Paul Weintraub and Marissa Burik
The phrase “value-based contracting” is both overused and under-implemented in healthcare today, leading to a general misunderstanding of its potential impact.
In the simplest terms, a value-based partnership represents a “win–win” for providers and vendors. The goal of a value-based contract is to derive value from efficiency, as opposed to price and quantity. Instead of pushing one another for savings of pennies on the dollar, value-based contracts task both vendors and providers to come up with creative ways to generate clinical and financial value from mutually beneficial improvements.
In effect, vendors and providers create a partnership. If done correctly, both parties are stronger working together than they could ever be working against each other. But these partnerships don’t just happen. Both parties need to be prepared and understand what is important to them when entering a negotiation.
Following are five key focus areas necessary for providers to effectively negotiate value-based supplier partnerships.