“Value” is the focus right now in American health care. Payers like Medicare and private insurers are placing great emphasis on it, as are hospitals and doctors’ offices needing to satisfy the demands of those payers to get paid. But the focus on value in the present system is centered on reforming payment and lowering costs almost exclusively, rather than enhancing the patient experience, and involves unproven approaches like “bundled payment” and “pay for performance”, in which doctors and hospitals are financially incented to fixate on efficiency in how they deliver care. In short, right now “value” means figuring out ways insurers can save money and providers cannot lose money.
The emphasis on value in terms of efficiency and payment reform isn’t trickling down in positive ways to individual patients. Insurance premiums continue to rise, taking more dollars out of patients’ paychecks to cover the care they need. Health insurance is covering less in that many of us pay higher deductibles and co-pays in our plans for services such as physical therapy, mental health care, and emergency care. Many people have annual deductibles of thousands of dollars that must be paid before having any specialty care covered.
Americans pay more and yet have serious access problems in primary care, long-term care, and much specialty care. Wait times to see all kinds of doctors are increasing in most areas of the country. To deal with this, in American primary care patients are guided into undifferentiated, highly transactional forms of service delivery that may be cheaper but are less comprehensive in the services offered and impersonal, involving fast-food care provided through web-based apps, big box stores, and urgent care centers. These sources of care often practice their medicine according to “cookbooks” of standardized clinical guidelines using high-turnover providers, giving us fewer moments of the relational excellence so important in high-quality health care.
We also continue to lose choice as we are captured by large health care delivery systems, now turning up in most areas of the country as different providers consolidate and form de facto monopolies that force us to see only their physicians, go to their facilities, and use their labs and imaging services. This makes patients prisoners of a given health care organization. That is not real value for patients, although those very same systems will try and tell you it is, even as the prices they charge continue to rise, and the access problems get worse in those same systems of care. I tried to switch my primary care doctor recently from one large Boston-area health system to another. The new system told me that I would have a difficult time getting “referred out” to any specialists, even ones I was already seeing, in the system of which I was still a part. We keep everything in house, they told me. Good for their business, not so good for me.
A value definition controlled by insurers, providers, and big employers looking to maintain profit margins does something else bad for patients. In measuring value through the heavy use of standardized performance measures to judge their own worth to those paying them, doctors and hospitals work harder on comparing themselves to each other, which leads to gaming incentive systems that possess too many superficial and self-reported quality measures It also means providers spend less time measuring how they are meeting our unique needs, wants, and preferences as individual patients. This makes our health care feel more impersonal. It also encourages health care delivery organizations to view insurance plans, accreditors, and Medicare as their chief customers, rather than us.
Focusing on value for patients requires meaningful change in the health care industry. Large delivery systems that dominate geographic areas must be regulated more effectively to provide patients with greater choice and timely access. Provider competition needs to be encouraged, not squashed. Payers must construct flexible reimbursement approaches that reward, in meaningful ways, patient satisfaction and relational excellence between providers and patients. Right now, that’s not the case. Most importantly, patients must be activated as true consumers and force the system to be accountable to them. This accountability comes in many forms. It can involve pushing providers to be transparent about the prices they charge for different services; and then helping us to comparison shop and make decisions using that information. It can involve things other industries and a few innovators in health care use such as money-back guarantees and the use of Yelp-type ratings systems, which we control.
Of course, these things would only be a start on the road to pursuing “value” as a more patient-driven concept within the industry. But once we realize that such a vague word can mean anything we want it to mean, and that patients rather than the industry should define it, it will get easier to do.
Timothy Hoff, PhD is Professor of Management, Healthcare Systems, and Health Policy at Northeastern University in Boston, A Visiting Associate Fellow and Visiting Scholar at Oxford University, and author of the new book, “Next in Line: Lowered Care Expectations in the Age of Retail- and Value-Based Health”, published by Oxford University Press.
Today health care is moving from fee-for-service to value-based care. Patients see value in the care provided. Providers are looking for solutions to provide quality care for their patients. Patient Referral Management Solution helps providers like – FQHC’s, enterprise hospitals, imaging centers, specialty clinics to provide quality care and also increase providers overall operation’s efficiency.
Third party payors and a closed highly regulated system like the one you’re privy to in Massachusetts want “value” to consist of the basic medical service at a decent price. They have to squeeze every dime out of you and not refer you out because of payroll, insurance, compliance costs, etc. There is no one invoice, as you know every Tylenol and every test is itemized and billed separately, thus ballooning costs as in a cardiac cath. where the cardiologists’ fee is $1500 but the 23 hour stay in hospital is $45,000. The problem lies in the perception of value in the patients’ eyes vs the one defined by the check signer. Patients define value as the fact that they got the hard boiled egg instead of oatmeal during their hospital stay but maybe they left with the hypertension uncontrolled and to be managed as an outpatient, they feel fine, no need to follow up and see more doctors–or mid level practitioners. They simply cannot judge when there is good value, because they don’t know what they don’t know. We’ve a biphasic wave of patients at one end wanting nice food and a clean short hospital stay– which may be an impossibility given how they may have wrecked their bodies for 45 years–and “the system” wants a clean 4-way CABG with no readmissions for infections, loss of memory or stroke. Good luck with that.
