Healthcare Value For The Health Consumer

Healthcare value?

healthcare value strong foundation

Health economists argue that the consumer is in the driver’s seat for health care and must “insist on cost effective care”. This is supposed to increase healthcare affordability and slow the growth of healthcare costs. Let’s look at this call to action by our health economists in greater detail; specifically,

  • What exactly is “cost effective care”?
  • How do we know it when we see it?
  • Does “insist” mean we must tell our doctors the medical treatments we want even if they disagree and propose less than “cost effective care”?
  • For a given medical situation, where is the data that tells us what to ask for?

Let’s look at the first question in more detail.  In this blog, I will not be using the expression “cost effective care” (except when a direct quote), because the word “cost” emphases only the one part of healthcare that economists understand (i.e., money).     I will be replacing “cost effective care” with the term healthcare value.  Reducing costs alone to achieve healthcare affordability is a recipe for getting inferior health care when money is tight.  Utilizing an inexpensive treatment that delivers little to no benefit is wasting money while a more expensive, effective treatment would probably provide greater healthcare value as defined in the equation below.

healthcare value equation

We understand the concept of buying something for value in all parts of our lives EXCEPT in healthcare. Many of us were told by our mothers to buy the best quality we could afford for the best outcome. A quality-made shirt or dress will presumably wear better and last longer. In addition, we shop for the lowest price available for any given good or service we purchase.  The final decision of what we buy is always in our hands. The choices we make are not in the hands of the salesperson who sells us the item nor in the hands of the company that advertised and manufactured the item.

Outside the healthcare industry, faulty products are returned and the errors traced back to the people who are responsible.  This reasoning is not applied to purchases we make in health care and the quality of the product (or service) is often difficult to gauge.  When very ill or when needing immediate medical care, we are usually in no state to demand or evaluate healthcare value.  It must be built into our healthcare system.

Before one can assess healthcare value, one needs to be able to measure it. We need to measure both the patient outcomes achieved (i.e., the quality of the treatment) and the dollars spent (i.e., the total cost of care to achieve the outcome). Healthcare businesses (and health consumers) have historically NOT been held accountable for “patient outcomes achieved” nor for the costs incurred in arriving to the outcomes.  For those of us not in the healthcare business, this would be like NEVER having an annual performance review (or budget constraints) to assess how well we are doing our jobs.   No one likes to have their job performance evaluated by someone else, but it is necessary so that we can learn from our mistakes and become more effective in our jobs. As you might imagine, healthcare practitioners are not very happy about having their performances evaluated so that potential customers can judge healthcare value.

Piecemeal (and uncoordinated) efforts to improve healthcare value have been multiplying in recent years in spite of resistance from healthcare industry lobbying. Obamacare (PPACA) legislation has several initiatives for healthcare value data acquisition, measurement, and analysis. These include the creation of a National Quality Strategy, establishment of the Patient-Centered Outcomes Research Institute (PCOORI), a mandatory physician quality reporting program, and authorization of new payment and delivery models. Medicare, Medicaid and many private health insurance plans have started “Pay for Performance” (P4P) initiatives aimed at improving healthcare value.

The Measurement of Healthcare Value

The measurement of healthcare value is not a straightforward task.  The evaluation of it is even more complicated.  Let’s take a brief look at the two separate components below.

Patient Outcomes Achieved 

Patient outcomes achieved is in the numerator of the healthcare value equation, and therefore, to maximize healthcare value, we want “patient outcomes achieved” to be as high as possible. While the absolutely “best” outcome is to be 100% cured, we know this is not always possible. Even when the “best” treatment plan is followed to the letter, outcomes are not guaranteed.  The “best” treatment for most people might be ineffective for you. Another treatment might do the trick or not. This is the nature of medical practice.

So how does a healthcare practitioner go about identifying the “best” plan of action for a given condition or disease?   Your healthcare practitioner uses the appropriate tests to diagnose your problem and then draws on his clinical expertise and the newest, available data to determine the course (or courses) of action to deliver the “best” patient outcome.  The data available to the healthcare practitioner (and to patients on the internet) comes from two sources:

  • Evidence-based clinical research (and meta-analyses)–Statistical data from large number of patients across the world that tells us which medical treatments achieve the statistically “best” results. This information is used for creating “best” practice guidelines (in countries outside the United States) for all healthcare providers to consult.
  • Individual (patient) health records–This data can be combined and contribute to “best” practice guidelines.  It is collected and used to determine the quality of care delivered by individual healthcare providers.  This data is currently only collected outside the United States.

Evidence-based clinical research data (and meta-analyses) and information from individual (patient) health records provide a statistical picture of  what has worked and what has not worked for a large number of people.  The data comes from healthcare practitioners and medical experts located around the world.  This data is used to identify likely plans of action for treatment.  Several different treatment plans are often available for a given condition or disease situation and multi-step plans of action must constantly be evaluated after each step is completed.  Which plan of action is followed is ultimately in the hands of the patient (or his patient advocate if unable to do alone), who must assess the benefits and risks (and cost) for each plan of action.  This situation is shown in the figure below.

