To improve the overall quality of healthcare, The National Quality Strategy of the U.S. Department of Health and Human Services broadly defines the outcomes that the Centers for Medicare and Medicaid Services (CMS) wants to achieve through the care it purchases for its beneficiaries. The strategies; aims of better health, better care, and lower costs.

1. Extended Abstract prepared for the EMS 2019 Doctoral Consortium. Dissertation in progress.
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WHEN AND HOW DOES VALUE BASED PURCHASING IMPACT HOSPITAL
PERFORMANCE?
Prepared by:
Shevon Lewis
Georgia State University
Executive Doctorate in Business – Class of 2020
Committee Chair: Dr. Subhashish Samaddar
SUMMARY
To improve the overall quality of healthcare, The National Quality Strategy of the U.S.
Department of Health and Human Services broadly defines the outcomes that the Centers for
Medicare and Medicaid Services (CMS) wants to achieve through the care it purchases for its
beneficiaries. The strategies; aims of better health, better care, and lower costs, capture the
Center for Medicare and Medicaid Services (CMS's) concept of value improved outcomes for
individuals and populations at lower costs. CMS has many tools to support the three aims, but
we believe that value-based purchasing (VBP) is one of the most potentially transformational.
VBP rewards providers who deliver better outcomes in health and health care for the
beneficiaries and communities they serve at lower cost (VanLare et al 2012). In this study I
analyze US hospitals. The relationship I expect to explain is the impact of Healthcare
associated infections (HAI), mortality measures and status of reward on hospital’s
performance. How well non rewarded hospitals perform compared to rewarded hospitals and
how much they can improve their own performance compared to their performance during a
prior baseline period.
INTRODUCTION
Medicare’s Value-based Purchasing (VBP) program is a key feature of the hospital payment
reform in the Affordable Care Act (ACA), intended to incentivize high value health care
provided in the hospital setting by rewarding hospitals that perform well on value metrics
while penalizing hospitals that do not. Funding from the program comes from withholding a
percentage of Medicare inpatient payments to prospectively paid hospitals and redistributing
these dollars according to each hospital’s performance on certain measures of value.
Measurement Domain- The total performance score (TPS) for each hospital is based upon
hospital performance scores in each domain listed below. Each hospital may earn 2 scores on
each measure, one for achievement and one for improvement. The final score awarded to a
hospital for each measure is the higher of these 2 scores. A hospitals’ Medicare payments is
adjusted based on the total performance score that reflects, on a measure-by-measure basis.
Hospitals are gauged on measures of outcome such as:
¡ Clinical Care (Mortality and complications)
¡ Safety (Healthcare-associated infections- HAI)
¡ Patient safety

2. Extended Abstract prepared for the EMS 2019 Doctoral Consortium. Dissertation in progress.
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¡ Patient experience
¡ Process
¡ Efficiency and cost reduction
THEORETICAL FRAMEWORK
To understand the main indicators that influence a hospital’s performance and the processes
at work, the research draws on the Theory of Constraints. Researchers, in their studies,
showed how this theory can be a useful tool to examine processes at work in Healthcare.
TOC focuses on understanding and managing the constraints that stand between an
organization and the attainment of its goals. Once the constraints are identified, TOC
subordinates all the non-constraining resources of the organization to the needs of its core
constraints. The result is optimization of the total system of resources (Tabish, S.A, Nabil
Syed, 2013). The Five steps of the TOC process:
¡ 1) Identify the system's constraint
¡ (2) Decide how to exploit it
¡ (3) Subordinate/synchronize everything else to the above decisions
¡ (4) Elevate the system's constraint
¡ (5) If the constraint has shifted in the above steps, go back to step 1
METHODS
A quantitative approach will be followed. In this research we are going to quantify the
problem and address the when and how aspects of the research question. The Analysis of
secondary data is used in this study.
In examining the value-based system, we expect to explain the relationship between a
hospital’s reward status and their performance; and the role of Healthcare associated
infections measures (HAI) and mortality measures. As demonstrated in the research model
below, our variables will be tested individually and collectively to examination these
measures.
DATA SOURCE
For our analysis we will use secondary data from the Centers for Medicare and Medicaid
Services (VBP payment adjustment amounts, Hospital Compare data, Total performance
score data, Clinical and safety domain data) and the American hospital association survey
data (for 2018).

3. Extended Abstract prepared for the EMS 2019 Doctoral Consortium. Dissertation in progress.
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Research Model
CONTRIBUTION
My anticipated contribution to science and practice would be in:
¡ To assess whether non-rewarded hospitals are on a path to ultimately being rewarded
when the Theory of Constraints is applied.
¡ To prescribe measures to improve quality for non-rewarded hospitals
¡ To move healthcare to a more sustainable, collaborative direction
¡ To assess whether VBP accelerates improvement in hospital performance
¡ Improve competitive position
¡ Introduce ways to dramatically increase value
¡ Evaluate two factors affecting a hospital performance
DISCUSSION
There is a concern that non rewarded hospitals can be adversely affected by value-based
purchasing. The Hospital VBP Program is set forth in Section 1886(o) of the Social Security
Act. The Hospital VBP Program is the nation’s first national pay-for-performance program

4. Extended Abstract prepared for the EMS 2019 Doctoral Consortium. Dissertation in progress.
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for acute care hospitals and serves as an important driver in redesigning how the Centers for
Medicare & Medicaid Services (CMS) pays for care and services based on the quality and
value of care, not only quantity (C. Measure, B. Report, 2019). In the US, as an upsurge in
healthcare cost continues, the quality of care is depleted within healthcare facilities. The
Value Based Purchasing program is part of a long-standing effort to improve care across the
entire US healthcare delivery system. This includes, hospital inpatient care by aligning
Medicare payments to quality and cost measure performance.

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