“Value” is the most important concept in healthcare today. But it’s problematic.
Futurists say our system is transitioning
from volume to value. Device and drug manufacturers tout the value of
their products. It even found its way into Wednesday night’s
Presidential debate when frontrunner Hillary Clinton answered Chris
Wallace’s query Medicare’s long-term viability with the following reply:
“We’ve got to get costs down, increase value, emphasize wellness. I
have a plan for doing that.”
Value is defined as “a fair exchange in return for a thing” (Dictionary.com).
Per Webster’s, it is a “fair return in goods, services, or money for
something exchanged; worth in money; usefulness, or importance in
comparison with something else.” In essence, it is the relationship
between what something costs and the benefits that accrue to its
purchaser. Transactions between buyers and sellers based on the
purchaser’s deduction of what something costs and the benefits derived
are the basis for value-based economics. They’re aided by rating
services like Consumer Reports that provide useful methods for making
selections: the current issue covers SUVs, coffee makers, nut butters
and gas/electric ranges. Very straightforward. Side by side.
But in healthcare, value-based purchasing
is elusive. Academics like Harvard’s Michael Porter called for
value-based healthcare to replace the current economy of healthcare
that’s based on fee for service incentives and utilization alone.
Similarly, other developed systems of the world, including the United
Kingdom, Germany, Scotland and others, have launched initiatives to
inject value-based methodologies into their purchasing. Their efforts to
date have resulted in impressive methodologies for comparing drugs but
not much more. Per a 2015 report by The Economist’ Business Intelligence
Unit, their efforts have been marginally successful but remain
incomplete. Why? Because determining costs in healthcare—a test,
admission, procedure, visit—in the context of unique patient signs,
symptoms, risk factors and co-morbidities requires enormous computing
power and tera-bytes of clinical, financial and operational data. And
defining “quality” in terms of widely accepted valid and reliable
measures is a battle royale as each organization in healthcare believes
it alone enjoys insight about true quality (and rarely do these domains
of self-interest agree).
Value-based healthcare, like quality of
care, seems simple enough on the surface but gets more complicated when
efforts to implement it are attempted. In the Affordable Care Act, the
U.S. Department of Health and Human Services is tasked with developing
an annual National Quality Strategy that addresses three aims: better
health, better care, and lower costs. These constitute the ingredients
of its value equation. And its Star Rating Programs for Hospitals and
Medicare Advantage Plans recent illustrations of its attempt to relate
cost and quality.
But the underlying math in these is far
from perfect. The Hospital 5 Star ratings, as it turns out, fail to
account for differences in the severity of patient populations
penalizing teaching hospitals as a result. The Star Ratings for Medicare
Advantage plans place more weight on process measures-what’s done by
the plan—rather than measures of improvement in the Medicare enrollee’s
health (an outcome). And so on.
Our system is evolving clumsily toward
value-based healthcare. It’s understandable. There’s no central bureau
to which consumers can go to know what drugs work best or which
physicians get the best outcomes and what these costs in multiple
markets and channels. Proprietary technology assessment programs and
coverage and denial deliberations by payers are not widely accessible
publicly. The costs in our hospitals and clinics bear no resemblance to
their prices due to the variation in third party reimbursement,
group-purchasing agreements that limit access to cost information and
wildly variable differences in bad debt due to payer-mix distinctions.
As a result, we are more value conscious about over-the counter remedies
and our visits and scripts than the big-ticket items that run $100,000
or more. That explains why there are 844 “top 100” hospitals, star
ratings for hospitals and plans are challengeable and quality of care is
thought to have more to do with affability and service than diagnostic
accuracy and optimal outcomes.
The reference to value in Secretary
Clinton’s reply was telling: that value-based healthcare is in her
conceptual framework about healthcare’s future is significant. The
challenge will be defining it, and hardwiring it into the policies and
politics of the system we have.
Maybe in the first 100 days of the new
administration, a Blue-Ribbon Task Force on Value-based Healthcare
should be convened. Just a thought.
Paul
P.S. In hospitals and health systems, leadership development and succession planning is an increasingly important task. I recently had the opportunity to participate in one program, the Ascension Leadership Academy, that impressed me more than any I’ve seen. It’s scope, content and most important, it’s centrality to how the system’s leaders behave, are exemplary. The unprecedented challenges of the new normal place a premium on leadership. Getting that right is in all probability the most critical factor to the organization’s sustainability.
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