Costs will never be be transparent until laws change that allow physicians to divulge what Anthem will pay them for 99213, yes we have gag clauses that prohibit discussing or sharing or divulging to anyone, much less listing, fee schedules in our contracts. And we’re going to have to have an honest discussion about the 8% that accounts for health care costs incurred by doctors fees–the other 92% of costs swallowed up by pharmaceuticals, nursing, administration and maintenance of all the cool alphabet soup programs to track and follow the value quality and care we are delivering!
In the Mar 13 issue of JAMA (see p 1) both specialists and generalists in the U.S. are paid about twice as much as in comparable countries, and the average difference in compensation is “more than $200,000” (Papanicolas et al.), YET the proportion of health spending allotted to physician compensation in the U.S. is the second lowest among Western countries with modern health systems. According to data from the Overseas Employment Development Board and a survey from healthcare staffing firm Jackson Healthcare, physician compensation accounted for 8.6% of total healthcare costs in the U.S. in 2011—or $216 billion of the $2.5 trillion spent on healthcare. This proportion is 8.5% in Sweden, 15% in Germany, 116% in Australia, 11% in France, and 9.7% in the UK (tinyurl.com/ya9qu98r).
“At eight percent of total healthcare costs, if physicians worked for free we would still have a serious cost problem,” said Richard L. Jackson, chairman and chief executive officer of Jackson Healthcare (https://tinyurl.com/y7lds35a).
U.S. physicians, unlike others, may have a $300,000-$400,000 debt from their medical education, FYI.
As a patient, I have two separate perspectives on this subject. First, I have an economic interest in finding the lowest price at acceptable quality / competence for any given service, test or procedure that can vary widely in price even in the same city or town. I’m thinking of MRI’s, CT scans, screening colonoscopies and the like in this context. Even if my insurer is paying the entire bill, I want this in order to mitigate growth in the cost of my insurance premium. I also want to stay away from expensive hospitals if care can be delivered safely in a non-hospital setting. Unfortunately, the confidentiality agreements between payers and providers make real price discovery impossible for all practical purposes, at least in real time.
Second, I would like to see some consensus evolve among payers and across society around the value of a human life which can be then translated into cost per quality adjusted life year (QALY) for expensive surgeries and specialty drugs as Uwe Reinhardt described in his lecture that Hootsbuddy linked to. Since we’re talking about costs that most people aside from the mega-wealthy can’t afford to pay for out of pocket, payers need to be able to just say no to coverage if the cost per QALY is too high.
Soft issues like patient experience and personal chemistry between patients and doctors don’t lend themselves readily to bonus compensation. If I don’t like a doctor, even if I find him completely competent, I should probably find another one especially in the case of primary care doctors, cardiologists and others who I may need to see over many years. Surgeons don’t need to have a compatible personality if I’m only going to see him for one surgical procedure and some follow-up care though if the nurses are afraid to call him in the middle of the night if complications develop, that’s a problem.
I would like to see a “consensus evolve among payers and across society around the value of a human life which can be then translated into cost per quality adjusted life year (QALY) for expensive surgeries and specialty drugs as Uwe Reinhardt described…” As he wryly suggested, the idea of QALY can vary widely. Is the life in question yours or mine? Is it for a Democrat or a Republican? He someone in my family or a stranger in the ER? What is the life expectancy?
The number of unanswerable subjective questions runs from ridiculous to sublime, making QALY a somewhat meaningless metric, not to mention the problems that arise when the boundaries of differing jurisdictions (state, national, international) and faiths (Catholic, Evangelical Protestant, Jehovah’s Witnesses). A recent case comes to mind of the baby in the UK deemed brain-dead & on life support whom Italy declared was made an Italian citizen and invited to Italy by the Pope himself. I’m sure the British docs must have declared his QALY ration was way past the salvation point when they took away his life support.
I’m not part of the medical community so I have no way to know, but there may already be some formula applied to give every situation a kind of QALY “score” to help both lay people and professionals know what it means in various cases. If not, there should be such a resource. The number of variables seems endless, but that’s not a good argument against trying to craft something that would at least make conversations among professionals, individuals, non-medical authorities (lawyers, politicians, adoring public, etc.) and family members more rational.
A QALY “score” might consider life expectancy from the actuarial tables, mobility, cognitive and/or sensory issues, future costs (including sources of assets — rich people obviously get a higher score than wards of the state), family/friends/others willing to be post-medical supporters and caregivers… Clearly there is no really objective system that would be universally applicable, but a good case can be made for working on such a project.
