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Paying for Value

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Ensuring providers of health care are rewarded for quality and efficiency

Our current health care system is designed to pay for volume – the number of medical services delivered – not the value of those services. Value is far more important; it considers the results of the services provided in exchange for the costs incurred. Today physicians and hospitals are not financially rewarded for delivering high quality care. They also have little incentive to work together to improve the patient’s overall health and experience in the health care system. The Pacific Business Group on Health engages in policy and advocacy, partnerships and pilots that pay for value, improving the quality and efficiency of care while also containing costs.

Spotlight: Mythbusting: the most expensive hospital may not be the best

Throughout California, hospital prices are rising rapidly, but studies show there is no correlation between the most expensive hospitals, and the quality of care provided. For example, a recent story on NPR found that it was a hospital’s clout, not its performance or quality that dictated premiums.

The California Public Employee’s Retirement System (CalPERS), who provides health coverage to more than 1.6 million Californians each year, needed to create a system to encourage their members to use higher quality, lower cost hospitals. In 2005, CalPERS removed some of the costliest hospitals from its HMO networks, saving an estimated $252 million over five years.