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Tag: Value

Where Are Health Care’s Value Meals?

By KIM BELLARD

If you’re anything like me, you’ve noticed that food costs have been increasing. Whether it is food from the grocery or at a restaurant, the bill can be eye-opening compared to a few years ago. Blame the pandemic, blame corporate greed, blame the President – take your pick. But the bottom line is, you have to eat. You can buy lower priced options, you can go out less often, you can skimp on non-food spending, but you’re going to buy food. The other thing you can do is to complain.

Well, the fast food industry, for one, is listening to those complaints, and many leading fast food companies have launched a variety of “value meals” to reduce the pain consumers feel. Evidently they are still capable of feeling shame, or at least of recognizing that consumers have choices.

I just wish the healthcare industry was capable of doing the same.

Let’s be clear: the fast food industry has brought this on themselves. The Wall Street Journal reports that prices of food eaten away from home rose 30% since 2019, according to labor Department statistics, and that prices for a Big Mac increased 21% over the same period. McNugget meals were up 28% over the same period.

McDonald’s recognized the problem. It announced a $5 meal bundle in mid-May, targeting a June 25 launch date. For those of you craving a McD’s fix, the deal includes McDouble or McChicken sandwich, small fries, small soft drink and a four-piece Chicken McNuggets. “I’ve been in our restaurants. I’ve sat in focus groups,” Erlinger said on the Today show, touting the new deals.

It didn’t take long for other fast food chains to offer their own version. KFC introduced its $4.99 value menu back in April, even before McDonald’s announcement. Wendy’s has a $3 breakfast deal, Burger King has a $5 Your Way Meal, Taco Bell has something it calls a Luxe Craving Box for $7, Starbucks has a new Pairing Menu priced between $5-$7, Jack in the Box has a $4 munchies Meal, and Sonic now offers a $1.99 menu it calls “Fun.99,” which it says will be permanent, not a time limited promotion. I’m sure there are others.

“It still holds true that imitation is the sincerest form of flattery,” Burger King North American president Tom Curtis said in a May email to restaurant operators. “We know the competition is doing that. So we will be in that game,” Jack in the Box Chief Executive Darin Harris said

Lest anyone be worried about hurting the fast food companies’ margins, R.J. Hottovy, head of analytical research at Placer.ai, told Yahoo Finance: “It really comes down to … repeat visits after the fact. You’re not making money on the value menu. You’re making menu money on the other products, the more premium products, the dessert products, the beverage products that go along with that.”

Health care is like food in that almost anywhere you go you can probably find it. There are fast food restaurants seemingly on every corner, but there also are drugstores and doctors’ offices somewhere near those fast food restaurants. Health care may not quite be omnipresent, but it’s pretty present.

Unlike food, you may not need health care every day — but you are going to need it at some point. It may be a simple visit, it may be a pill a day for a few days, but it could be a mind-boggling array of tests, medications and procedures you never imagined or lifelong care.

In a fast food restaurant, you look at the menu, pick what you want and how much you are willing to pay, but with health care you don’t have such a menu. Someone else is usually telling what you need and dictating how much you’ll pay for it. After numerous “price transparency” efforts in these last few years, you might be able to find some set of prices, but if anyone has ever successfully been able to use them for anything other than the simplest of interactions, I’d like to know about it.  

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It’s (Still) the Prices, Stupid

Inefficient markets create price differentials for identical goods. These price differentials frequently occur among markets dominated by oligopolies. Taking advantage of market pricing inefficiencies is known as arbitrage. Commodity traders frequently arbitrage by buying low and selling high. In inefficient markets for perishable goods, such as airline tickets, hotel rooms, or medical imaging, there is no opportunity to re-sell these goods. Thus consumers of these goods, such as health insurance companies, will attempt to buy at the lowest possible price to maximize value. Today we see many apps and websites, such as Expedia, that engage in improving these markets in airline and hotel industries. Stroll Health is one company attempting to scale this behavior to medicine.

