Extracting more value from the health care dollar

Americans spend more money on health care than any other nation, but get far less in return, say multiple health care executives in Sunday’s  Washington Post.

That’s not news to readers of this blog, but probably is not yet common knowledge among the general American taxpayer. That might change. The news media seems to be writing about this "value gap" more frequently, particularly in citing the growing momentum behind creating a center for comparative effectiveness research to evaluate drugs, devices and treatments to find out what works best.

Defining and measuring value is not easy, but increasingly public and
private health care purchasers are using their market power to demand higher quality care. Whether the science is
ready to support this "value-based purchasing" is the topic at the ECRI Institute’s annual conference today and tomorrow. (I’m attending the conference and will report on it tomorrow.)

Simplistically, value-based purchasing combines  information on the quality
of health care, including patient outcomes and health status, with health spending. It aims to reduce inappropriate care, as well as find and reward the most effective treatments and best providers.

Senators Max Baucus (D-Mont) and Chuck Grassley (R-Iowa) recently proposed legislation to establish a value-based purchasing program for inpatient hospital care within Medicare.

The Maryland Citizens’ Health Initiative, a $15-billion state universal health care plan announced last month, includes a provision for value-based purchasing. This component came largely from Sean Tunis, former medical director at the Centers for Medicare and Medicaid Services who now directs the Center for Medical Technology Policy in San Francisco.

While ECRI’s conference will focus largely on whether the science is ready to support value-based purchasing, I wonder whether the American public is ready to embrace it.

One sentence from The Post article that
jumped out at me was this: "Americans are attracted to innovations,
regardless of cost or whether they have been proven to achieve results."

I’m interested in this alleged copious demand for the latest and greatest health technology
develop and whether it will change as health costs continue rising. Public opinion has great implications for
the creation of a center for comparative effectiveness research or any
attempt to extract more value from the 16 percent of GDP Americans devote to
health care.

1 reply »

  1. The issue of whether Americans are “ready” for VBP is a red herring, as is the plaintive cries that value cannot be measured in healthcare.
    Value in healthcare is and will be different to different purchasers. CMS has clearly articulated their thoughts in the November 2007 report to Congress, and history suggests that the private payers will follow the lead of CMS.
    The fact that consumers may have a different value equation that CMS does not change the fact that value can be measured. If quality between providers is equal, consumers might choose on the basis of price or proximity or brand reputation or customer satisfaction.
    As frequently as comets and cicadas, CMS radically alters the payment methodology for hospitals. The hospitals that embrace the advent of VBP will be in a much better position to articulate value to consumers and others in the next few years.