Balancing Quality and Risk in the Era of Value-Based Payment—5 Keys to Success

As reimbursement shifts from a fee-for-service model towards a greater emphasis on value and outcomes, maintaining high clinical quality will increasingly impact financial performance and reduce risk of brand impairment. According to a report from Moody’s Investors Service, healthcare organizations with better patient outcomes produce stronger operational margins.

The report suggested that hospitals with above-average value-based purchasing (VBP) scores produced a median operating cash flow margin of 11.7 percent, compared to 8.6 percent for organizations with below-average VBP scores. The patient experience, which accounts for up to 30 percent of the VBP score, has a similar correlation.

The impact of health reform

With more money being injected into fraud and claims enforcement, hospitals and health systems will continue to face regulatory risk. Healthcare organizations will face large fines, penalties, and reputational damage from corrupt arrangements and inappropriate claims. Maintaining and improving clinical quality should be a primary focus. Successfully done and the rest will fall in place—patients who’ve experienced good outcomes will recommend you, your reputation will grow positively, and good reimbursement will follow thanks to pay for performance models.

Keys to success

Hospitals and health systems that establish strong risk management and patient safety programs, improve the integrity and quality of documentation efforts, proactively review charts, and implement provider training and education, fare better in managing risk. Keys to success include:

  1. Delivering consistent quality patient care by establishing performance goals, quality improvement policies, and risk reduction procedures and measurement systems to ensure dependable results.
  2. Improving medical outcomes by measuring, reporting and comparing all outcomes based on similar medical conditions. By measuring, reporting and comparing health outcomes, leadership can properly evaluate the effectiveness of processes and procedures while identifying care gaps within the cycle of care.
  3. Increasing patient engagement and patient education. If patients are not engaged with their providers, it makes delivery of proper care extremely difficult to attain. If patients aren’t educated on the importance of adhering to treatment plans, they are less likely to keep their end of the bargain with providers and caregivers.
  4. Proactively managing risk by reducing avoidable errors which can become costly in terms of damage, discomfort, disability or distress. Proactive programs charge risk managers to perform risk assessments to identify risks before problems occur. To maintain a low-risk environment, risk managers need to establish standardized processes throughout the entire organization which include provider and staff education along with process redundancies that ensure each step of the process is being completed timely and accurately. Since risk managers cannot identify every risk within an organization, they will need to establish a non-punitive environment to implore everyone to feel comfortable in identifying possible risks along with informing leadership of those potential risks.
  5. Implementing strong service recovery programs to improve resolution of medical malpractice and negligence lawsuits. Having strategies to communicate well with patients and families when something does occur and having a disclosure of adverse events program all go a long way to reducing risk.

Challenges to quality and risk management program success lie in balancing the management of risk, both clinical and administrative, along with the quality of care. Clear and concise processes and procedures will help to ensure program success. Measuring data, reporting and comparing can help to evaluate the effectiveness of all processes and procedures while identifying care gaps. With the continuing paradigm shift to value-based healthcare, it is imperative that hospitals and health systems employ efficient quality and risk management programs to safeguard an organization’s financial position.


Article written by guest blogger Ray Evans. Ray is an Account Executive at Harmony Healthcare and is a subject matter expert in quality and risk management.

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