Value-based purchasing, efficiency, and hospital performance

Mei Zhao, D. Rob Haley, Aaron Spaulding, Holly A. Balogh

Research output: Contribution to journalArticlepeer-review

11 Scopus citations


The Medicare hospital value-based purchasing (HVBP) program that links Medicare payments to quality of care became effective in 2013 in the United States. Hospital efficiency will be added to the HVBP in 2015. It is unclear whether hospital efficiency-specific hospital characteristics are associated with HVBP performance scores and the subsequent incentive payments. Using data from the American Hospital Association Annual Survey the Medicare Hospital Compare, this article examines the association of hospital efficiency hospital characteristics with the HVBP performance scores. The results indicate that less efficient hospitals are more likely to have lower patient satisfaction scores and total performance scores compared with more efficient hospitals. Hospital size, ownership, and payer mix also have significant impact on HVBP performance scores. The findings of this study provide significant policy practice implications. On the one hand, hospitals should consider investing their limited resources into identifying implementing the most cost-effective procedures to improve their patient experience total performance scores. On the other hand, policymakers should consider the unintended negative impact that these new payment incentives will likely have on hospitals that serve a higher proportion of low-income racial ethnic minority populations.

Original languageEnglish (US)
Pages (from-to)4-13
Number of pages10
JournalHealth Care Manager
Issue number1
StatePublished - Feb 6 2015

ASJC Scopus subject areas

  • Leadership and Management
  • Health(social science)
  • Health Policy
  • Care Planning


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