My attitude derives from having been a non-medical caregiver for the last nine years in my post-retirement life. I have seen the end-of-life landscape up close and personal from a multitude of perspectives. I became an evangelist for advance medical directives, palliative and hospice care and broach the subject every chance I get (while trying not to be a broken record).
I toss this idea into this discussion hoping that someone will reveal something less abstract than QALY (of which I am not aware). Otherwise it’s time to advance the idea of working in that direction for a better definition of QALY for discussion purposes in specific cases.
One issue is the lack of any researched based and non-invasive test to assess the resiliency of a person’s baseline homeostasis at one point in time and how that is changes over time to predictably define futility. It is of interest that human health research is based on the time dimension. There is another testing realm of knowledge defined as the Frequency domain. Biologic control systems are very complex and frequently operate with non-linear functional characteristics, the bane of diagnostic certainty for physicians. Other than for electroencephalographic patterns, the use of the Frequency Domain has not occurred as a basis for assessing biologic phenomena.
An exploratory model might involve a high frequency (100/second), simultaneous recording of beat to beat heart rate and peripheral arterial oxygen saturation for 15 minutes (right hand without dextrocardia or coarctation) before the first diurnal meal with a cross-correlation study analyzed by a Foray Transform to assess the power interaction patterns of cardiac and respiratory interaction. Then the QALY concept would become useful, person by person INSTEAD of just a population assessment.
It is not my intention for a specific QALY limit to be a rigid metric especially since hospital and physician operating costs vary quite a lot around the country. . It should be more of a guideline. For example, a payer might say it will pay for the treatment if the QALY metric is at or below X. If it’s between 1.01X and 1.50X or even 2.0X, it will evaluate whether or not to pay on a case by case basis. Or, it will establish protocols for which patients get treatment and which don’t similar to what we already do for organ transplants when there are not enough organs to go around. We have to draw the line somewhere and, if we need to set limits, which we do, we should try to set them as rationally, fairly and morally as possible. Different payers may decide a specific case differently or set different payment limits which are fine. Wealthy people should be free to spend as much money as they want out of their own pockets. That’s their prerogative.
When foreign experts are asked their opinion about the U.S. healthcare system, their response is usually along the following lines: The U.S. has great doctors, great hospitals, great scientists and a long history of medical innovation. The problem is that it doesn’t know when to stop treatment. They also hate our financing system because it leaves a significant number of people without health insurance.
The federal regulatory agencies such as the EPA, DOL, and FAA among others implicitly try to put a price on human life all the time when they do their cost vs. benefit analyses in trying to decide how much incremental cost to impose upon business and consumers to achieve some environmental or safety objective to reduce pollution, accidents and fatalities. From what I can tell, those numbers tend to fall in a range of $5-$12 million or $150K per life year at the $12 million number based on an 80 year lifespan. That’s about 3X the $50K number that Uwe Reinhardt suggests is used as a QALY limit in the UK.
Another issue we have comes back to our culture of litigiousness. At the end of life, in the absence of guidance from the patient or family, the default protocol is the full court press because doctors and hospitals are afraid of being sued, at least in some jurisdictions, if they don’t do everything possible to keep the patient alive. Maybe the default protocol should be to apply common sense depending on circumstances and maybe we should make executing a living will or advance directive part of the process when signing up for Medicare or Medicaid or entering a nursing home or assisted living facility.
If there are no limits and drug companies thought that if they priced a new specialty drug at $5 million per year and payers would pay that price, they would try to price it at that level. We can’t afford to give everything to everyone which should be self-evident. Deciding how to set limits is not easy or straightforward but it’s not impossible either.
“It can involve pushing providers to be transparent about the prices they charge for different services…”
Thanks for your discussion. Consider that providers really have no control over the transparency you are suggesting. Payers forbid this type of transparency as do large health systems. I would gladly have prices posted tomorrow in the office.
No discussion of “value” should overlook the wisdom of Ewe Reinhardt on this subject. He covered it quite well in a 2016 meeting of health care professionals. I made a clip of his delightful portion of the event which appeared on C-SPAN last November.
Dr. Hoff said “such a vague word can mean anything we want it to mean” and he’s correct..
Listen from about the six minute mark for ten minutes or so for the gist of Reinhardt’s message which is the same but more entertaining as he illustrates the point.
I suppose it’s a foregone conclusion that health care discussions inevitably settle on how it applies to people with insurance. The spotlight is usually on choice and costs, but for millions of Americans dependent on our tattered safety net (or without even that) these discussions are irrelevant. I find myself coming to THCB less as the years pass, having learned that discussions here are focused on how best to manage a system crafted on rationing by affordability. For that population the word “value” means whatever comes their way in the form of charity, either private or tax-funded. “Choice” in those cases means anything they can get.
Great discussion by Ewe. Thanks.
Well said right up to the part about the usefulness of Yelp like reviews. Heck yelp doesn’t even help me find good restaurants