“VA Health Care Defining Excellence in 

the 21st Century” was a theme adopted in 

2010 to underscore the VA’s promise to 

honor our commitment to provide the best 

care anywhere to America’s Veterans. 

The VA’s “Excellence” campaign is guided 

by the principles of our system becoming 

patient-centered, team-based, data-driven, 

and continuously improving. This ongoing 

transformation serves our Veterans today 

and ensures we will stand ready to serve 

them tomorrow. 

The journey of improvement is not easy. It 

requires the balancing of three big pieces: the 

best individual patient experience (including 

quality, access, and reliability), meeting (all) 

the needs of our Veteran population, while 

improving the value of care.1 

Efforts to maximize the performance of our mission will be unsustainable if the cost is excessive. 

Efforts to improve technical quality alone may be 

invisible to the patient in their actual experience 

of care. Patients see the organization’s ability to 

be respectful, answer the phone, and get what 

they need as their measure of quality. 

Improving the VA Patient 

Experience

So, how does VA improve our patient experience while also becoming more efficient? 

Remember, improved quality is generally less 

(not more) expensive.2 For example, just in 

the area of access, we know from VA studies 

that patients who wait are less satisfied, and 

have worse outcomes.3 Improved access (to 

appointments, phone, and e-mail, etc.) reduce

cost, and is an improvement in quality that 

patients do notice.

The transformation in “defining excellence” i

underway in primary care through the implementation of the Patient Aligned Care Teams 

(PACT). We are redesigning care practices an

team roles to be patient-centered by developing core teams that continuously improve the 

care they deliver. Significant investment in 

kiosks, telehealth technologies, and a portfoli

of inpatient informatics tools is also underway. Communication paths with Veterans are 

being enhanced through secure messaging an

planned improvements in telephone access. 

The Veterans Health Administration organiza

tional structure is also being realigned to better support our mission. 

While the work of finding better and more ef

ficient ways to serve our Veterans can be chal

lenging, sustaining improvements can prove 

to be even more difficult. Our systems and 

processes must be reliable and sustainable. VA 

is now adopting approaches other industries 

have found useful in this area: the ISO 9000 

Quality System standard for one. This standard will complement existing statutory and 

regulatory requirements; it will help us better identify the added value in our processes, 

obtain the results of process performance and 

effectiveness, and give us a more reliable base 

for continual improvement of processes base

on objective measurement. 

In November 2010 the VA led the health care 

industry by releasing detailed quality and perFORUM

Translating research into quality health care for Veterans

Commentary

The Imperative to Transform

Robert A. Petzel, M.D., Under Secretary for Health, Michael L. Davies, M.D., 

National Director of Systems Redesign, and Ro Hurley, M.S., Associate Director, 

Systems Improvement, Office of Systems Redesign

 August 2011

Contents

Director’s Letter 2

Increasing the Value of VA 

Health Care 3

Transparency and Public 

Reporting of Quality and 

Safety in VA Health Care 4

VA Databases: Window into 

Clinical Operations? 5

Value-Based Purchasing in VA 6 

Resource Use Measurement 7

A publication of the VA Office of Research & Development, 

Health Services Research & Development Service, Center 

for Information Dissemination and Education Resources, in 

conjunction with AcademyHealth. 
formance information for all VA hospitals; 

it was another step in demonstrating our 

quality improvement and public accountability. Some goals are set above other health 

systems, but VA believes that the goals are 

worth seeking in order to improve our Veterans’ health. We are targeting opportunities 

for improvement, not finding fault. The VA 

Hospital Compare website permits Veterans, 

family members, and their caregivers to compare the performance of their VA hospital to 

other VA and non-VA hospitals nationwide. 

On this website, quality information: (a) sum

marizes outcomes in areas such as acute care

safety, intensive care, and other measures; (b) 

documents quality and safety goals for all VA 

hospitals and how well they are being met; 

(c) compares outcomes for congestive heart 

failure, heart attack, and pneumonia; and (d) 

tracks progress in reducing complications 

from surgery including infection, blood clots

cardiac and respiratory problems. 

“Remember, improved

quality is generally less

(not more) expensive.”

Going for the Gold

The real “gold” for 2014 when health care 

reform changes take effect, however, will 

only be achieved when the talent of the entire organization is “released” to improve 

the efficiency and reliability of processes in 

every single part of the organization so that 

taxpayers know VA is a good investment and 

Veterans affirm that “VA is the care I want” 

by choosing us! 

References

1. http://www.ihi.org/IHI/Programs/ConferencesAndSeminars/TheTripleAimApril2011.htm?TabId=0.

