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Pay-for-Performance Measures Could Reduce Cost and Improve Quality of Care, Analysis Says

By CQ Staff

September 5, 2006 -- Costs, complications, and deaths associated with hospital stays could be reduced if hospitals followed certain steps to ensure patients received high-quality care, according to an analysis released Tuesday.

The analysis, conducted by an alliance of not-for-profit hospitals, known as Premier Inc., with the Centers for Medicare and Medicaid Services, finds that if medical professionals adopted certain care strategies for pneumonia, heart bypass, heart attack, and hip and knee replacement patients, they could lower hospital costs by $1.35 billion.

The analysis also reveals that doing so could result in a total of 750,000 fewer days in the hospital, 10,000 fewer readmissions, 8,100 fewer complications, and 5,700 fewer deaths.

The findings released Tuesday are part of a three-year project designed to determine whether financially rewarding hospitals is an effective way to improve the quality of patient care.

The Premier Inc. and CMS demonstration project, started in 2003, is testing the merits of "value-based purchasing," which links payment to quality of care. A budget savings bill (PL 109-171) that President Bush signed in February requires CMS to develop a plan to enact value-based purchasing beginning in 2009.

"Our nation's current health care payment system pays all hospitals the same way regardless of the quality of care delivered," said Premier President and Chief Executive Officer Richard A. Norling. "These new findings point the way toward a payment system that's better for patients and hospitals—one that rewards hospitals for delivering higher quality care."

The demonstration project was conducted by gathering a set of 33 factors that indicate high-quality service from more than 250 participating hospitals nationwide.

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