In Information Week David Carr writes about some of the current trends in health care, and especially about “value based payments.” He writes –
“Value based” is a catch-all label for Accountable Care Organizations (ACOs) and other ways of restructuring healthcare around payment for value delivered, as measured by metrics of healthcare quality or the aggregate health of a population rather than by the volume of visits, procedures, or hospital stays a healthcare organization records. In other words, it’s a highly data-driven vision of healthcare reform, intended to improve quality and efficiency while reducing costs.
He reports on a new study by Availity that says while 75% of providers currently participate in some form of “value-based payment model…fewer than 30% believe these schemes offer a good level of reward for the risk.” Generally, both physicians and hospitals are concerned about the additional administrative burden and expense needed to justify payment.
That concern is certainly borne out by an article titled “What is Value in Health Care?” from the New England Journal of Medicine sent to me by a friend. This was published in 2010 and written by Michael Porter of the Harvard Business School.
Porter is extremely well regarded, so what he writes must be taken seriously. But there is something about health care that makes even sensible people lose their grip. Porter starts off with –
In any field, improving performance and accountability depends on having a shared goal that unites the interests and activities of all stakeholders.
That sounds very insightful and meaningful, but is it remotely true? I can’t think of a single instance of its being true.
Before Bill Gates and Steve Jobs, did the computer industry have a “shared goal that united the activities of all stakeholders?” What would that “shared goal” have been? Did the goal change when Microsoft and Apple came along? It would seem that the goal of these two companies was to eat IBM’s lunch. I doubt IBM shared that goal.
Ditto with every significant innovation, ever. The “shared goal” of existing stakeholders is to divvy up the market and keep out competitors. Is that really how performance and accountability are improved? The “shared goal” of new competitors is to get rid of the old “stakeholders” and persuade consumers that there are new and better ways to fulfill their needs.
Porter actually knows this. In 2008 the Harvard Business Review published an update of Porter’s “Five Forces” analysis of competitive dynamics that included his famous graphic –
Where is the “shared goal that unites the interests and activities of all stakeholders” in this?
Porter’s NEJM article goes on with some useful suggestions but an awful lot of platitudes. For instance, he says that health care should be based on value to the patient, “value” being defined as “outcomes relative to costs.” Then he writes –
Outcomes, the numerator of the value equation, are inherently condition-specific and multidimensional. For any medical condition, no single outcome captures the results of care.
But a “numerator” is by definition a number. How can we develop a single number to represent outcomes when they are so “multidimensional” and “condition specific?”
In fact, I would argue that the whole idea that “value to the patient” can be defined objectively is misguided. Even with precisely the same cost and the same medical outcome, the “value” of a service will be different for every patient. Dick Cheney seems to be very happy with his heart transplant and thrilled to extend his life by several more years. Someone else might think that the ordeal of the surgery and medical attention isn’t worth it. Or they might think that their life is pretty crappy and not worth extending.
This doesn’t apply just to health care. The value of a new Mercedes is different for you and me. You might think having such a car is proof to the world that you have arrived: it shows how successful and prosperous you are. I might be embarrassed by the conspicuous consumption and prefer something more modest. I might prefer to spend the money on charitable contributions. The difference is entirely subjective.
The balance of Porter’s article illustrates how futile his quest is. Some quotes –
- Because care activities are interdependent, value for patients is often revealed only over time and is manifested in longer-term outcomes such as sustainable recovery, need for ongoing interventions, or occurrences of treatment-induced illnesses
- For patients with multiple medical conditions, value should be measured for each condition, with the presence of the other conditions used for risk adjustment.
- The concept of quality has itself become a source of confusion.
- No organization I know of systematically measures the entire outcome hierarchy for the medical conditions for which it provides services
- Current cost-measurement approaches have also obscured value in health care and led to cost- containment efforts that are incremental, ineffective, and some-times even counterproductive.
Whew! What a great number of windmills for this Don Quixote to attack!