Value-Based Purchasing

As the largest purchaser of health care in America, employers are paying a high price for poor quality care.  About 55% of Americans get health insurance through employers,1 and employers pay nearly three-quarters of premiums. 2 At the same time, poor quality care, such as care that is excessive, ineffective, or harmful, costs a typical employer between $1,900 and $2,250 per employee every year. 3 Improving the quality of health care could improve health while saving money.

Slide1Even though employers are the largest purchasers of health insurance, they typically don’t leverage their influence to encourage improvements to the health care they buy or promote healthy behaviors to their employees.  With escalating costs, providing benefits to employees has become a bottom line issue for employers, and increasingly, poor quality care and chronic diseases are driving costs even higher.  Nearly three-fourths of the money spent by private insurance goes to treat people who suffer from chronic illnesses such as diabetes, asthma, heart conditions, and depression. 4 Unless we move rapidly to improve the value we get for our health care dollars, we will continue to squander precious resources on a broken system.

By working with providers, insurers and local health care organizations, employers can promote quality as well as cost savings by adding quality considerations to health care purchasing.  Value-based benefit design aligns employee incentives with the value of a given health care service – reducing barriers to receiving high-value care, and creating consequences for receiving care that has little value.