Reducing costs always has and will continue to be a focus area in which NeKY RHIO can provide great value, but it clearly isn’t the only area. The transition from fee-for-service to pay-for-quality has become the new normal for providers, creating new and powerful demands for value-based purchasing solutions.
That’s why NeKY RHIO works collaboratively with our members and manufacturers to develop evidence-based standards through resource utilization and comparative effectiveness analyses. It’s a systematic, objective evaluation process that considers price in the context of maintaining or improving the quality of care, both goals that are now essential to providers facing reimbursement cuts and payment penalties for less than ideal quality outcomes.
A natural outgrowth of this new order of healthcare accountability is risk-based or value-based contracting, an approach that replaces manufacturers’ price-per-unit based contracts with those that reward how well these products work, similar to provider value-based purchasing. We’re already working toward risk-based contracting and value-analysis testing as a strategy for competitive differentiation.
As data becomes more normalized, manageable, and transparent, the focus on best price will shift to total cost over the next five years, especially when big data and small data come together. In addition, suppliers will be required to be more consistent with providing pricing parity across systems. As more invest in supply benchmarking tools, it will become increasingly apparent that there is very little pricing discipline on the part of suppliers. Until this is addressed, providers and GPOs shouldn’t take price off the table. In fact, supply benchmarking tools will have providers pushing more aggressively on price, with the expectations that they can get the best price for better commitment levels by aligning with their clinical colleagues to make the right decisions for their institution. Finally, GPOs need to sharpen their focus on education around the total cost of supply, but not give up on price until it is clear there is pricing discipline across the industry.
Price still counts, and always will. Customers, regardless of the market, will expect competitive pricing for products and services. But to be successful beyond price, suppliers and GPOs must be able to measure the value of the additional services and solutions they provide. When GPOs lower the cost of a specific provider treatment through the elimination of duplication and reduction of variability, they must be able to provide documentation that shows the success of their efforts.
Sources:
Business Insider, August 2016
David Ricker, Broadjump
Doug Swanson, HealthTrust