that opted into the program. While upward and downward adjustments to the inpatient base rate may be related to hospital financial performance, prior financial performance may also be related to the adjustments. Financial health may allow facilities to invest and position the hospital for favorable future P4P adjustments. The results of our analysis indicate the VBP adjustment to the inpatient base rate is very small (±0.18%), clustered around zero, and is not correlated with financial performance. We also find that financial performance and improvement in the years prior to the adjustment are not related to the VBP adjustment or its respective components. This suggests that CMS is avoiding penalizing less profitable facilities, but the adjustment is also so small and tightly clustered around zero that it is failing to provide an adequate incentive to hospitals. The costs of improving patient satisfaction, clinical process adherence, health care outcomes, and efficiency above that of peers coupled with the growing number of metrics being used to calculate the VBP adjustments call into question the financial incentives of the hospital VBP program.

What is the value of graduate education? An economic analysis of Army Medical Department Graduate Programs.

Current and forward-looking resource constraints within the federal health system and general health market are generating questions of fiscal or economic viability of a number of programs including graduate education. This article establishes a framework for assessing economic value among graduate health-related programs within the Army Medical Department. The findings of this analysis indicated that the programs evaluated in the study generate positive economic value based on a market-based valuation of extrinsic benefits compared to extrinsic costs for conducting graduate education within each of the programs. Suggestions for future research and policy application are also discussed.