Principles of Healthcare Business

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Principlesof Healthcare Business

Levelof Value Based purchasing Implementation at Vanderbilt

VanderbiltUniversity Medical Center (VUMC) is among organizations classified byHEFMA’s Value Project as academic in nature, but with well advancedhealth care facilities and research resources (TheHealthcare Financial Management Association (HEFMA), 2012). Accordingto HEFMA, academic medical centers must adopt value-based approach ofa business by doing all but not limited to the following factors:Incentives must be aligned across all important areas such asteaching, research and delivery of care functions of the center,centralization of governance, reduction of the organizational overallstructure of costs, and enhanced processes of care delivery.

VUMCis among the top ranking care givers nationally. The hospital offerservices to about 1.7 million outpatient visits and close to 50,000inpatients annually. In both the World Report and the U.S. News, theVanderbilt School of Medicine was ranked 14thand among the ten best in NIH funding (Vanderbilt University MedicalCenter, 2013). Since ranking involves an analysis of more than 20measures, most of which are used in value based purchasing, it isclear that the degree of the system implementation is significantlyachieved.

StrategicPlan to Progress VBP in Vanderbilt

Threemost important departments for implementation of VBP

  1. Teaching

Accordingto the Healthcare Financial Management (2012), Academic MedicalCenters are focusing on gradual implementation of VBP by making theprogram part of learning to medical students. By the time theygraduate, students should appreciate all the elements of value basedpurchasing. Understanding that services are not the only yardstickfor measuring proper health care delivery is extremely important forthe organizations that they will work for. The profitability ofhospitals and the ability to raise revenues required in order toremain in existence are heavily dependent on the responses of thepatients who receive the services. Moreover, incorporation of adetailed course on value based purchasing that is examinable willemphasize the importance of the course and require them to master thecontent adequately in the normal learning process.

  1. Research

Justlike any other aspect of life, health complications keep evolvingfrom time to time. Research ensures that medical facilities are ableto develop new ways of handling emerging conditions and at the sametime improve the existing approaches and techniques to servicedelivery. Additionally, given the nature of VBP rating, whichinvolves a variety of measures to rate the performance of a healthfacility, ability to conduct gradual research is essential fordevelopment (StuderGroup, 2016). VUMC conducts regular surveys,especially from patients or members of the public who have benefitedfrom their services. Surveys form an important strategy of gettingfeedback, complaints, and suggestions for improvement.

  1. Care delivery

Theprimary objective of health facilities is to deliver medical care tothe patients in need. Institutions need to not only provide the bestquality of health care, but do so in the most cost effective ways toboth the individual and the state departments that contributes asignificant portion of revenues collected (Bailes, Rachel &ampKeller, 2014). To the health facility, their ability to remain inoperation, pay workers and supplies, and collect funds fordevelopment largely depend on what they get from health care servicesthey offer. As a result, care delivery services should be prioritizedin the implementation of the VBP program in Vanderbilt UniversityMedical Centre.

ImportantRoles of the Three Departments in Implementation Of VBP


ImplementingVBP in the healthcare department will play in important role inensuring that there is a clearly visible relationship between theservices received by patients and revenues collected. If the numberof reported cases of poor performance in this department increases,the incomes from government will decrease. As a result, VBP willfunction as an indicator to management on whether the healthcareservices need to be improved. It is critical that Vanderbilt positionitself strategically to deliver healthcare that would attract moreclients and at the same time receive a high rating of customersatisfaction if revenues are to be improved. Healthcare FinancialManagement Association (2012), states that most organizations areable to reduce clinical costing, both outpatient and inpatient, byinvesting in an effective clinical information system. According tothe association, organizations are actively developing integratedinformation systems by including other functions such as costing,data investment, and clinical information system. In partnership withother establishments, health information exchanges with other healthproviders is an opportunity available for the formation of analliance that will lead to access of a broader data sourceslongitudinally.


