Value in Healthcare

A common complaint about healthcare in the United States is that it has traditionally operated on a fee for service (FFS) based model. It is a natural and easy to understand system, and generally the type of system that both patients and providers prefer. The idea is that you pay for the services you receive from a healthcare provider. So if you need a tooth extracted, you go and have the tooth extracted and pay for the extraction. If you need a skin check, you go and get a skin check and pay for it. However, this FFS model can encourage a lot of waste through unnecessary medical procedures, and the value in healthcare is sometimes lost when we wait until someone has a problem before we help them with their health.

 

A lot of government programs, employers, and insurance companies are making efforts to push against FFS in an effort to provide greater value in the healthcare services we pay for, but it is worth asking, what is value and how can healthcare systems provide it? Is value just better health? Is it services that a patient said they were happy about? Is it care that saves a life or can it just be care that makes a life somewhat more comfortable? Dave Chase helps explain one aspect of value in healthcare in his book The Opioid Crisis Wake-Up Call, “Value is defined as the ratio of quality to cost. Value increases as the quality of the care increases or the cost of care decreases.”

 

FFS encourages short appointments where doctors cram as much as they can bill for into the shortest possible time before moving on to the next patient to do the same. Value based models, on the other hand, seek to improve the quality of the care provided without adding more costs to the patient and their insurer. As opposed to simply cramming in more tests, treatments, and procedures to get more money, value based systems that increase quality focus on improving health outcomes while keeping costs stable.

 

Alternatively, value based models might seek to keep quality the same, but reduce overall costs. This can wade into territory we don’t necessarily want to support, such as cutting nurse management staff to keep overhead low, but it could also look like more comprehensive care to reduce costly re-admissions after a procedure. When we think about value and try to build systems around value, we ultimately have to think about quality and cost, and how those are related. We can cut pieces out of the system that are just meant for signaling and cut pieces out that might be unnecessary without diminishing quality. But at the same time, we really need to examine whether the pieces we want to cut really do help with the quality of the care, especially over the long run.

 

Thinking about value in healthcare isn’t entirely new, but it is receiving increased focus, which is important if we want to have a healthcare system that people actually trust and are willing to engage with when necessary.

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