Our current Hospital Outpatient Department (HOPD) payment schedule is one example of an inefficient market where identical CPT codes are priced very differently based on whether they are provided in a grandfathered hospital outpatient department or a freestanding outpatient medical center. Hospital accountants will justify this higher payment schedule by attributing social expenses such as police and training programs. Other HOPD supporters will claim they deliver relative value through higher quality (outcomes) that justifies (often disproportionally) higher prices. Yet increasingly “illusions about value: that we know what it means and can measure it, that the same things matter to all patients” are being voiced.

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Will Clinton Take Another Look at Value-based Healthcare?

Paul Keckley“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.

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Cost, Value & Tools

Peter PronovostLike a pro golfer swears by a certain brand of clubs or a marathon runner has a chosen make of shoes, surgeons can form strong loyalties to the tools of their craft. Preferences for these items — such as artificial hips and knees, surgical screws, stents, pacemakers and other implants — develop over time, perhaps out of habit or acquired during their training.

Of course, surgeons should have what they need to be at the top of their trade. But the downside of too much variation is that it can drive up the costs of procedures for hospitals, insurers and even patients. When a hospital carries seven brands of the same type of product instead of one or two, it’s not as likely to get volume discounts. Moreover, if hospitals within a health system negotiate independently of one another, they may pay drastically different prices for the exact same item.

Carrying many brands of a given item may also increase risks for error and patient harm. Staff members need to be trained and competent in a variety of tools; the greater the number of tools, the greater the risk for error.

These physician preference items are no small contributor to health care costs. Around the year 2020, medical supplies are expected to eclipse labor as the biggest expense for hospitals, according to the Association for Healthcare Resource and Materials Management. Higher costs for physician preference items are major drivers of this increase.Continue reading…

Getting (to the Value) of Value In Health Care

Susan-Dentzer-For PostHow would you judge the value of your health care? A longstanding definition of treatment holds that value is the health outcomes achieved for the dollars spent. Yet behind that seemingly simple formula lies much complexity.

Think about it: Calculating outcomes and costs for treating a short-term acute condition, such as a child’s strep throat, may be easy. But it’s far harder to pinpoint value in a long-term serious illness such as advanced cancer, in which both both the outcomes and costs of treating a given individual—let alone a population with a particular cancer—may be unknown for years. And then there’s the complicating issue of our individual preferences, since one person’s definition of a good outcome—say, another few years of life—may differ from another’s, who may be seeking a total cure.Continue reading…

Pharma and Volume-to-Value: The Big Throwdown

Joe FlowerThe collision between the “volume-to-value” movement and the pharmaceutical and biotech industries over the next few years will have a powerful impact on them and on the healthcare industry and on us as customers, patients, and payers. 

On the one hand, pharma is perhaps the part of the healthcare industry least exposed to direct price regulation under the Obama reforms. The actual costs of pharmaceuticals have been rising as a percentage of what people spend on healthcare, and are seen as the part they have the least influence on. At the same time, many new drugs for cancer and other life-threatening diseases have come with astonishingly high price tags, often not fully covered by insurance (due to the high deductibles and co-pays of the new plans), and with few ways for regulators or the market to push back on them. The public perceives these huge price tags as threatening people with a Hobson’s choice of bankruptcy or death. In the volatile political atmosphere of the 2016 elections, this leaves the pharmaceutical industry highly exposed to political attack and actual new price regulation.

On the other hand, the pharmaceutical and biotech industries also potentially offer some of the best answers to bringing the cost of healthcare down through the use of personalized medicines, smart medicines, new methods of administration such as implants, as well as the possibilities glimmering at us from recent research of real breakthroughs in such important chronic disease areas as Alzheimers, diabetes, addiction, behavioral medicine, and functional medicine. For the most part, though, these answers remain potential. We will not see them adding to the “value” side of the equation until they become fully integrated into a system that is at risk for the health of its customers and using every trick in the handbook to bring those costs in line.

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Health Value: IT and the Rise of Consumer Centricity

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Accountable care demands that the system sync with the preferences and choices of the consumer purchasing the services.  In order to get to real health value, consumer-patients must make the health care decisions that improve personal health and do not derail personal bank accounts.  It was hard to piece these together for the last 15 years.  Now, with high deductible plans, more transparency for costs, and on-time digital connectivity, there is less difficulty.