Benefit Risk Analysis for healthcare value evaluation

The measurement and evaluation of “patient outcomes achieved” could also provide our government (and health consumers) with quality report cards for individual healthcare practitioners. In other words, this data could tell us how well  a particular doctor performs for the delivery of best “patient outcomes”.  Let me give you an example of a quality measure that relates to “patient outcomes achieved”. When selecting a physician for a screening colonoscopy (to detect pre-cancerous polyps), I would love to have the physician’s “adenoma detection rate“. This procedure is very operator-dependent (the doctor has to find the polyps) and this quality measure tells me how thorough the particular doctor is at detecting the precancerous polyps. A thorough and competent doctor will not miss pre-cancerous polyps and his patients would benefit with “best” patient outcomes.  I would not want to have the screening from a doctor who is not as thorough or competent. Every doctor’s quality measures could be tabulated and shared with potential patients before treatment.

Dollars Spent

“Dollars spent” falls in the denominator of the healthcare value equation, and therefore, we want the dollars spent to be as low as possible to maximize healthcare value. In order to measure dollars spent, we need  to know  the costs of healthcare products and services. Unfortunately, healthcare pricing is very much distorted and fiercely protected by the “business of medicine” practices.  The concept of “how can you put a price on a life” is exploited as justification for outlandish profit margins. Pharmaceutical firms threaten to stop drug development if they don’t get the high prices demanded.  The connection between manufacturing costs and prices set are not revealed for scrutiny.  Five extra minutes spent by a healthcare provider during a procedure is charged hundreds (even thousands) of extra dollars (using the right medical codes).  These practices and many more like them cry out for reform.

Even the prices set for healthcare goods and services are murky and not readily available to consumers. Insurance companies, healthcare businesses, and even our government guard “negotiated” healthcare prices and reimbursements like state secrets. Two patients buying the exact same services from a hospital or healthcare provider would likely  pay totally different price based on the rates negotiated between their health insurance plans and the healthcare businesses involved. Identical treatments in different parts of the country (and even in different locations within the same city) can vary considerably. If you live in Bayonne, NJ and have COPD,  the retail price for treatment varies from $7044 (in 2011) at Lincoln Medical and Mental Health Center in the Bronx to $99,690 at Bayonne Hospital.

Before we can evaluate the healthcare value of various treatment plans for action, the pricing structure built into the “business of medicine” must be made transparent and reformed first.  As in all other segments of our economy, the healthcare industry pricing structure should have some connection to the actual cost of the product and service.  Until then, comparison of the costs of healthcare treatments (although inexact) can still be made in broad terms.

Use of Healthcare Value Data

In many other industrial countries, governments take responsibility for their residents’ health care from birth to death as a matter of public health policy. They acquire, measure, and evaluate healthcare value data to foster an efficient use of healthcare funds on a national level. Physicians that deliver sub-par care are identified and corrected. Great Britain’s National Institute for Health and Care Excellence (NICE)  evaluates the newest clinical data and defines “best practices” (guidelines) that all medical providers can consult. The guidelines, clinical expertise of the healthcare practitioner, and informed patient choices combine to deliver the “best” patient outcomes.

In the United States, where medical practitioners are private, for-profit businesses, there is no national effort to deliver healthcare value to the individual American. Our government has a policy to not interfere with the business of medicine and therefore the delivery of “patient outcomes” has historically been left unmeasured.

Our healthcare system operates on the premise that the knowledge and clinical expertise of ONE healthcare practitioner is superior to the collected information and clinical expertise from MANY medical practitioners combined and therefore fights to keep specific guidelines out of healthcare in the United States.  Instead, we rely on individual healthcare practitioners to keep up with (and apply) the vast quantity of evidence-based clinical data being constantly generated for delivery of the best “patient outcomes”.  This is not very realistic and even dangerous given the financial conflict-of-interest built into our for-profit healthcare business model.

The Bottom Line

The delivery of healthcare value should be a primary goal of our healthcare system in the United States. Maximizing healthcare value calls for providing the “best” patient outcomes at the lowest prices possible.   In practicing the concept of healthcare value delivery, your healthcare practitioner (1) uses the appropriate tests to diagnose your problem,  (2) draws upon his clinical expertise and  the newest, available clinical data to determine the possible course (or courses) of action to achieve the “best” patient outcome, and (3) presents the options to the patient.   The final decision is made by the patient (or his patient advocate if unable) after assessing the benefits and risks (and cost) for each plan of action.  “Engaged” patients and their advocates are encouraged to research the latest medical advancements and evidence-based clinical data to assure delivery of the “best” treatment options with the highest healthcare value.

With the high cost of health care, consumers cannot walk into a doctor’s office and think “I don’t care what it costs, just fix me”. Payers  of healthcare are passing more and more of the cost of healthcare onto patients and we simply do not have the pocketbooks to back up this “try everything” approach to medicine. This thinking is also an invitation for doctors in our for-profit healthcare system to over-treat and over-test. Healthcare costs and prices must be made transparent to the public and reformed before a true picture of healthcare value can be assessed with confidence.

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