Healthcare and government leaders talk a lot about value-based payment changing the way U.S. healthcare works. But, a closer look shows that “value” is often measured on the basis of procedures. So providers are still paid for delivering volume. More important, value as experienced by medical customers* is still not a big factor in the provider incentive equation.
Primary care is a good example. In theory, the primary care doctor should be the customers’ ally: teaching behavior that avoids health problems, spotting and treating problems before they become serious, and advising on how to use the health system for best results and reasonable cost. The value of this care manifests as better long-term health, lower cost, and less suffering from disease and medical treatment.
In practice, there are two big problems. First, the healthcare system is not set up to measure value in the way that customers experience it. Payers, who control the incentives for providers [the golden rule: “s/he who has the gold makes the rule”], have systems that measure quality on the basis of percentage of customers who see a doctor (“engagement”) and procedures performed, and they are accustomed to monitoring providers using procedure-based claims data and medical chart analyses such as HEDIS scores. Basically, the provider is rewarded for customer encounters, procedures delivered, and boxes checked in the health record. S/he makes more money by doing this as fast as possible. Does this sound familiar? Assembly line medicine is alive and well.
The second big problem is time horizon and willingness to invest. In primary care particularly, much of the value of good care emerges over time. Eighty percent of healthcare cost is driven by chronic diseases, which often result from lifestyle choices: over-eating, no exercise, sun-bathing, smoking, excessive drinking, bad diet, etc. Providers can spot risk factors, counsel customers at early disease stages to change behavior, and stabilize customers with serious conditions to keep them out of the hospital. The benefit of this work shows up in the future, often years in the future.
Too often, payers have short time horizons. Commercial insurers lose over 20% of plan members every year**. The average Medicaid client churns out after nine months. These payers and plan sponsors lack financial incentive to invest dollars today to reduce care costs a few years down the road. To their credit, they often invest more in wellness than the bottom line would dictate.
And, many individuals don’t seem to care much, either, as evidenced by how poorly they take care of themselves. Exploring why is work for another day, however, I think the paternalistic culture of U.S. healthcare — “when I am sick the doctor will fix me and the employer/government will pay the bill” — is a big factor.
The payers that do a good job investing for long term health benefit tend to be those that know most of their customers will be with them for a long time. Plan sponsors that have long-tenured or hard-to-recruit employees and/or a culture of concern of employee welfare, like
Many providers deliver great medicine, ignoring the dysfunctional incentives, because they care. But incentive are powerful: there would be more great care if provider incentives were aligned with customer value. And entrepreneurial doctors and start-up companies have created retainer-based primary care businesses to align the incentives for doctors. However, these businesses have to work hard to find payers who will invest in more-intensive primary care, and they often have to comply with payers' requirements for procedure based data that drives payers' standard quality metrics, adding work that creates little value.
Fixing this problem broadly is a huge challenge because the root problem is how we pay for healthcare, a gnarly political problem. And short-term oriented behaviors occur at every level of the healthcare payment chain: government, corporations, and individuals. But if we don’t start to fix these problems, then in many cases “value-based healthcare” will turn out to be the same old pig with new lipstick.
Notes:
* Wherever possible, I use the term “customer” or “medical customer” instead of “patient”.
** The Kaiser Family Foundation found that 18% of employers change plans each year. And about 3.5% of employees turn over each year, which combines to 21% change in plan members each year. In addition there will be plan member changes due to employees moving to spouse or government coverage or switching between plans offered by their employer.
