Understanding VBC performance metrics

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Mar 21, 2017

Figuring out the best way to measure physician performance is a critical consideration for policymakers focusing on the transition to value-based care.

For example, MACRA requires physicians who participate in the MIPS quality incentive track to report on a clinically relevant subset drawing from 271 quality measures.


This makes for a careful consideration of measures to report. As Harvard Professor Michael Porter asserts, quality and performance improvements are key drivers of cost containment and higher value, where quality equates to better health outcomes.


It makes any strategic planning or decision making challenging, but there are some decisions that can set providers up for success in any case. Chief among these is investing in effective data tools.

Quality improvement tools in healthcare

According to an Institute of Medicine (IOM) report, the majority of medical errors result from faulty systems and processes, not individuals. The report emphasizes that healthcare needs to be effective, safe, patient-centered, timely, efficient and equitable. Considering this, key performance indicators must be tied to an organization’s strategy. Consider the following strategies to help the organization create a successful performance metrics system:

  • Metrics should be defined and understood by everyone within the organization
  • Metrics should be strategically integrated for tracking daily operations
  • Metrics should ultimately impact a financial component
  • Good performance metrics are engineered based on cause and effect relationships

There’s more than one road to success with these metrics. For instance, the Innovation and Collaborative Care University of Arizona Health Plans offers 10 measures in their facility in line with state Medicaid objectives. Olathe Health created an executive council to set policy and communicate with other physicians, which include patient satisfaction metrics. Organizations should take a proactive approach to performance measurement, tailor it to their culture and strategy, and ensure that physicians working within the organization are an important part of that process.

Different strategies to measure performance 

It’s impossible to manage what you can’t measure. While metrics can be created for a host of areas under organizational control, operations and member experience should be top of mind considerations.

The two most strategic measures to improve processes are either cause and relationship based or based on the balanced scorecard. The former continues to grow in popularity with organizations and takes recent developments into account through strategy mapping. A good balanced scorecard contains lagging measures (outcomes) and leading measures (performance drivers) that will predict outcomes.


Population level waste accounts for 45 percent of the total waste in care delivery and results in medical treatments for a given patient population that are unnecessary. The Deming Chain Reaction is a useful strategy, which emphasizes how lower costs can be gained by eliminating waste and errors, allowing for prices to be lowered increasing revolving income. Other useful measures that can be applied to the different settings of care and care processes can be found in AHRQ’s National Quality Measures and the National Quality Forum.

Continuous process improvements are necessary for any healthcare organization, but integrating those into the day to day workflow presents a challenge to many organizations. Try the following steps to overcome that issue:

  • Be in clear agreement with the senior leadership on the selection and use of measures that are most effective
  • Develop a set of performance indicators that reflect requirements and business drivers
  • Integrate clinical and financial measures to make sure information is widely visible
  • Continuously refine information sources used within the organization. Review progress and assess organizational performance relative to strategic objectives and action plans
  • Use population analytics to conduct analyses and use the results to support strategic planning and daily decision making

At the start, implementing quality improvement initiatives may feel time consuming and tedious. But, the initial investment in time and energy will return great dividends. The Wisconsin Collaborative for Healthcare Quality has pioneered a methodology to obtain clinical data directly from physicians. Oregon Health Care Quality Corporation (Q Corp) increased transparency levels by producing information that measures cost and quality and making the data available to consumers, employers, providers, policymakers, health insurers. There is little doubt that collaboration with different stakeholders, primarily patients and payers, is key in finding ways to connect to connect evidence-based practice with rapid-cycle improvement while identifying and gaining consensus on potentially better practices.

About the author

Mason Beard

Mason Beard, 
Chief Solutions Officer, Philips PHM

Mason Beard is Chief Solutions Officer for Philips PHM. He leads the strategic and operational development and programs of the Philips Population Health Management group. He is the co-founder of Philips Wellcentive and has deep experience in developing flagship healthcare IT innovations.

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