Print Сite this

Value-Based Purchasing Approach in Healthcare


The U.S. healthcare shows clear tendencies to head toward rewarding value. Recent changes in legislation (the Affordable Care Act) have drawn attention to value-based purchasing (VBP) programs. The present case study evaluates VBP in Medicare on the example of the PROMETHEUS reform and some other successfully applied programs. The given reform was launched in response to the rising number of reports coming from the Institute of Medicine about the quality of care. A notable fact about the initiative is that it makes providers, not payers, responsible for wastes and “defects in episodes of chronic, procedural, and acute medic care” (Joshi, Ransom, Nash, & Ransom, 2014, p. 534). Thus, by fairly shifting financial risks to providers, the reform allows health organizations to substantially increase the quality of services.

We will write a
custom essay
specifically for you

for only $16.05 $11/page
308 certified writers online
Learn More

Value-Based Purchasing: PROMETHEUS Reform

To begin with, the PROMETHEUS reform is a new Medicaid program, which has been successfully implemented in a number of communities across the USA. The key challenge that health providers faced when joining the initiative was calculating financial risks related to failures in care. However, the given payment model was the first to quantify the defects’ cost and offer solutions to reach comprehensive outcomes of treatment (Joshi et al., 2014). In accordance with the program’s statutes, any patient requiring readmission due to the lack of care receives further treatment free of charge (Joshi et al., 2014). In terms of service improvement, it is a huge step forward since patients with chronic diseases can report insufficient care, and the costs of a repeated therapy course will be absorbed by the health provider. This way, clinics always carry responsibility for the services they sell.

As stated in the research, providers’ responsibility spreads not only to the services but to the products consumers purchase as well (Joshi et al., 2014). Bundled payment option involves replacing medications or full money refund in case patients detect any defects in the products they buy. Another advantage of this option is that bundled prices allow the government to fight the monopoly by moving market share from one manufacturer to another (Joshi et al., 2014). The evaluation of the approach made between 2008 and 2012 demonstrates that hundreds of provider organizations expressed their readiness to participate in the discussed bundled payment pilot (Joshi et al., 2014). A number of states, including California, Wisconsin, New Jersey, and some others, showed a clear tendency to implement the reform throughout the public clinics. Inspired by the example of state organizations, private medical establishments started to express their interest in borrowing the method, too, since many of them were guided by the widely promoted Blue Shield and Blue Cross plans.

To have more in-depth insights into the assessment of VBP, one needs to operate with the framework this concept is evaluated by. As Chee, Ryan, Wasfy, and Borden (2016) indicate, the evaluation of VBP depends on three major influences: program features, provider characteristics, and external environment. From the angle of the external environment (patient’s preferences, payment policies, and more), the PROMETHEUS reform focuses maximum attention on patients’ demands while making providers responsible for all possible errors. Provider characteristics (include available resources and organizational culture) presuppose educating employees about more effective working techniques to reduce readmissions. Finally, the program features of the initiative include risk management and, again, shifting financial risks to providers.

Assessing Other Value-Based Purchasing Programs

With regards to the mentioned VBP evaluation framework, there are other international programs that encompass the same range of care delivery settings. The given models are actively utilized by both public centers for Medicaid and commercial structures, such as insurance companies, private clinics, and others (Chee et al., 2016). Considering that cardiovascular diseases are among the most widely spread health conditions through all of the countries, these programs were primarily designed to provide quality care to patients with illnesses of this type. For clarity, the methods or initiatives were divided by clinicians into two categories: outpatient and inpatient.

The Integrated Healthcare Association (IHA) model was designed as a suited alternative to the discussed PROMETHEUS program. This model, belonging to the outpatient group of VBP initiatives, approaches care delivery in four dimensions: meaningful use, patients’ experience, service quality, and resource management (Chee et al., 2016). Between 2004 and 2013, “the IHA awarded a total of nearly $500 million in bonus payments” thus, proving its usability and high-level profitability for consumers (Chee et al., 2016, p. 2200). The reports received from the organizations participating in the initiative demonstrated growth in practically all measurement areas. The overall clinics’ performance rose by 3% annually, while personal employees’ achievements showed 5% to 12% improvement (Chee et al., 2016). Reports were made using an online quality assessment card, which served as a form to fill in by the surveyed health providers. The results of the online survey indicated a substantial increase in patient satisfaction, which was mainly attributed to the positive effect of the program on the quality of medical services, as well as their cost.

Among the inpatient initiatives, the Hospital Quality Incentive Demonstration (HQID) was widely utilized by medical centers in the period from 2003 to 2009. As Chee et al. (2016) admit, providers who joined the initiative demonstrated 2.6% to 4.1% performance growth yearly owing to the featured pay-for-performance improvement. Yet, the increase in metrics was usually partial, with some aspects remaining at the same level as they were before. This statement primarily relates to mortality statistics, which seemed not to be influenced at all. The data were analyzed using reports from 3570 hospitals across the United States (Chee et al., 2016). The results led the researchers to the conclusion that the program might require redesigning to incorporate more frequent feedbacks and focus on an individualized treatment (Chee et al., 2016). Additionally, one may suggest that the initiative must come with a clear and transparent financial plan to consider the needs of poorer clinics. Improving the situation in public clinics through the introduction of a renewed model would also positively impact the private sector with organizations aiming at increasing their market competitiveness.

Get your
100% original paper
on any topic

done in as little as
3 hours
Learn More


The PROMETHEUS reform is a newly introduced Medicare program, which allows patients to significantly reduce treatment costs and receive the required level of care. In accordance with this reform, responsibility for possible failures and defects is shifted to healthcare providers. If a patient applies for readmission due to a provider’s error, all further treatment he or she receives free of charge. The initiative proved to be profitable for consumers and answering their medical needs. By analogy with the given reform, IHA and HQID models also focus attention on consumers’ bonuses by creating a favorable environment for improving organizations’ performance on an annual scale.


Chee, T. T., Ryan, A. M., Wasfy, J. H., & Borden, W. B. (2016). Current state of value-based purchasing programs. Circulation, 133(22), 2197-2205.

Joshi, M., Ransom, E. R., Nash, D. B., & Ransom, S. B. (2014). The healthcare quality book: Vision, strategy, and tools (3rd ed.). Chicago, IL: Health Administration Press.

Cite this paper

Select style


StudyCorgi. (2021, October 16). Value-Based Purchasing Approach in Healthcare. Retrieved from


StudyCorgi. (2021, October 16). Value-Based Purchasing Approach in Healthcare.

Work Cited

"Value-Based Purchasing Approach in Healthcare." StudyCorgi, 16 Oct. 2021,

1. StudyCorgi. "Value-Based Purchasing Approach in Healthcare." October 16, 2021.


StudyCorgi. "Value-Based Purchasing Approach in Healthcare." October 16, 2021.


StudyCorgi. 2021. "Value-Based Purchasing Approach in Healthcare." October 16, 2021.


StudyCorgi. (2021) 'Value-Based Purchasing Approach in Healthcare'. 16 October.

This paper was written and submitted to our database by a student to assist your with your own studies. You are free to use it to write your own assignment, however you must reference it properly.

If you are the original creator of this paper and no longer wish to have it published on StudyCorgi, request the removal.