Value-based purchasing (VBP) is a term that is often employed in the healthcare field. Typically, the term refers to the development of specific purchasing policies and procedures that aid in improving the range and overall quality of the healthcare services provided. The idea behind this particular purchasing strategy is to identify the ideal balance between that quality and the cost involved in delivering those services to patients.
While there are a number of different approaches used in calculating value-based purchasing, a basic formula is usually utilized to determine the value associated with any given purchase. By dividing the quality associated with the purchase by the actual cost involved, it is possible to determine the value that is gained by making that purchase. In theory, the value that is gained from the purchase will increase along with the quality, assuming that the cost remains constant. This approach can be helpful when it comes to the purchase of medical supplies or evaluating the efficiency of services rendered, based on all known factors.
For example, the process of value-based purchasing can help medical purchasing agents determine which suppliers to work with. Assuming that several suppliers offer a similar product for the same price, the task will require evaluating the quality of each of the products. The purchasing agent will likely choose supplies that are likely to last longer and provide more benefit to the operation, since there would be no additional cost involved in going with the higher quality products. As a result, the value of the products is greater to the operation, since more benefit is generated and the use of the superior products will also likely result in enhancing the reputation of the operation for providing quality care.
It is important to note that while value-based purchasing is an effective way to manage expenses and still obtain quality products for use in the operation, this strategy is often used in tandem with other considerations and approaches. For example, the purchasing agent may also attempt to reduce unit costs by seeking products that offer high quality but at lower prices. In this scenario, the importance of the price becomes at least as important as the quality, and may have either a positive or a negative impact on the value that is ultimately generated by the purchase. Since value-based purchasing takes into consideration not only savings on the front end but also the potential to enjoy additional savings on the back end, this approach may actually produce better results than basing the purchases mainly on cost.