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Hospitals look to value-based contracting in healthcare supply chain

Almost three-quarters of C-suite and supply chain leaders say their health systems prioritize value-based contracting, although barriers remain.

Jeff Lagasse, Associate Editor

Most hospital and health system leaders are interested in value-based contracting when it comes to their supply chains, but a new Premier survey shows a lack of opportunities to lock down contracts with suppliers.

Among 200 C-suite executives and supply chain leaders, 73 percent said their health systems prioritize value-based contracting when looking to improve their return on investment.


In perhaps another sign of the inevitability of value-based care, 81 percent of respondents said they would be interested in more suppliers offering value-based contracting options.

Despite that, only 38 percent said they had participated in value-added or risk-based contracting with suppliers or pharmaceutical companies.

There are some barriers. When asked if they had considered participating in value-based contracts with suppliers with both up- and downside risk/reward, 55 percent said they didn't know enough about shared risk contracts. Another 20 percent said they're actively considering such contracts; 16 percent are already participating in them.

As for why many providers haven't yet taken part in value-based or risk-based contracting with suppliers, 67 percent said it's due to not having been engaged by a supplier. About 11 percent said it doesn't align with the organization's strategy.


Respondents provided some examples of value-based contracts they had implemented, and at the top of the list was surgical services at 13 percent.

Following that was purchased services (11 percent); cardiovascular (11 percent); pharmacy and materials management (9 percent); nursing (8 percent), imaging and lab (6 percent); and facilities (5 percent).

Data was the most common challenge, cited by 22 percent of respondents. That was followed by internal communications (14 percent); coordination with suppliers (12 percent); infrastructure support (11 percent); and physician buy-in (10 percent).


Research this year from Sage Growth Partners highlighted the challenges providers face in succeeding under value-based contracting. Slightly more than two-thirds of the survey's 100 respondents said value-based care has provided them with a return on investment, but many have had to supplement their electronic health records with third-party population health management solutions to get the most bang for their buck.

Twitter: @JELagasse

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