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Value Based Purchasing (Cost of Quality)

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Value Based Purchasing (Cost of Quality)

Hospitals and healthcare providers have historically been reimbursed by payers for providing services.  This is commonly referred to as fee-for-service.  Under this model, if you had an MRI, the hospital was paid for the MRI. If you had an infection, the hospital was paid to treat you for that infection.  If you were readmitted, the hospital was paid for that admission.

Over the past decade, an evolution of payment for better quality and efficiency has begun by paying hospitals a set amount for a given diagnosis.  With healthcare reform, this idea was advanced further by now rewarding prevention and paying for episodes of care.  This means that doctors and hospitals will be paid one flat rate for providing a service instead of being paid for each individual service or procedure. 

By concentrating on safety and the prevention of complications during a hospitalization, healthcare providers can dramatically improve care while saving resources and reducing costs.  If a patient receives a procedure and develops an infection, more resources will be needed, reducing the healthcare providers' profit for providing the service.  Additionally, hospitals will be penalized for certain readmissions within a short timeframe thus encouraging both hospital and community healthcare providers to work together for the improved health of the patient even after discharge from the hospital.  These new concepts of how we care for patients provide greater incentives for the entire healthcare system to function more efficiently by providing the highest level of care for the patient.