The Impact of Value-based Purchasing on Rural and Urban Healthcare Systems in the United States

Abstract

Since the 2010s, the U.S. government has adopted value-based purchasing, and many states has utilized this program to reduce hospital readmission rates and improve performance of urban hospitals. Nonetheless, the lack of participation in this program among rural hospitals has contributed to the growing urban-rural health disparities. This paper aims to identify policy solutions to improve health outcomes of vulnerable populations who reside in resource-poor at-home healthcare agencies, nursing homes, and hospitals in rural regions. This paper finds that rural health outcomes are significantly worse than urban parts. At the same time, it also shows that African Americans and Hispanics have higher mortality and morbidity rates than that of their White counterparts, demonstrating the need for policymakers to further address the unmet medical needs of vulnerable populations, such as racial minorities and those with chronic conditions. Therefore, this paper proposes that the government allocates more healthcare funding toward resource-poor urban hospitals. Moreover, insurers should not penalize rural hospitals with a higher proportion of high-risk patients for having higher-than-average hospital readmission rates.