Therole of research is to help keep the medical organization up to dateby making new discoveries and improving existing approaches to boththe healthcare delivery and the education sector. The function of VBPimplementation in this department will be to ensure that the value ofthe discoveries made far exceeds the cost of the research.


Therole of VBP Implementation in education will be to ensure that by thetime the medical students graduate, they are adequately trained onthe system. When learners interact with the arrangement early enough,it becomes more acceptable and beneficial in the long term. Lateimplementation may face significant resistance from workers. Forinstance, although Vanderbilt implemented homegrown EHR since 2001,the institution’s Chief Operations Officer (COO) is reported toclaim in a conference held by AMA Group association that the merefact that EHR system is installed in Vanderbilt does not necessarilymean that everyone uses it (Mrozek, Thorpe, &amp Grisaffe, 2013).She continued to state that being completely electronic does notimply that the system is under meaningful use. To avoid a repeat ofsuch a scenario, implementation in the education department comes inhandy.

DepartmentalGoals of VBP Implementation


Thegoals in this department will be to ensure that all healthpractitioners are fully conversant with value based purchasing beforecompletion of their learning program. One of the fundamental scopesof the VBP is to encourage health facilities to offer standardizedquality of services (NationalBusiness Coalition on Health, 2011). Whenthe VBP programs form part of instructional materials covered duringacademic years, medical students will appreciate the essence of thesystem more efficiently and standardization will be easily attained.Health facilities will receive graduates with theoretical knowledgeabout the program and practical experience acquired during theinternship. In the long run, VBP will become part of the core skillsthat all medical practitioners possess as they enter the job market.This implies that within a number of years after implementation ofthe program in academics, the 100% of all graduates will have asubstantial understanding of value based purchasing strategies.


Inthe research department, goals will be to ensure that the most costeffective strategies are used for service delivery withoutcompromising the quality of health care. Research is an importantmeans through which new innovations and developments are achieved byorganizations. Furthermore, the only way that an organization cankeep in touch with changes happening in the medical world is byinvesting in research and development. Currently, some medicalconditions, such as many types of cancers, are very costly and inmost cases have devastating side effects. A good number of patientsdie largely because they cannot afford adequate treatment. Researchcan lead to new innovations that will make treatment of suchconditions less costly and reduce the side effects associated withit. When patients’ access quality and expensive services at a muchlower cost than they can remember having paid for previously, therating of services offered by Vanderbilt will skyrocket. Sincecustomer rating is one of the yardsticks used to rate a hospital, theability of the center to receive more revenues from the governmentwill also improve in an equal proportion.


Amongall the three departments, healthcare is the most fundamental. Theprimary goal of implementing VBP strategies is to ensure that maximumbenefits are realized from this unit. If prime healthcare is notachieved through the former two departments’ initiatives, it wouldbe assumed that the program has failed in achieving its objectives.The current national rating of Vanderbilt among the top 100 globalplayers in healthcare is an indication that important aspects arebeing achieved (VanderbiltUniversity Medical Center, 2013).

AttainingQuality Outcomes in Patient Care and Reimbursements through the SetGoals

Adequatelytrained and informed clinicians on value based purchasing stands abetter position of offering optimum healthcare to patients.Currently, most institutions are spending heavily to educate theirstaff members on value based purchasing (TheHealthcare Financial Management Association, 2012).When a program that ensures the content is internalized during schoolyears, this would save resources and time. Medical students will geta chance to study the theory part in detail and at the same timeapply the procedure practically (Farrell, 2014). When a course isheavily intertwined in the instructional material, it tends to beabsorbed more extensively, especially if learners are to sit an examrelating to its application.

Inresearch, improvement in new techniques of offering current serviceswill be critical in improving the healthcare. When certain proceduresthat are time consuming are significantly shortened, strainexperienced by both the patient and the clinicians will beeliminated. Decrease in cost due to innovation, which constitutes oneof the core strategic goals of Vanderbilt, will generally lead toimprovement in health care provision (VanderbiltUniversity Medical Center Strategy Framework, 2013).