2. Nolan T, Bisognano M, “Finding the Balance between 

Quality and Cost,” Healthcare Financial Management,

April 2006; 60(4):66-72.

3. Prentice J, Pizer SD, “Delayed Access to Health Care 

and Mortality,” Health Services Research, April 2007; 

42(2)644-62.

FORUM — Translating research into quality health care for Veterans 2

Director’s Letter: Writing A Winning HSR&D

Research Proposal

Preparing a winning research proposal is always challenging.

Following are six suggestions for improving the likelihood

of funding of research proposals submitted to HSR&D

(and other organizations).

1. Propose Innovative Hypotheses and Aims – Thoroughly understand the state of

knowledge of the area of research, as well as the most important ‘next steps’ that will be

required to move the field forward. Develop research hypotheses, aims, and a research

design that explicitly address the next steps.

2. Clearly Document What is Known and Not Known – The fundamental goal of

research is to measurably advance knowledge. Therefore, the research proposal must

concisely and clearly present what is known and unknown related to the proposed research endeavor. The proposal also should convincingly describe why gaining greater

understanding of the “unknowns” will significantly advance knowledge.

3. Present the Proposed Project in a Theoretical Context – Present the proposed project’s research aims in a theoretical context or model. The model should include the

most important variables and specify those that the project will address, and why.

4. Demonstrate the Potential Generalizability of the Project’s Results – While the

project may focus on a specific issue, the proposal will be stronger if the investigators

convincingly argue that the results are likely to be generalizable to other situations. For

example, a project that focuses on improving appointment-keeping in a substance

abuse clinic is much more likely to be funded if results also are likely to be applicable to

primary care and specialty clinics. A sound theoretical model supports the generalizability of results.

5. Avoid an Intervention that Proposes Increased Resources to Improve Outcomes –

Projects often propose to evaluate the impact of increased resources (e.g., a dedicated

nurse, pharmacist, telephone manager) on outcomes. Such proposals are reviewed

with limited enthusiasm, since the positive impact of increased resource allocations on

health outcomes is usually predictable. Therefore, a project that proposes an intervention that involves increased resources must either hypothesize a dramatic impact, or

provide an additional commanding benefit.

6. Identify and Engage a Program or Operations Advocate for the Project – The longterm goal of many proposals is to evaluate a concept for subsequent adoption by a

VHA program or operations office. Too often, however, the intended beneficiary is not

particularly interested in the product; and the long-term impact of the project, even if

completely successful, is minimal. Engaging the intended project beneficiary during the

project’s development stage may greatly increase the project’s value, while requiring

minimal modification of the project’s aims.

Seth Eisen, M.D., M.Sc.

Director, HSR&D

VA Office of Research & Development, Health Services Research & Development Service August 2011
VA Office of Research & Development, Health Services Research & Development Service August 2011

Technological advances have improved health 

care outcomes, but at great cost. Health care 

now represents more than one-sixth of the 

U.S. economy and it is widely agreed that the 

current rate of growth in U.S. health care expenditures is not sustainable. 

The challenge to health care systems, including 

the Veterans Health Administration (VA), is to 

achieve higher value with the resources already 

available. Developing a value-based health care 

system will require many changes: comprehensive and transparent assessment of outcomes; 

improved health care delivery; activated health 

plan members; and an emphasis on prevention, 

screening, and health maintenance. Dr. Petzel et 

al. describe some of the VA transformational efforts that are already under way. 

Strategies to Improve Value

A value-based health care system will create better outcomes for each dollar of cost. The strategies that VA has used to successfully improve 

health care quality can also be employed to improve its value. These strategies include practice 

guidelines, performance measures with incentives, and implementation efforts. Each of these 

strategies can help VA “bend the cost curve.” 

Practice guidelines and coverage decisions 

can consider whether new treatments deliver 

sufficient value to justify their cost. Costeffectiveness analysis is a formal evaluation 

of the efficiency of an intervention in terms 

of cost per quality-adjusted life year gained. 

Cost-effectiveness analysis is widely used 

in other countries, but less widely in the 

United States, where it has sometimes been 

misunderstood to be a form of health care 

rationing. Cost-effectiveness methods have 

been applied in thousands of studies. Findings from these studies are ordinarily applied 

to decisions about new interventions. Since 

much of the growth in health care cost stems 

from more intensive use of interventions 

already adopted, this limits the potential 

impact of cost-effectiveness research for improving health care value. 