Information technology can deliver the needed information to the patient and the physician to improve not only the likelihood of improved care but also the time-to-achieve the outcomes.  Most patients want and need to be involved in their care.  There is evidence that giving patients access to their information results in higher levels of engagement and adherence to recommendations.  In fact, the latest evidence shows that patients have been signing up for access to their health system portals at a rate of 1% per month for over 30 months.

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It’s a Trade-Off, Stupid.

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An advantage of being a foreigner, or a recent immigrant to be precise, is that it allows one to view events with a certain detachment. To analyze without the burden of love, hate or indifference for the Kennedys, the Clintons or the Bushes. To observe with both eyes open, rather than one eye looking at the events and the other looking at a utopian destination.

The most striking thing I’ve observed in the healthcare debate in the US is the absence of an honest discussion of trade-offs.

I’ve found that “trade-off” carries a sinister connotation in American healthcare parlance. Its mere utterance is a defeatist’s surrender. If optimism is the iron core of the United States, acknowledging trade-offs is her kryptonite.

I was raised in Britain. I learnt to guard optimism with pursed lips. You never knew when it would rain. I also learnt in Britain’s NHS where healthcare resources really are finite, there is a trade-off between coverage and access.

In the discussions preceding the implementation of the Affordable Care Act (ACA) two disparate truths were conjoined by a single solution. The unsustainable trajectory of healthcare spending. And the large number of uninsured population. It was scarcely acknowledged that solution of these problems are inherently oppositional.

This has led to the search for utopian payment models. Fee for service incentivizes physicians towards generously reimbursable services of marginal benefits. Capitated systems dissuade physicians from taking sicker patients.

How about we pay for outcome, value and quality?  Sounds simple enough.

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The Cost Curve Probably Won’t Bend Downwards. But That’s Ok.

flying cadeucii

To control the nation’s overarching fecundity the government of India raised mass awareness of condoms; the chief effect of which were a load of giggling school boys and a load of giggling school girls. Further, in an initiative by Sanjay Gandhi, vasectomies were performed, nearly en masse, through a mixture of cajolement, economic incentives and coercion.

The fertility curve remained unbent.

Then along came color TV. Paul Ehrlich’s doomsday prophecies were forestalled. I know correlation is not causation, let alone abstinence. I’m just saying.

Policy is a strange and lucky beast. It can survive its futility. It is not so much occasionally inept as often incidental. And it has the epistemological luxury of not being easily falsifiable: i.e. it’s hard to prove that it was not responsible for the effect for which it was instituted.

Can you prove that it was not condoms but color TV that derailed India’s logarithmic fecundity? Good luck randomizing to the television arm.

Yes I can hear you muttering “ahem seatbelts.” This is not to say policy never achieves its desired aims. It’s to say that it’s not easy to distinguish policy’s true successes from pseudo successes.

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10 Things You Can Do With CMS Data

farzad_mostashariFive years ago, my mother needed an orthopedic surgeon for a knee replacement. Unable to find any data, we went with an academic doctor that was recommended to us (she suffered surgical complications). Last month, we were again looking for an orthopedic surgeon- this time hoping that a steroid injection in her spine might allay the need for invasive back surgery.

This time, thanks to a recent data dump from CMS, I was able to analyze some information about Medicare providers in her area and determine the most experienced doctor for the job.  Of 453 orthopedic surgeons in Maryland, only a handful had been paid by Medicare for the procedure more than 10 times.  The leading surgeon had done 263- as many as the next 10 combined. We figured he might be the best person to go to, and we were right- the procedure went like clockwork.

Had it been a month prior to the CMS data release, I wouldn’t have had the data at my fingertips. And I certainly wouldn’t have found the most experienced hand in less than 10 minutes.

It’s been a couple of months since the release of Medicare data by the Centers for Medicare and Medicaid (CMS) on the volume and cost of services billed by healthcare providers, and despite the whiff of scandal surrounding the highest paid providers (including the now-famous Florida ophthalmologist that received $21 million) the analyses so far have been somewhat unsurprising. This week, coinciding with the fifth Health DataPalooza, is a good time to take stock of the utility of this data, its limitations, and what the future may hold.

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