Healthcareis a composite subject which as observed above comprises of about 24measures. It is the single most important channel through whichperformance of an organization can be adequately assessed. Thesuggested full implementation of the electronic health record need toinclude an important element referred to as data warehouse. Accordingto Mrozek, Thorpe &amp Grisaffe (2013), it is not enough fororganizations to strive shifting to value based model alone in theiroperations without addressing other complementary and competingpriorities. The authors indicate that upgrading of EHR must be doneto qualify for incentives granted for meaningful use. Reimbursementsthat punishes or rewards depending on the quality of outcomes, sharedpayment-risk emerging models, for example, the Accountable CareOrganizations (ACOs), transitioning process to care centered onpatient model and shortages of professionals’ informationaltechnology personnel are some of the complementary and importantaspects that must be addressed.

ForVanderbilt to deliver better health care, a system that storepatients’ data properly must not only be maintained, but also onethat aids comparison of medical condition and assist healthpractitioners to offer solutions. Automation of the data warehousewith adaptive features enables organizations to aggregate, extractand integrate clinical, administrative, financial and patientexperience, among other vital components and relevant data essentialfor application of advanced analysis (Mrozek, Thorpe &amp Grisaffe,2013). Data warehouse can also aid Vanderbilt to measure patient andclinical safety, costs of services, patient satisfaction in bothprocesses and final outcomes and other organizational tasks. In theirwork, the authors note that development of an empirical informationmanagement is not an option under the new shared accountability modelthat require successful establishments to provide tangible evidenceof the important measures for processing of their revenues.

Oneof the intended long term goals for implementation of VBP in all thehealthcare institutions on a national scale is to ensure that highand standardized services are offered to all patients at affordablecosts (Centersfor Medicare &amp Medicaid Services, 2015). However, without anadaptable agile data warehouse, clinicians face tremendous and almostimpossible role of integrating clinical data with standard costing,financial data, and patient satisfaction feedback information fromsystems located in different transactional systems designedspecifically to meet the objective of specific providers and patients(Mrozek,Thorpe &amp Grisaffe, 2013). In the past, this has been a stumblingblock to insightful conclusions reachable if data is linked to anintegrated system available under data warehousing system which islinked with common identifiers that leads to reduction of variationsin the delivery of care, improved efficiency and significantreduction in cost and at the same time, offer high quality that meetsstandard specifications and safety.

Vanderbiltis a complex organization with well-structured departments. Someareas exercises extensive autonomy, which suggests thatimplementation of a common system may not be a walk in the park.However, an adaptive data warehouse makes the process more convenientby allowing an organization to transform its performance intodata-driven enterprise. This enables aggregation of data, analysisand reporting, patient satisfaction and financial performancemeasurement of clinical information (Mrozek, Thorpe &amp Grisaffe,2013). The procedure used can involve working through departments, bydisease conditions, by individual medical practitioners, by line ofservice or by any other available means through which data is enteredor captured by electronic means. Ultimately, Vanderbilt will producedata captured at all those levels and use it to implement costeffective clinical guidelines for the entire institution. The systemshould also record details of specific physicians who make the dataentry that can be used to ascertain accountability and for rewardprocessing.

ImportantPoints for Staff to Understand and Embrace

Asa strategy to market values based purchasing, one of the mostimportant points that employees must appreciate is that the abilityof the hospital to raise revenues depends on proper implementation ofVBP. To encourage full compliance by the working staff, remunerationsto individuals will be awarded based on the performance. Servicesmust not only meet high standards, but ensure that patients’approval is also met as their feedback plays an important measurementrole.

Inaddition, staff must understand that in order to achieve VBP goals,complete application of EHR systems is instrumental as it attractscertain incentives. EHR is a guaranteed approach to ensure thatstandard quality is provided in all departments of the organization.Again, it is the best source of evidence for nature of healthcareservices offered and customer feedbacks, directly affecting theincentives awarded by the government department in charge.