Performance measures have been developed 

to rate provider efficiency.1

 Statistical measures, like Stochastic Frontier Analysis, have 

been used in many academic studies, but 

rarely applied by health care systems. Private 

vendors have developed benchmarks for 

the cost per covered life and cost per treatment episode. Products such as the Diagnostic Cost Group Classification Model, the 

Episode Treatment Group System, and the 

Medical Episode Grouper are being used by 

managed care organizations to reward providers who spend less than the benchmark. 

There are limitations to these efficiency measures. Most current measures do not include 

outcomes. This may give providers an incentive to reduce high-value care. Although these 

measures identify high cost providers and high 

cost episodes of care, they do not identify which 

practices must be changed to increase value. Researchers are also concerned that these methods 

may misclassify some efficient providers. 

Implementation efforts of the VA HSR&D 

Quality Enhancement Research Initiative 

(QUERI) program have helped VA improve 

quality. Quality improvement is only one way to 

increase value. These strategies could also help 

VA increase value by reducing inappropriate use 

of high cost services. There are many examples 

of this type of value-enhancing implementation 

study in the literature, including efforts to reduce 

inappropriate use of pharmacy, laboratory, blood 

bank, and imaging services. The overall impact 

of these efforts has been small. VA could use 

education, audit and feedback, clinical reminders, 

organizational interventions, and other implementation strategies proven effective in QUERI, 

to increase health care value in this way.

There is no shortage of clinical areas where 

this effort is needed. The New England 

Healthcare Institute documented 460 studies that identified health care waste or inefficiency.2

 Low-value services were identified 

in the Tufts Cost-Effectiveness Registry. 

Lists of inappropriate services have also been 

identified by a coalition convened by the 

National Quality Forum, and by the National 

Institute on Clinical Effectiveness (NICE), 

which makes recommendations to the British 

National Health Service.3 An implementation 

effort directed at changing provider behavior 

could help VA switch from these low-value 

services, freeing resources that can generate 

greater value.

Seeking Veteran Input 

More Veteran input will be needed to provide 

the patient perspective on what constitutes 

value. In countries that use cost-effectiveness 

to make coverage decisions, both academic 

and government decision makers seek public 

input to define health care value. 

Achieving a value-based, efficient health care 

system will be a difficult undertaking. To stimulate the flow of information between VA leaders 

and researchers, the Health Economics Resource Center (HERC) is hosting cyber-seminars 

on health care efficiency. These seminars feature 

VA leaders, researchers, and experts from other 

organizations. For upcoming seminars, or to 

view past seminars, visit the HSR&D website at 

http://www.hsrd.research.va.gov/for_researchers/cyber_seminars/. 

Greater efficiency is about achieving better 

health for patients. If we stop spending resources on expensive things that yield little value, 

it will free resources that can be used in a more 

productive way. Doing so is an ethical imperative as it will improve the health of the nation’s 

Veterans and, additionally, can address the 

challenges of the “campaign for excellence” 

that Dr. Petzel et al discussed.

References 

1. Hussey PS, de Vries H, Romley J, et al. “A Systematic 

Review of Health Care Efficiency Measures,” 

Health Services Research, June 2009; 44(3):784-805.

2. New England Healthcare Institute. How Many Studies will it 

Take? A Collection of Evidence that our Health Care System can 

do Better. February 25, 2008.

3. National Priorities Partnership. 2008. National Priorities 

and Goals: Aligning Our Efforts to Transform America’s 

Healthcare. 

Response to Commentary

Increasing the Value of VA Health Care

Paul G. Barnett, Ph.D., VA Health Economics Resource Center

FORUM — Translating research into quality health care for Veterans 3

.
VA is committed to transparency as part 

of our health care delivery. We do this out 

of respect for Veterans’ service and our 

accountability to the American people. 

Transparency takes many forms—such 

as disclosure of errors and adverse events 

to patients and family members—but is 

increasingly viewed as a proactive strategy 

of sharing ongoing performance data in 

order to improve trust in government. VA’s 

considerable experience in health delivery 

transformation and quality measurement, 

if shared widely, can catalyze our internal 

transformation as well as benefit the wider 

debate on national health care reform. 

