Engineering value in healthcare: Applying failure modes and effects analysis to value based purchasing

When the Centers for Medicare and Medicaid Services (CMS) introduced the hospital Value Based Purchasing (VBP) program in 2012, CMS provided a definition and structure for measuring value in hospital-based healthcare services. Under this new program, CMS withholds a percentage of reimbursement from each participating hospital. CMS then distributes withholds back to hospitals, based on VBP total performance scores (TPS), which are weighted calculations that include scores on multiple measures, such as clinical process of care and patient satisfaction. Currently, hospitals have no easily applied method for prioritizing which measures of VBP to improve, to maximize the hospital\u27s reimbursement of withholds. This research develops an objective method, Value Failure Modes and Effects Analysis (VFMEA), for hospitals to target VBP measures for improvement, by analyzing current performance and optimizing limited resources. This VFMEA, partnered with integer programming, provides hospital administrators the insights needed to reliably prioritize VBP measures for improvement and to direct resources to improvements that will produce the largest gain in the hospital\u27s TPS, and thus reimbursement of withholds