Value-Based Health Care: Solutions without Patients
Value-based purchasing is a synonym for “your third party payer is going to tell you what to do.” It is the latest quick-fix for health care, and the usual policy groups are promoting it by urging employers and government to use value-based purchasing.
According to a paper from the Agency for Health Care Research and Quality, the purchasers who pioneer in value-based purchasing collect cost and quality data, select “good” plans and providers based on that data, use fiscal incentives to get employees to enroll in “good” plans, and work with providers to “identify and implement” best practices.
Who determines value? Good question. Consider the following case:
A high school student breaks his hand. He is an athlete. It is four weeks before the state competition. If his hand is in a cast he cannot compete. If he does not compete, his team cannot compete. He can compete, at 50 percent of his normal level, if his hand is in a splint rather than a cast.
He also plays in an orchestra. His instrument requires strength and flexibility in the fingers of the broken hand.
There are two possible courses of treatment. One is to cast and immobilize the hand for 8 weeks. The second is to cast the hand for two weeks, put it in a splint, and try to protect it from further insult.
Casting the hand for 8 weeks eliminates the cost of a splint, an x-ray, and a physician visit. It eliminates any risk that a freak accident might injure the bone further. It lengthens recovery time as physical therapy cannot start until the cast is off.
A cast then a splint shortens recovery time because the hand only atrophies in a cast for 2 weeks. The splint gives some of the fingers more mobility. Patients can shower without wrapping the splint in plastic, and the team can compete. Patients who do not comply with directions to keep the splint on could make their injury worse and require surgery.
The additional cost of the cast then splint option is about $200, plus the opportunity cost of the additional visits.
Which option has more value? Why? Would your choice be different if you were paying for his care with your tax dollars?
As this case shows, the only way to ensure value-based purchasing is to have as many people as possible using their own money to pay for routine health care. For example, how will a third-party insurer know whether the student could be trusted to follow instructions about keeping the splint on, be able to evaluate treatment given his extracurricular activities, or weigh the opportunity costs of additional visits?
Wonder defintion of value-based purchasing. I now understand the cocept and debate much more clearly.
I’m intrigued by valued-based insurance design (a similar concept). But it is a poor second to consumers making decisions using their own money.
Insurers have little choice but to try to find one-size-fits-all solutions (optimal solutions rather than perfect solutions. This is called satisficing in the social sciences). Individuals, on the other hand, can make individual decisions. At least proponents of value-based health care understand the power of incentives — even if it is difficult to always know which incentives to provide.
Right on, Linda. It’s a threat to the autonomy of patients and doctors.
Asked my orthopods at lunch and they said they rarely see anything like this. We do have quite a few situations where we have multiple treatments available with widely varying costs but not much difference in outcome.
Steve
The example I often hear of is hip and knee replacements. There is a huge difference in costs, given different brands and materials on the joint. There are a lot of hospitals that are eating some of the costs of buying these expensive joints, so they’re effectively making patients decide between the cheap models (which work just as well but just aren’t the Cadillac versions), and paying the difference if they choose the latter.
It makes sense. I don’t understand why we’re paying for all of this junk when the cheap option works just as well.
Brace yourself, Steve. Life is going to get very unpleasant for physicians.
Steve–both treatments result in a healed hand if all goes well. So the outcome, as usually defined, would be the same. Aside from the cost, the difference is in the speed with which the outcome is achieved, the activities that one has to give up while getting there, and, possibly, the amount of physical therapy required after the cast comes off.