History of Data Transparency 

in VA

VA began sharing comparative performance data in 2005 by transmitting Hospital 

ORYX measures directly to The Joint Commission for public posting on www.QualityCheck.org. In 2008, we began posting 

outpatient indicators based on the Healthcare Effectiveness Data and Information 

Set (HEDIS), and the following year VA 

released a comprehensive Hospital Quality 

Report Card that included data on quality 

of care, waiting times, staffing, nosocomial 

infections, availability of services, health disparities, and accreditation. We have updated 

and expanded the Hospital Quality Report 

Card each year thereafter.1

 

The next phase of quality and safety transparency involved transmission of VA administrative and clinical data to the Centers 

for Medicare & Medicaid Services (CMS) to 

allow direct comparisons of VA and Medicare hospitals on www.hospitalcompare.

hhs.gov. Core quality metrics first appeared 

in March 2010 and have been updated quarterly. Outcome indicators, including riskadjusted mortality and readmission rates for 

acute myocardial infarction, chronic heart 

failure, and community-acquired pneumonia, will appear in early August 2011. In 

calibrating its risk models, CMS uses VA 

data that includes subsequent admissions 

to Medicare hospitals when calculating readmission rates. The combination of VA 

and Medicare data thus allows a more complete picture of quality for Veterans with 

dual eligibility. VA also adopted the CMS 

methodology for measuring patient hospital 

experiences via the Hospital Consumer Assessment of Health Providers and Systems 

(HCAHPS) survey tool, and currently, those 

results are available on our own website, 

www.hospitalcompare.va.gov. Because these 

HCAHPS results are now adjusted for patient mix using the risk model provided by 

CMS, fair comparisons of VA to non-VA 

patient experiences are now possible.

Although direct comparisons of performance between VA and Medicare hospitals 

can be compelling, they fall short in several 

ways. The data on www.hospitalcompare.

hhs.gov are delayed by 18 months or more, 

and the reported quality indicators are limited to those obtained from chart abstraction, billing claims, or patient surveys. Our 

electronic health record systems actually 

allow more detailed and timely reporting, 

which is why we continue to post quality 

and safety data on VA websites. Our most 

recent public tools are the web application ASPIRE and the Linking Information 

Knowledge and Systems (LINKS) dashboards.2

 ASPIRE documents our journey 

toward high reliability by showing facility 

and network-level progress toward “aspirational” goals that represent the highest 

possible attainment (e.g., the aspirational 

goal for health care associated infection is 

zero infections). LINKS provides a quarterly “snapshot” of our outcomes for acute 

care, ICU, surgery, outpatient, and safety 

measures. 

VA Data Now Broadly Available

Now that VA data is available on our websites and those of CMS, as well as through 

government-wide sites such as www.Data.

gov, a variety of secondary users can further analyze our performance and display 

in ways that may be more accessible for 

certain readers. These include established 

and well-known organizations such as Consumer Reports and the Commonwealth 

Fund (sponsor of reporting site WhyNotTheBest.org), as well as new entities such as 

FindTheBest.com, which has just released 

a beta-version for comparing VA hospitals 

based on proximity to a given Zip code.3

If successful, transparency has the potential to be “game-changing” in the national 

health care debate. Transparency provides 

a powerful signal of VA’s commitment to 

transformation and its willingness to compete for clients based on measureable value. 

Embracing transparency of clinical quality 

and safety data on the national level offers 

one hope of countering the “tyranny of 

the anecdote” that so often besets public 

institutions. Finally, public transparency 

reinforces other accountability mechanisms 

by creating strong incentives to maintain the 

highest possible reliability. 

Important questions remain, however. Health 

literacy and numeracy remain low in the general U.S. population, and making public reports 

more “user-friendly” is a challenge. We know 

very little about how clinicians and administrators respond to these reports. Comparisons 

among VA and non-VA providers may not 

always be fair ones—our patients differ, our 

diagnostic coding practices have evolved in 

a different payer environment, and current 

methods of risk adjustment may not fully level 

the playing field especially for providers with 

complex populations or safety-net missions. 

Citizens may not find the data particularly 

relevant to their own health decisions. We 

welcome the engagement of the VA health 

services research community to assist us in exploring these critical questions.

References 

1. Each annual Hospital Report Card starting with 

2008 can be accessed via www.data.gov or 

directly downloaded from www.va.gov/health/

HospitalReportCard.asp

2. http://www.hospitalcompare.va.gov/aspire/index.asp

3. http://va-hospital.findthebest.com

FORUM — Translating research into quality health care for Veterans 4

VA Office of Research & Development, Health Services Research & Development Service August 2011

Research Highlight

Transparency and Public Reporting of 

Quality and Safety in VA Health Care

Joseph Francis, M.D., M.P.H., and Peter Almenoff, M.D., Office of Informatics 

and Analytics, Washington D.C.
VA Office of Research & Development, Health Services Research & Development Service August 2011

FORUM — Translating research into quality health care for Veterans 5

The Veterans Administration (VA) garners 

praise as a quality leader, despite tremendous 

complexity associated with being the largest 

health care system in the United States, with 

a reach from Manila to Maine. Rich national 

databases have contributed to VA’s remarkable transformation. These centralized data 

sources provide ample opportunities for 

clinical leaders, policymakers, and researchers to peer into the workings of the VA, to 

understand where it excels and where it can 

improve. Compared to primary data collection methodologies, these data sources offer 

an opportunity to study the universe of VA 

patients at relatively low cost and without 

selection bias issues inherent in other approaches. Thus, VA data sources contribute 

greatly to system transparency. 

