BurrowM_HRMT600-Research Assignment

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1 Value-Based Pay in Healthcare Mary Reed American Military University HRMT600 Human Resource Management Dr. Monica Galante November 12, 2023

2 Value-Based Pay in Healthcare Introduction In the late 1990s, the healthcare sector created incentives called pay for performance for healthcare employees to financially incentivize them to perform their tasks effectively and accurately, keeping patients happy and well. Improving the quality of attentiveness and care to patients helps the individual healthcare facility and the overall profits, ratings, productivity, and willingness to achieve goals faster, creates a culture full of employees who want to succeed, and promotes positive healthcare to patients. According to Kovacs et al. (2020), pay-for-performance (P4P) schemes – also called performance-based financing or results- based financing schemes – provide financial incentives to health workers or facilities based on the achievement of pre-specified performance targets and have been implemented in health systems across low and middle-income countries (LMICs). (p.2) When employees find incentives, motivation, and positive factors to work more successfully, harder, and thoroughly, they and the hospital are set up for success. Implementing value-based pay-for-performance models in the healthcare sector promises to enhance patient outcomes, foster cost-efficiency, and promote patient-centric care by harmonizing financial incentives with high-quality, streamlined healthcare services. Healthcare and Incentives The history of medicine dates back to the first history of men and has slowly advanced throughout history. During the Colonial times (the 1700s), there were very few doctors, physicians, and any sanitary measurements associated with healthcare. The mortality rate for most in this time frame was extraordinarily high, with threats of malaria, yellow fever, childbirth,

3 and smallpox. There needed to be more regulation when it came to performing procedures. Most surgeries performed were performed case-by-case, and most of the time, with little knowledge on how to treat what the patient may have. The first hospital was officially established in 1750 in Philadelphia, and fifteen years later, the Medical College of Philadelphia was constructed. Two years after the first college was established, New York constructed their first medical department at King’s College, with them awarding the first American Doctor of Medicine Degree. During the Civil War in the mid-1800s, most soldiers died from diseases, chickenpox, and mumps. Measles and fever are caused by the lack of hygiene, medical supplies, and a shortage of doctors who could care for them. After this catastrophe had ended, the United States Army created the Hospital Corporation, which helped alleviate some of these issues. During the early 1900s, President Theodore Roosevelt pressed for health insurance. During the Great Depression, healthcare became a more popular conflict due to the lack of money, the elderly, and the unemployed. This brought up the Social Security Act that helped the retired and elderly. Medical advancements were made more and more through the 1900s with Penicillin, Polio vaccines, organ transplants, and more medical facilities being built. According to Mullen et al. (2010), In 1999, the Institute of Medicine (IOM) issued a startling report estimating that, every year, between 44,000 and 98,000 people admitted to U.S. hospitals die as a result of preventable medical errors. (p. 64). In the early 2000s, healthcare facilities received public backlash for their quality of care, which then brought forth the pay-for-performance program, which is not one of the most extensive programs in the country. With performance pay established in healthcare, many facilities could redirect funds to promote and motivate better health situations and clinical practices.

4 Value-Based Pay and Effectiveness Value-based pay is an incentive that grants healthcare providers extra payments for the quality of care they give to people with health insurance. It also weeds out unwanted costs and potential wasteful spending, including clinic waste, administrative waste, and other possible factors. According to CMS (2023), Value-based care puts greater emphasis on integrated care, meaning health care providers work together to address a person's physical, mental, behavioral and social needs. In this way, providers treat an individual as a whole person, rather than focusing on a specific health issue or disease (para. 17). Treating a patient as an actual person and giving them the best care is an effective method for using the pay-for-performance program. It provides health equity in which everyone has a fair and attainable opportunity to receive optimal care by focusing on the patient, encouraging providers to look closer to the patient's needs and illnesses, and enabling providers to engage in communities, giving the best resources for better care. Valued-based programs have been shown to be successful, limit spending excess funds, grant patients better care, and provide lower- income cities with better care and a better ability to achieve that care. Employee and Employer’s Perspective Being an organization with a value-based pay-for-performance program can be very beneficial for both the employee and employer. A value-based employee receives a higher salary, which can attain more talent and help keep the employee who may be exceptional in their field of experience. From an employee's perspective, the value-based program is a motivating factor, as it provides employees with a clear understanding of how their performance will be

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