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Purchasing Principles

All members of The Leapfrog Group have agreed to implement the following principles, either directly or through the help of intermediaries such as health plans or "purchasing cooperatives":

A. Inform and educate employees
B. Use comparative rating
C. Use substantial incentives
D. Focus on discrete forward leaps in quality and safety
E. Hold health plans accountable for Leapfrog implementation
F. Encourage the support of consultants and brokers

 

A. Inform and educate employees.

Purchasers will educate employees about the importance of comparing the performance of healthcare providers and assist them in understanding how to use such measures to make informed health care choices.

Rationale: Without a modification to the current contextual framework within which consumers currently process information about their healthcare providers, they are unlikely to use comparative performance data. Employees/consumers are central in making important improvements in the healthcare system. Their behavior can send powerful signals to the marketplace about the value patients place on better care.

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B. Use comparative rating.

Purchasers will aggregate available validated performance information on their major providers of health care into comparative value ratings for all of their employees, retirees and family members. Wherever available, the performance measurement will come from nationally recognized sources such as NCQA, JCAHO, states and medical societies, in addition to the data collected by and made available through The Leapfrog Group, to assure validity in performance comparisons.

Rationale: Without relevant information disseminated effectively to consumers, patients cannot make informed decisions about the facilities that may be better suited to treat them. Lack of transparency in the health care system occults the variations in quality that are inherent to it and fail to serve the needs of its primary customer: the patient.

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C. Use substantial incentives.

Purchasers will use two or more of the following methods to reward delivery systems with higher value ratings and will annually increase their intensity until they prove sufficient to motivate widespread and substantial annual performance improvement among their major providers.

  1. Patient Volume. Support consumers' selection of higher value providers via one of the following methods.
    • Promotion, such as "blue ribbon" designation, selection/deselection of plans/providers and enrollment freezes;
    • Consumer economic incentives, such as Enthoven's model of price-conscious enrollee choice applied to providers or other methods of varying consumer out-of-pocket costs; and
    • Consumer decision support, such as easily accessible and understandable performance comparisons.
  2. Price. Vary the prices paid to providers based on comparative value, such as value-based bonuses or rebates and/or incorporating risk-adjustment into the negotiation of cost targets or prices when feasible.
  3. Public Recognition. Publicly recognize and disseminate information about superior performance.

Rationale: To motivate delivery systems to stretch for major breakthroughs in customer value, purchasers must build significantly more robust market rewards.

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D. Focus on discrete forward leaps in quality & safety.

In implementing comparative rating and substantial incentives, purchasers will highlight a common set of discrete delivery system improvements likely to yield the largest safety gains ("safety leaps"). These will be earmarked for special visibility in purchasers' interaction with providers, insurers/ administrators, and consumers.

For example, purchasers will use common RFP questions to rate the implementation status of the safety leaps for their plans and providers and explicitly integrate such status information into every method used to reward superior value (patient volume, price and/or public recognition). With expert input, we identified three initial safety leaps, which have been transformed into the safety standards.

  1. Computer Physician Order Entry: Physician order entry in hospitals should be computerized. Adverse drug events are the leading cause of avoidable death and disability in American hospitals. As documented in research by Dr. David Bates at Brigham and Women's Hospital, computer physician order entry (CPOE) is a highly effective discrete remedy. In well-managed installations, its costs are likely to be offset substantially by savings from the avoided costs of treating complications. 
  2. Evidence-Based Hospital Referral: Elective treatment should be guided by providers to hospitals and clinical teams with superior outcomes, when valid comparative outcome measurement systems exist. Where outcome comparisons do not exist, such guidance should be based on scientific evidence of volume-outcome relationships. For many treatments, the scientific literature documents significantly superior patient outcomes in hospitals with higher volumes or with teaching programs.

    In California, for example, Adams Dudley, M.D., at the University of California at San Francisco, and others project that for 11 conditions, 602 deaths could be prevented annually through such evidence-based hospital referral. In addition, if just 85% of California's infants with very low birth weight (less than 1500g) or major surgically-correctable anomalies -- who are also within 50 miles of a large regional neonatal intensive care unit -- were delivered there, approximately 700 additional deaths could be averted each year. If the current California equilibrium reflects the nation, it implies a national opportunity to save many thousands of American lives annually. 
  3. ICU Physician Staffing: Hospital ICU care should be managed by physicians certified (or eligible for certification) in critical care medicine who:
    • Are present during daytime hours;
    • Provide care exclusively in the ICU; and
    • At other times, can return ICU pages promptly and rely on a certified "effector" to implement telephonic orders.
  4. Current scientific evidence on strengthened ICU physician-staffing models indicates that the risk of death could be reduced by more than 10%. To maximize initial safety gains and minimize unintended negative consequences on the healthcare system, initial efforts to implement these three safety leaps will focus on urban areas using metropolitan statistical area (MSA) boundaries.

Rationale: Of all types of quality improvement, focus on patient safety is likely to produce dramatic improvements in patient outcomes and garner the widest support from the public, the media, regulators, accreditors, other purchasers, and the health industry.

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E. Hold health plans accountable for Leapfrog implementation.

In advancing these principles, purchasers who utilize health plans as their intermediaries may delegate responsibility to plans for applying the principles to their network providers. If so, purchasers would hold their health plans accountable via nationally standardized Leapfrog questions in health plan RFPs, heavily weighted scoring criteria, robust health plan performance incentives, and other methods of assuring health plan application of Leapfrog principles. Purchasers would intensify these incentives annually until their largest health plans fully meet their delegated responsibility for applying Principles A, B, C and D outlined above.

Rationale: Many purchasers utilize health plans as their intermediaries to healthcare delivery systems. The application of Leapfrog principles by health plans to their relationships with providers, for their whole book of business, will further leverage purchaser efforts.

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F. Encourage the support of consultants and brokers.

In selecting benefits consultants and brokers, purchasers will create strong incentives for them to incorporate Leapfrog principles (1) in their advice to other purchaser clients and (2) in their standard tools for assessing health plans and delivery systems.

Rationale: The purchasing principles advocated and utilized by these advisors profoundly shape the market experience of insurers and delivery systems. As major customers of these advisors, purchasers can motivate them to advocate these principles on behalf of all of their clients.

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Citations:

† Dudley RA, Johansen KL, Brand R, Rennie DJ, Milstein A; "Selective referral to high-volume hospitals: estimating potentially avoidable deaths"; JAMA; 2000, 283: 1159-66.

‡ Phibbs CS, Bronstein JM, Buxton E, Phibbs RH; "The effects of patient volume and level of care at the hospital of birth on neonatal mortality"; JAMA; 1996, 276: 1054-9 and unpublished analysis, 2000.