However, if data is the glass through which 

we examine VA, it is important to understand imperfections that can distort the 

view. This article describes a few queries 

one might make of these databases, to illustrate problems that can arise.

Who are the Veterans using VA 

Outpatient Services? 

This sounds simple. However, it turns out 

that there are many non-Veterans (e.g., employees, CHAMPVA, Tricare, etc.) included 

in National Patient Care Database (NPCD) 

outpatient files. If the focus is upon Veterans, then failure to exclude these people 

would lead to over-estimation of numbers 

of patients, and under-estimation of health 

care needs. This data issue impacts women 

much more than men: half of women in VA 

outpatient files are non-Veterans.1

Are We Providing High Quality Care? 

VA data includes a spectrum of processes of 

care. However, any work on processes of care 

should account for uncaptured care occurring 

outside VA. For example, some diabetic VA 

patients who appear to have failed to receive 

glycemic monitoring (based on VA data alone) 

may actually have been tested outside VA. One 

strategy is to link VA utilization data to other 

data sources, e.g., fee basis data, Medicaid data, 

Medicare data.2 Another strategy is to link 

NPCD to survey data (e.g., Office of Quality and 

Performance Survey of Health Experiences of 

Patients), using the latter to select patients who 

identify VA as their exclusive source of care. 

How Do Veterans Fare in Terms of 

Outcomes of Care? 

As one example, data quality control checks for 

the HSR&D funded project, IIR 04-248 revealed 

that, at many facilities, Decision Support System 

(DSS) lab data indicated that zero warfarintreated patients with atrial fibrillation had received International Normalized Ratio (INR) 

testing in 2003. This represented a problem with 

data transmission to the centralized database in 

the first year of roll-out of this new data element, 

and improved in subsequent years. In cases like 

this where irreconcilable data issues arise at some 

facilities, those analyzing the data may have to 

settle for conducting a “multi-site” query (i.e., at 

sites with reliable data), rather than a study of patients using every facility in the country.

How are Veterans Using VA? 

Since every encounter generates a record, 

NPCD reliably describes many types of utilization. However, some data elements are populated inconsistently, precluding secondary 

data manipulations to resolve data limitations. For example, the Women’s Health 

Evaluation Initiative (WHEI) conducts 

database analyses for the Women Veterans 

Health Strategic Health Care Group (WVHSHG) to inform national women’s health 

policy development. WHEI data quality 

checks on the clinic “stop code” (clinic type) 

322, labeled “Women’s Clinic,” revealed 

erratic application of the code across facilities: sometimes the code reflected care in 

a comprehensive Women’s Health Center, 

sometimes care in a preventive health “pap” 

clinic, and sometimes care in a general medical clinic.3

 Therefore, it was not possible to 

draw meaningful conclusions about how 

women were using gender-specific primary 

care services. However, in response to these 

findings, the instructions for coding of 322 

have been modified to permit systematic cap

ture of women’s health model of care. This 

points to VA’s commitment to continuously 

improving robustness of its databases.

Clinical leaders, policymakers, and researchers need to attend to caveats like these when 

using national VA databases to reduce the 

hazard of drawing erroneous conclusions. 

However, they should not shy away from 

taking advantage of these rich sources of 

information. With a little polishing, these 

databases provide a valuable window into the 

care that we provide to Veterans.

References

1. Frayne S, et al. “Gender Disparities in Veterans Health 

Administration Care: Importance of Accounting for 

Veteran Status,” Medical Care, 2008; 46:549. 

2. Halanych J, et al. “Racial/Ethnic Differences in Diabete

Care for Older Veterans: Accounting for Dual Health 

System Use Changes Conclusions,” Medical Care 2006; 

44:439. 

3. Herrera L, et al. Can Stop Codes Identify Women’s 

Health Care? Poster Presentation, VA Women’s Health 

Services Research Conference, Washington DC, 2010.

Research Highlight

VA Databases: Window into Clinical 

Operations?

