Critical Components of a Value-Based Purchasing Model
Patient Experience Analysis
Value-based purchasing models are essential for Kaiser Permanente operations and strategic objectives, hence the need to understand the critical component of the value-based purchasing model. Conducting a detailed patient experience analysis is one of the essential components of the model. The hospital is expected to regularly collect data on patients’ feedback and analyze them to provide information that can be used in decision-making to improve the quality of services offered to enhance patients’ satisfaction.
Quality Measures
Kaiser Permanente should consider establishing quality assurance measures as a component of a value-based purchasing model that aligns with the Centers for Medicare & Medicaid Services (CMS) regulations (Wadhera et al., 2020). The quality measure should focus on the model’s critical aspects, including managing chronic diseases, patient safety, experience, and utilization of preventive care. The information from the quality measure should be tracked and analyzed periodically to assess the need for improvements or adjustments.
Data infrastructure.
Since most of the critical components of the value-based purchasing model require analysis of various datasets, it is essential to build a robust data collection, analysis, and storage infrastructure to support the whole process until information application. The infrastructure will enhance monitoring and evaluation processes through smooth data flow across departments Mets and stakeholders, promoting transparency and accountability.
Budgetary and Financial Implications of Value-Based
Increased revenue
A well-implemented value-based model is more likely to increase revenue generated by the hospital, which can be used to financially support improving technological infrastructure and support weaknesses within the organization. It was estimated that in 2022, Kaiser Permanente made a loss of $1.3 billion, which was never the case in 2023, when it attained a profit of $329 million. The operating revenue also differed significantly; in 2022, it was $95.4 billion and $100.8 in 2023. Better implementation of the model can translate to more financial rewards than last year’s records (Kaiser Permanente, 2024).
Reduces Costs
The value-based purchasing model can reduce the cost of care, making Kaiser Permanente’s healthcare services affordable to its patients. There will be the realization of reduced readmission of patients due to better healthcare and improved management of chronic illnesses due to reduced healthcare spending.
Payment method shift
One of the barriers identified to impeding the quality of healthcare services was the fee-for-service payment method, which is an undesired strategy when it comes to the value-based purchase model. It was identified that the fee-for-service also negatively impacts the quality of service at Kaiser Permanente, for it encourages healthcare providers to perform several tests because health insurers pay for each service (Permanente Medicine, 2024). Implementing the model will help transition from the fee-for-service payment method, for there will be a need to incorporate quality improvement initiatives in the organization’s financial organisation away from budgeting based on service volume.
Example of Shared Risks
Capitalization is an example of shared risk where the provider is required to offer a periodic fixed amount which covers all services and hence bears the risk of managing care within the allocated budget. The risk may require Kaiser Permanente to consider investing in preventive care and early interventions for diseases to help cut operational costs.
Moreover, population health management is also an example of a shared risk model where Kaiser Permanente is expected to take care of the health needs of a designated population and be responsible for the care financial needs. An example of population health management is an accountable care organisation. Kaiser Permanente may also consider collaborating with various healthcare providers that are also responsible for providing quality care to execute the objective and share the financial rewards (Wilson et al., 2020).
Budgetary and Financial Implications of Shared Risk Models
Opportunities
The opportunity for resource allocation in the shared risk model may require Kaiser Permanente to allocate many resources toward the care of the population. The allocation may mean funds are reallocated from acute care services and budgeted to population-based programs. Kaiser Permanente is also likely to align with financial requirements and reduce costs for care providers and receivers (Wilson et al., 2020).
Challenges
However, the shared risk model is also associated with various risks, such as higher initial capital, which is required to build data infrastructure and care programs that target the entire designated population. The management of data of the entire population may also pose challenges and require intensive initial and operational capital. Failing to meet quality requirements exposes the organorganizationenalties, affecting its financial stability.
Effective OrganOrganizationalure.
Data-driven decision
The effective organorganizationalure to be developed is one that invests in using data from diverse performance measures and analyanalyzes to offer detailed information embedded within the facts and figures to make stratorganisationalation decisions across all operations. According to various research, it has been approved that organorganizations focus on making decisions based on their data have improved operation efficiency and quality compared to those that do not invest in data analysis (Tseng et al., 2021).
Good Leadership
Leadership strategy bears significant implications for the organization’s overall performanorganizationce, is essential in developing a culture that focuses on quality in a value-based purchasing and shared risk models environment. Kaiser Permanente desires to demonstrate committed and strong leadership, for it has been proved that there is a positive correlation between good leadership support and positive organisatiorganizationalce, hence the need to enhance good leadership (Ridwan, 2021). For instance, senior leaders should be engaged in strategic planning and decision-making to enhance a transparent and integral culture.
References
Ridwan, R. (2021). The Effect of Leadership on Performance: Analysis of School Management Ability and Attitude. AKADEMIK: Jurnal Mahasiswa Ekonomi & Bisnis, 1(2), 59-67.
Tseng, M. L., Tran, T. P. T., Ha, H. M., Bui, T. D., & Lim, M. K. (2021). Sustainable industrial and operation engineering trends and challenges Toward Industry 4.0: A data-driven analysis. Journal of Industrial and Production Engineering, 38(8), 581-598.
Wilson, M., Guta, A., Waddell, K., Lavis, J., Reid, R., & Evans, C. (2020). The impacts of accountable care organizatiorganizationst experience, health outcomes and costs: a rapid review. Journal of health services research & policy, 25(2), 130-138.
Wadhera, R. K., Figueroa, J. F., Maddox, K. E. J., Rosenbaum, L. S., Kazi, D. S., & Yeh, R. W. (2020). Quality measure development and associated spending by the Centers for Medicare & Medicaid Services. JAMA, 323(16), 1614-1616.
Permanente Medicine. (2024, January). What is Quality Health Care, and why does it matter? https://permanente.org/medical-excellence/what-is-quality-healthcare-and-why-it-matters/
KaiserPermanente. (2024, February). Kaiser Foundation Health Plan and Hospitals Report 2023 financial results. PR Newswire: press release distribution, targeting, monitoring and marketing. https://www.prnewswire.com/news-releases/kaiser-foundation-health-plan-and-hospitals-report-2023-financial-results-302058872.html#:~:text=Operating%20income%20was%20%24329%20million,billion%20in%20the%20prior%20year.
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