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Why Value in Health Care Is the Target

Article · October 24, 2016

The words You have cancer strike fear in the minds of nearly every patient who has the disease. When it happens, we want the best doctors in the best health care organization to give us the best chance of achieving the outcomes of care personally important to us as individuals, at a price we can afford. As consumers, we traditionally seek value in many spheres. We compare prices and features on TVs, computers, cars — almost everything we bring into our lives. Consumers understand that value is the best quality at the lowest price. But when we become patients, we sometimes stop behaving like consumers. It is unusual to choose our doctor based on how well he or she treats a particular condition, and we rarely have a full picture of what the costs of care will be.

Lately, there has been a lot of talk about value in health care. A value proposition for health care arose from the work of Harvard Business School Professor Michael Porter, who advocates that value for patients should be the overarching principle for fixing our broken system. So what do doctors and patients need to know about value in health care? It is the balance between the health outcomes patients want and the cost to achieve them. Over the past ten years, doctors and hospitals in increasing numbers are trying to assess their value in treating specific problems. They are beginning to measure outcomes of care more regularly and are taking a hard look at health care costs.

High value in health care is a great outcome that matters to the patient at the lowest possible cost. It is neither a lower-cost treatment that has a worse outcome nor a great outcome that is not affordable. It is critically important that doctors and patients understand that outcomes of care are about more than basic questions such as, Will the patient survive an operation? or How long will a patient live with cancer? Outcomes also involve the patient experience — questions such as, Will there be pain with treatment? How long will the patient miss work?, and What will the impact on the family be? In a value-based system, both doctors and patients should know what outcomes to expect, and demand that outcomes be measured and publicly reported. When outcomes of care are reported, doctors can improve their results, and patients can make meaningful choices about where to receive care.

Costs of care delivery — the other part of the value equation — also need to be measured and made transparent to doctors and patients. Cancer is the leading cause of personal bankruptcy, yet most doctors do not know how much the care they outline will cost the patient, and most patients do not know how much their care will cost. It is time that patients know this information and that providers be transparent about their costs.

In addition, in a value-based system how doctors and hospitals get paid will change. Reimbursements will likely evolve to replace fee-for-service payment largely with bundled payments, which will require doctors to be sure they do only what is necessary to get a good health outcome — but not more. Bundled pricing does not mean that doctors will do less because they are getting a fixed amount of money; just the opposite, since bundled payments will be tied to getting the best outcomes. Doctors will be paid more for good outcomes and less for worse outcomes — something that happens in most industries, but has never been true in health care.

In a true value-based system, volume matters. Doctors will see a lot of patients with the same problem and become expert in treating those problems. Right now, too many clinicians try to treat too many different problems in which they may not be expert. As value-based care progresses, not all hospitals will treat everything. In Europe, there is a movement to certify breast cancer centers, where only those that see a lot of patients are certified.

A true value-based health care system controls costs through efficiency, eliminating things that do not need to be done and doing only those things that improve outcomes. Less health care does not mean worse care, often it means better care. Good health outcomes cost less. Lower cost in health care is good for patient health and for our economy. Fixing our health care system cannot be done simply by government fiat, by health care providers, by administrators, by patients, or by any party acting alone — but only with all parties focusing in tandem on value for the patient.


This post originally appeared in NEJM Catalyst on May 5, 2016.

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