Susan M. Frayne M.D., M.P.H., Center for Health Care Evaluation, VA Palo Alto 

Health Care System
FORUM — Translating research into quality health care for Veterans 6

VA Office of Research & Development, Health Services Research & Development Service August 2011

Value-based purchasing (VBP) is a relatively 

new term in health care that encompasses, 

at its heart, the idea that the value equation 

includes both utilization or cost of services, 

and the quality of care delivered with those 

services. This article explores the concept of 

value-based purchasing in the context of issues that arise in the Department of Veterans 

Affairs (VA) given its relatively unique role 

in the U.S. health care system as both a payer 

and provider of services.

The best early definition of the term ‘valuebased purchasing’ comes from Meyer et al. 

(1997): “The concept of value-based health care purchasing is that buyers should hold providers of health care 

accountable for both cost and quality of care. Value-based 

purchasing brings together information on the quality of 

health care, including patient outcomes and health status, 

with data on the dollar outlays going towards health. It 

focuses on managing the use of the health care system to 

reduce inappropriate care and to identify and reward the 

best-performing providers. This strategy can be contrasted 

with more limited efforts to negotiate price discounts, 

which reduce costs but do little to ensure that quality of 

care is improved.” 1 The Centers for Medicare & 

Medicaid Services (CMS) has been a leader in 

making VBP a central organizing concept as it 

has approached health care reform in the Medicare program. In that context, in ways that both 

meld well with challenges for VA and in ways 

that do not, CMS works from the following 

eight goals: financial viability; payment incentives; joint accountability; effectiveness; ensuring 

access; safety and transparency; smooth transitions; and electronic health records.

VA competes with the private sector by offering its own diverse blend of quality, access, and cost within a specific eligible patient 

population that thereby is offered universal 

access to health care.2

 But since the VA operates as both the regulator of health care 

service provision and the provider of those 

services, many of the goals that CMS is promulgating apply to VA only in the ‘make or 

buy’ decision to provide services directly or 

contract for those services with the private 

sector. This article will explore CMS’ eight 

goals as an organizing principle for briefly 

discussing some of the issues that arise for 

VA in pursuing these goals.

VA differs from the Medicare program in 

that it does not operate off of a specific trust 

fund, so the financial viability of the federal 

government is not directly at issue, but it 

does mean that in evaluating ‘make or buy’ 

decisions the current Treasury interest rate is 

the best approximation of borrowing costs 

for VA. Whenever the federal government 

runs a budget deficit, the VA implicitly borrows money through the Treasury. The use 

of payment incentives by VA in using VBP 

for ensuring quality and efficiency when buying from the private sector face the same 

challenges as when health plans use such 

incentives, including the key challenge in 

directing the “incentive payment to an organized entity capable of bringing resources 

and organizational expertise to support 

process improvement.”3

 This latter point for 

a VA that might be trying to contract with 

general health care providers for services that 

are specialized for Veterans dovetails into the 

CMS goal of joint accountability.4 

VA HSR&D already is a key contributor to 

the effectiveness goal in VA through comparative effectiveness research. It can be difficult 

in some cases to convince outside contractors 

to follow VA directives and other evidencebased and outcomes-driven guidelines developed in VA if the contract represents only 

part of the contractors’ business and requires 

costly redesign. VA and Medicare face a 

comparable challenge in ensuring access to an 

equal level of high quality, affordable care to 

beneficiaries all across the country, wherever 

they choose to live. The ability of the health 

care system to meet the clinical needs of patients is increasingly challenged by the cost 

of technological solutions to bring care to 

the patient in the community. VA and CMS 

already are partnering on joint standards for 

safety and transparency to bring beneficiaries 

direct information on the quality, cost, and 

safety of the health care they receive. Smooth 

transitions to coordinate patient care across 

multiple providers and settings requires seamless information flows. The focus of CMS in 

trying to incentivize electronic health records 

illustrates the transitions and effectiveness 

challenges perfectly, for a contractor providing care to Veterans: fully adopting seamless 

information exchange with the VA electronic 

health records system would be especially 

costly and challenging. 

These challenges for effective VBP are true 

across all health care systems and payors. VA 

faces special challenges as a payor with its own 

provider health care system as well as options to 

purchase care from outside vendors. The complexity of the problem increases the closer one 

gets to capitation of care across a wide range of 

services. The considerable challenge of defining 

quality in purchasing is simpler the smaller the 

slice of health care services one is purchasing, 

though by no means easy. The challenge in VBP 

is the same as the wider challenge in the health 

care system, defining quality and efficiency in 

what services we provide to patients.

