What is Value-Based Contracting (VBC)

Contracts are a powerful and often underutilized way to shape the business while involving all stakeholders. There exist stunning stories where an inspiring contract turns a lose-lose scenario into a successful relationship that fosters significant win-win behaviors. The latter will depend on contracting practices adapted to the level of coordination and the outcomes being sought. Inspiring contractual arrangements can drive a better outcome-based approach that is benefiting everyone. Every business is currently oriented toward value-centered outcomes; contracts can help sustain this approach by incentivizing the desired behavior to reward activities that create value, rather than simply reimbursing costs. Contract discussions should not be adversarial, but they should present an opportunity to align consumers' and providers' values while keeping expenditure under control. This chapter discusses real stories where innovative and inspiring contracting styles generate a vast value and realign the business approaches. This chapter is putting the concept and the story together.