Doctors and hospitals nowadays are being asked to demonstrate the value of the health care provided to patients. Value is defined as the relationship between cost and quality. In very qualitative terms, value is the ratio of quality to cost. In other words, as quality increases relative to cost, value increases. Looked at from the cost perspective, if quality is held constant while costs are reduced, value increases.
This would all be well and good if it were a simple calculation - which would be the case if all of these elements were well understood and easily measured. One might think the easiest to tackle would be cost, as that seems an easy number to capture. Even there, however, it is complicated by the nettlesome issue of cost versus charges: the difference between what it costs to provide a service and the price one tries to collect from the customer for that service.
A familiar example of this can be found in the airline industry. I flew to San Diego this past summer for a wedding. I will be making the same trip for Thanksgiving. The cost of my transportation via airplane will surely be about the same, allowing for changes in the price of fuel. But the ticket prices are wildly different, because the airlines can charge whatever they want, and they gouge passengers who want to travel for holidays.
Hospitals exhibit large differences between costs and charges, not because they take advantage of those who get sick during periods of peak demand, but because they have to make up for the people who cannot pay by charging much more than cost to those who can. This is called cost shifting. Everyone in the health care and health insurance industries knows all about it, and nobody likes it, but until everyone has health insurance that pays enough to cover costs, that's how it will be. And by the way, the government programs that cover the poor and the elderly (Medicaid and Medicare) do not pay enough to cover costs, so the rest of us are paying for the health care of these patients both through our taxes and through cost shifting.
How does this affect the value calculation? If Hospital A has more patients with no insurance or with Medicaid and Medicare than Hospital B (which has more patients with real insurance), Hospital A will have to charge higher prices to the insured (unless it wants to go out of business). That will make Hospital B look like a better value, which is hardly fair.
If you are now dismayed that measuring the element of cost in the value equation is not as simple as it should be, wait until you see what happens when we attempt to measure quality!
The Centers for Medicare and Medicaid Services (CMS - don't ask what happened to the extra "M") has many "quality measures" for doctors and hospitals. These are things they expect us to measure and report to them. As you might guess, measuring all of these things is rather labor-intensive, which adds to costs. To make it appealing, they start out by providing a small monetary incentive (pay for reporting) for doing this, but over the next few years that goes away and is replaced by penalties for not reporting.
In addition to penalties for not reporting, CMS also penalizes hospitals for failing to hit targets for the quality measures. This would seem to be a good thing, as it gives us a financial incentive to improve quality. But that assumes the "quality measures" imposed by CMS actually measure quality.
Most of us in healthcare think the important thing to measure is patients' health outcomes. And some of the quality measures actually get at this. For example, CMS thinks patients should not acquire infections while in the hospital. I agree. While rates of hospital-acquired infections probably cannot be reduced to zero, we can get pretty close, and we have good evidence of best practices that will help us to get there.
But many of the other measures are related to processes rather than outcomes. So we are expected to do certain things for patients being admitted to the hospital for treatment of pneumonia. These are things you might think would result in better outcomes, and so it might seem reasonable to measure how good we are at doing those things consistently and reward (which means not penalize) us for that. But here is the problem. First, the connection between processes and outcomes is often surprisingly loose. Second, CMS uses quality measures based on processes that have never been shown to improve outcomes. Why would they do that? Maybe you weren't even asking that question, because you know it's a government agency, but the answer is simple: like everyone else, they do things that seem to make sense, even when there is no evidence to support intuition. Then, when presented with evidence to the contrary, they change their approach only with great reluctance, and resistance, and lengthy delay.
So we find ourselves doing many things that we know contribute nothing to improved outcomes because of government mandate. This, as I'm sure you will understand, is very frustrating. The folks at CMS claim to want to improve quality and reduce cost, thereby increasing value, but instead they cause us to waste resources doing useless things, thereby reducing value.
Fasten your seatbelt, because it gets worse. There are actually things they want us to do that may reduce quality and cost lives.
My favorite current example is what they are telling us about ordering CAT scans of the head for patients who come to the emergency department (ED) with headaches. They have established a set of criteria they want us to follow. If the patient doesn't meet the criteria, we shouldn't order a CAT scan.
By now, you have surely predicted the problem. Yes, you guessed it, the criteria are not scientifically valid. There are ED patients who do not meet the criteria who should get CAT scans. And some of those patients, because of the CMS "quality measure," will not get CAT scans. And some of them will have serious conditions that will go undiagnosed.
These "quality measures" adopted by CMS are typically endorsed by an outfit called the National Quality Forum (NQF). NQF endorsement is by no means a guarantee that a quality measure is good, but they try. This new "quality measure" related to CAT scans for headache patients was rejected by the NQF. And yet it was adopted by CMS anyway. They are convinced that it will save money and improve quality by sparing patients needless and potentially harmful radiation exposure, and that we will not, by following their criteria, miss any important diagnoses. If that were true, it would be great. Why, you may ask, has CMS not been dissuaded by the lack of scientific evidence to support this "quality measure?"
A dear friend and colleague once (many times, in fact) said that CMS makes up the rules not to improve health care but to fit the amount of money they want to spend. This is a very important truth to keep in mind. And it's not just CMS. Any time you read or hear statements about value in health care, maintain a healthy skepticism. Ask whether the better value being promised is really about the ratio of quality to cost, or whether it's really just about cost, with quality only an afterthought (if it is a thought at all). All too often, as the "value equation" is addressed, cost is the focus, and quality is ignored or sacrificed.
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