Note: James F. Burgess, Jr., Ph.D., through his Boston 

University academic appointment, has been a contractor to 

the Centers for Medicare & Medicaid Services for its Value 

Based Purchasing programs.

References

1. Meyer J, Rybowski L, Eichler R, Theory and Reality of 

Value-based Purchasing: Lessons from Pioneers. AHCPR Publication No. 98-0004, November 1997.

2. Burgess JF, Jr., Stefos T, “Federal Provision of Health 

Care: Creating Access for the Underinsured,” Journal 

of Health Care for the Poor and Underserved, 1991, Meharry 

Medical College, Nashville, Vol. 1, 364-87. 

3. Sautter KM, Bokhour BG, White B, et al. “The Early Experience of a Hospital-based Pay-for-Performance Program,” Journal of Healthcare Management, 2007; 52: 95-107.

4. Burgess and Stefos, 1991.

Research Highlight

Value-Based Purchasing in VA

James F. Burgess, Jr., Ph.D., Senior Investigator, Center for Organization, 

Leadership, and Management Research, VA Boston Healthcare System 
VA Office of Research & Development, Health Services Research & Development Service August 2011

FORUM — Translating research into quality health care for Veterans 7

Health care “efficiency” or “resource use” measurement is in the early stages of development. 

Although public and private payers express 

considerable interest in calculating the value 

of health care services, it remains a challenge 

to develop and implement nationally accepted 

measures. The term “resource use measures” 

is intended to broadly capture indicators of the 

cost and efficiency of health care provision. 

Health care resource use measures reflect the 

amount or cost of resources used to create a 

specific product of the health care system. The 

specific product could be a visit or procedure, all 

services related to a health condition, all services 

during a period of time, or a health outcome. 

“Efficiency” measures are a subset of resource 

use measures that compare the production of 

products of a specified level of quality. Most 

resource use measures today are not efficiency 

measures by this definition because they do 

not explicitly incorporate a measurement of the 

quality of the product. 

A systematic review of available resource use 

measures was published by AHRQ at www.

ahrq.gov/qual/efficiency/index.html. There 

are three main groups of resource use measures that have been developed:

1. Relatively simple measures of the 

resources used to produce health care, 

such as mean length of stay; readmission 

rates for hospitals; and consultation or test 

ordering rates for outpatients with common 

complaints such as low back pain. These 

measures focus on utilization and are widely 

used. However, they generally do not provide 

information about whether the utilization 

was efficient or inefficient.

2. More complex measures of health care 

resource use, including both inpatient and 

outpatient services, and using econometric 

or mathematical programming techniques to 

account for multiple outputs. The complexity of these methods may have inhibited the 

broad use of these measures beyond academic research, because measurement results 

can be sensitive to a multitude of specification choices and difficult to interpret.

3. Measures of the resources used in an 

episode of care for a patient, or to treat a patient with a specified burden of comorbidity 

for a specified period of time. Of the two 

approaches, episode-based measures have been 

used most widely by commercial payers, and 

have been recommended for use in Medicare by 

the Congressional Budget Office and the Medicare Payment Advisory Commission, among 

others. Episodes are defined using “grouper” 

tools, such as the Episode Treatment Groups 

(ETGs) developed by Symmetry Health Data 

Systems or Medstat Episode Groups (MEGs) 

developed by Thompson Medstat. These tools 

group related services into episodes primarily 

using diagnosis codes; episodes include services 

furnished by different providers in different care 

settings. The cost or resources used to produce 

each episode are then tallied across providers. 

A population-based approach to efficiency 

measurement, such as Diagnostic Cost Groups 

(DCGs), classifies a patient population according to morbidity burden in a given period (e.g., 

one year). The cost or resources used for all 

health care for that patient over the time period 

are then measured.

The state-of-the-art in health care resource use 

measurement contrasts sharply with that of 

the measurement of health care quality. Little 

is known about the validity of resource use 

measures, or the advantages and disadvantages 

of different measures. Only a few resource 

use measures (length of stay and readmission 

measures) have been endorsed by the Nationa

Quality Forum (NQF). Unlike the evolution 

of most quality measures, current resource use 

measures are not typically derived from practice standards in the research literature, profes

sional medical associations, or expert panels. 

Unlike most quality measures, resource use 

measures have been subjected to few rigorous evaluations of their reliability and validity. 

However, many groups including CMS and 

private organizations are investing in further 

development of these measures. 

