Value-based purchasing is a demand side strategy to measure, report, and reward excellence in health care delivery. Value-based purchasing involves the actions of coalitions, employer purchasers, public sector purchasers, health plans, and individual consumers in making decisions that take into consideration access, price, quality, efficiency, and alignment of incentives. Effective health care services and high performing health care providers are rewarded with improved reputations through public reporting, enhanced payments through differential reimbursements, and increased market share through purchaser, payer, and/or consumer selection.

Effective value-based purchasing is an external motivator for providers to lead this re-engineering of health care delivery. Many NBCH members participate in and lead quality improvement projects, but they should not be confused with demand side purchasing strategies. Value-based purchasing is necessary for clinical quality improvement, but not sufficient.