Value-Based Purchasing

Junior (College 3rd year) ・Healthcare&Medicine ・APA ・1 Sources

Value-based purchasing is a strategy that the federal government and employers use so as to utilize their market power to promote value and quality healthcare service. Value-based purchasing has three major elements, and it can also be classified into three main models namely: pay for performance, accountable care organization, and bundled payments models.

Value-based purchasing (VBP) is a strategy to report, measure, and reward excellence in healthcare delivery. The federal government and employers employ VBP so as to capitalize on market influence and to publicize the value and quality of medical services (Damberg, et al., 2014). The key elements of VBP are gauging and reporting comparative performance, paying providers based on performance, and developing medical incentives and strategies that encourage individuals to manage their healthcare and health and to prefer high-value providers and services.

VBP has three major models: -

Pay for performance; a payment procedure in which providers are awarded bonuses or deducted in payment based on meeting pre-established benchmarks or targets for measures of efficiency and quality (Damberg, et al., 2014).

Accountable care organization; these are health care organizations consisting of hospitals, doctors, and healthcare providers who come together freely to provide collaborated care and accept to be held responsible for overall quality and costs of care provided to their population of patients. 
Bundled payments; this is a system in which payments to healthcare providers are based on expected cost for a clinically defined period. The paying consists of quality and financial performance responsibility for the episode of care (Damberg, et al., 2014).

VBP’s overall goal is to solve the health care cost problem in the United States. VBP’s long-term aim is to increase disease prevention and improve population health by influencing all determinants of health status and not just healthcare. As the business community has discovered over the years that, preventing illness and maintaining workforce- improves competitiveness and productivity and can even reduce healthcare costs over time (Damberg, et al., 2014). VBP aims to improve health status, ensure greater population satisfaction with healthcare and plans, and more competitiveness in the market.


Damberg, L. C., Sorbero, E. M. & Lovejoy, L. S. (2014). Measuring Succes in Health Care Value-Based Purchasing Program. Research Reports, 1(1), pp. 5-20.

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