Why should managers and researchers care 

about resource use measures? Because of the 

desire, indeed the demand, for better value in 

health care. As our methods of assessing quality have matured to the point where there are 

now well-accepted, standardized measures tha

can be used to benchmark providers on the 

outcomes of care, the next logical question to 

ask is how we can measure (and ultimately improve on) the resources used to produce those 

outcomes. Not all the care being currently 

delivered necessarily contributes to producing 

good health outcomes, and identifying and 

rooting out care that does not meaningfully 

contribute to good care is needed in order 

to achieve the goal of providing the highest 

possible value for taxpayer-supported health 

care. Measures that accurately assess resource 

use and efficiency are going to be needed for 

doing this in a scientific manner.

Definition

Resource Use Measurement

Paul G. Shekelle, M.D., Ph.D., M.P.H., VA Greater Los Angeles 

Healthcare System, and Peter Hussey, Ph.D., RAND Corporation, Washington D.C.

FYI: Evidence Synthesis 

The VA Evidence-based Synthesis Program (ESP) was established to provide timely and accurate syntheses of targeted health care topics of particular 

importance to clinicians, managers, and policymakers, as they work to improve the health and healthcare of Veterans. Three new ESP Reports are 

now available on the HSR&D website:

• Health Effects of Military Service on Women Veterans

• Rural vs. Urban Ambulatory Health Care Review

• A Critical Review of the Literature Regarding Homelessness among Veterans

Access these reports and other ESP Reports at http://www.hsrd.research.va.gov/publications/esp/reports.cfm
Peter L. Almenoff, M.D., FCCP, 

Office of Informatics and 

Analytics, VA Central Office, 

Washington, D.C.

David Atkins, M.D., M.P.H.,

QUERI Director,

VA Central Office, 

Washington, D.C.

Cynthia Caroselli, Ph.D., R.N.,

Associate Director for Patient 

Services & Chief Nurse 

Executive, VA New York 

Harbor Health Care System, 

New York, NY

Martin P. Charns, D.B.A., 

Director, VA HSR&D Center 

of Excellence, Boston, MA

Seth A. Eisen, M.D., M.Sc., 

Director, HSR&D

VA Central Office,

Washington, D.C.

Joseph Francis, M.D., M.P.H., 

Office of Informatics and 

Analytics, VA Central Office, 

Washington, D.C.

Skye McDougall, Ph.D.,

Chief Medical Officer

VAMC Long Beach, 

Long Beach, CA 

Richard Owen, M.D., Director, 

VA HSR&D Center of 

Excellence, Little Rock, AR 

Alan S. Perry, M.P.A., M.H.A., 

FACHE, Director, VA 

Central California Health Care 

System, Fresno, CA

Frances Weaver, Ph.D.,

Director, VA HSR&D Center of 

Excellence, Hines, IL

FORUM

Geraldine McGlynn, Editor-in-Chief

Margaret Trinity, Editor

Editorial Board

HSR&D Cyber Seminars Program

The HSR&D Cyber Seminars Program hosts 

numerous cyber seminars that provide stateof-the -art training and special interest sessions 

right from your computer! Topics include clinical informatics, health economics, women’s 

health, implementation science, evidence 

synthesis reports, and much more. Cyber seminars are available as live web conferences and 

as on demand 24/7 archived presentations. 

To view a list of upcoming seminars or to 

access the archived presentations please go to 

http://www.hsrd.research.va.gov/for_researchers/cyber_seminars/catalog-upcoming.cfm 

Special Journal Supplement on 

Women’s Health

In 2004, VA’s Office of Research and Development put forward a VA women’s health research 

agenda, spanning biomedical/laboratory, clinical 

sciences, rehabilitation, and health services research that has led to a growing research portfolio. 

In fact, more research on the health of women 

Veterans was published from 2004 through 

2008 than in the previous 25 years combined. 

Furthering these efforts, VA’s Health Services 

Research and Development Service (HSR&D) 

with supplemental support from the VA Women 

Veterans Health Strategic Health Care Group, 

funded a special issue in the journal Women’s 

Health Issues. The issue includes 18 peer-reviewed 

manuscripts summarizing health services research 

findings about women Veterans and women in 

the military, framed in the context of informing 

evidence-based practice and policy. The articles are 

complemented by commentaries from HSR&D 

and the Women Veterans Health Strategic Health 

Care Group leadership as well as an editorial from 

the Editor-in-Chief of the journal. All articles are 

accessible, regardless of subscription status, and 

may be accessed at http://www.whijournal.com/

content/supplements. 

FORUM

Translating research into quality health care for Veterans

Center for Information Dissemination and Education Resources 

VA Boston Healthcare System (152C) 

150 South Huntington Avenue, Boston, MA 02130-4893

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