Lastly,as a marketing strategy that will ensure employees comply, it iscritical to explain that in the long run, the system will make theirwork a lot less tiresome. Although it might appear cumbersome at theinitial stage, familiarizing with the standards will help medicalpractitioners and support staff deliver more efficiently afterwards.

IncorporatingEthical Clinical and Business Practices in Strategic Plan

Ethicsin healthcare organizations help to protect patients againstexploitation by demanding application of professional standards. Forinstance, charging for services not delivered or offeringsub-standard ones at exorbitant prices amounts to unethicalbehaviors. One of the core objectives of reformation factored in VBPis decreasing the number of adverse events, readmission rates, andcost of care and improving quality of care, and perception of thepatients about the care they receive (Bailes, Rachel &amp Keller,2014).

Toensure that these goals are achieved at Vanderbilt, the program to beimplemented will guarantee that healthcare is provided byprofessional clinicians who understand all the important aspects. Byadhering to laid down procedures, readmission levels would be reducedand hence, costs and general improvement in the client’sperception.

Toavoid unethical clinical practices among workers, VBP willincorporate use of checklists where they are to countercheck that allprocedures required in a certain treatment or operation has beenadhered to. Heavy penalties will be imposed to staffs who fail toobserve professional ethical standards.

Tocurb the problem of unethical business practices, The VBP system willbe designed in such a way that all healthcare services have astandard pricing. This will ensure that the amount collected from thepatient or the insurance company is equivalent to services received.


Theresearch department is the main source of information used in theeducation and the healthcare departments. For instance, when newapproaches to handling certain medical conditions are discovered, thebest way to implement them is by conducting refresher courses for thepracticing doctors who specialize in that particular area. This willdirectly affect the quality of healthcare as recommended by VBP.Similarly, in the education sector of Vanderbilt, instructors willadopt the newly developed mechanism in place of the alternativeoption that becomes outdated once a better method is implemented.This will ensure that all the three departments work harmoniously byextending the advantages enjoyed in one sector to the others.

Timelinefor Implementation in Three Years

Ineducation, the first year will involve discussions and awarenesscreation among the students. At the same time, curriculum course willproceed and be completed in the second year. During the third year,course developed will be fully implemented. Research is a continuousendeavor and as such, time plan may not be perfectly relevant. Inhealthcare delivery, the first year will involve laying foundationand determining what need to be changed. The second year will focuson empowering employees through education and training while thethird year will see full implementation in all departments.


Bailes,B., Rachel, M., &amp Keller, S. (2014). Nursing`s ethicalresponsibilities in value-based

purchasing.OnlineJournal of Health Ethics, 10(2).Retrieved17 August 2016, from

Centersfor Medicare &amp Medicaid Services,. (2015). HospitalValue-Based Purchasing – Centers for Medicare &amp MedicaidServices.Retrieved 17 August 2016, from Instruments/hospital-value-based-purchasing/index.html?redirect=/Hospital-Value- Based-Purchasing/

Farrell,K. (2014). Educationalinnovation brief: Educating graduate nursing students on value basedpurchasing(Master in Nursing). Rhode Island College.

Mrozek,K., Thorpe, A., &amp Grisaffe, M. (2013). Lookingback, moving forward: How meaningful is your meaningful use?(1st ed., pp. 1-17). Encore Health Resources.

NationalBusiness Coalition on Health. (2011). Value-basedpurchasing: A definition. Retrieved17 August 2016, from Definition

StuderGroup.(2016). Value-basedpurchasing.Retrieved 18 August 2016, from

TheHealthcare Financial Management Association,. (2012). Thevalue journey organizational road maps for value-driven health care(2nd ed., pp. 1-68). Westchester: 3 Westbrook Corporate Center,Suite 600.

VanderbiltUniversity Medical Center Strategy Framework. (2013). Vanderbiltuniversity medical center strategy framework 2013(1st ed., pp. 1-16).

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