Value in Health Care: Accounting for Cost, Quality, Safety, Outcomes, and Innovation: Workshop Summary (2010)

The general themes, insights, and possible activities presented in this chapter and throughout this report are drawn from the presentations, observations, and suggestions coursing through workshop discussions. They are intended to complement the content of the individual presentations, which represent the core material of the published workshop summary. This material does not constitute findings or recommendations, and serves only to inform Roundtable discussions and possible collaborative activity among members and their sectoral colleagues. Since this is an “open source” process, additional suggestions and observations are welcome and encouraged as Roundtable members identify which, among the many compelling issues, are best suited to their capacities.

A number of common themes emerged during workshop discussions. These converging ideas explored the urgency to obtain greater value from our investments in health care, the ideas and actions that need to be considered as stakeholders pursue the value proposition, the diversity of perspectives on value, and the possibility of implementation and change (Box 8-1). The themes focusing on the exigency and facets of value include the following:

• Urgency: The urgency to achieve greater value from health care is clear and compelling. The persistent growth in healthcare costs at

a rate greater than inflation is squeezing out employer healthcare coverage, adding to the uninsured, and doubling out-of-pocket payments—all without producing commensurate health improvements. We have heard that perhaps one-third to one-half of health expenditures are unnecessary for targeted health outcomes. The long-term consequences for federal budget obligations driven by the growth in Medicare costs have been described as nearly unfathomable, amounting to an estimated $34 trillion in unfunded obligations, about two-thirds of the total of $53 trillion as yet unfunded

for all mandatory federal entitlements (including Social Security and other civilian and military benefits).

• Perceptions: Value means different things to different stakeholders, so clarity of concepts is key. We have heard that for patients, perceived value in health care is often described in terms of the quality of their relationship with their physician. It has been highlighted that value improvement means helping them better meet their personal goals or living lives that are as normal as possible. It does not necessarily mean more services or more expensive services, since it was stated patients are more likely driven by sensitivity to the value of time and ensuring that out-of-pocket payments are targeted to their goals. Provider representatives suggest that value improvement means developing diagnostic and treatment tools and approaches that offer them increased confidence in the effectiveness of the services they offer. Employers discuss value improvement in terms of keeping workers and their families healthier and more productive at lower costs. Health insurers assert that value improvement means emphasizing interventions that are crisply and coherently defined and supported by a high level of evidence as to effectiveness and efficiency. Representatives from health product innovators and manufacturers have spoken of value improvement as products that are better for the individual patient, are more profitable, and contribute to product differentiation and innovation.

• Elements: Identifying value in health care is more than simply the right care for the right price as it requires determination of the additional elements of the applicability and circumstances of the benefits considered. We have heard that value in any endeavor is a reflection of what we gain relative to what we put in, and in health care, what is gained from any given diagnostic or treatment intervention will vary by individual. Participants believe that value determination begins with learning the benefits—what works best, for whom, and under what circumstances—as applied to individuals because value is not inherent to any service but rather specific to the individual. Value determination also means determining the right price, and we heard that, from the demand side, the right price is a function of perspective—societal, payer, and patient. From the supply side, the right price is a function of the cost of production, the cost of delivery, and the incentive to innovation.

• Basics: Improving value requires reliable information, sound decision principles, and appropriate incentives. Since the starting point for determining value is reliable information, workshop discussants underscored the importance of appropriate investment in the infrastructure and processes for initial determination and continu-

ous improvement of insights on the safety, efficacy, effectiveness, and comparative effectiveness of interventions. Action to improve value, then, also requires the fashioning and use of sound decision principles tailored to the circumstances and adequate incentives to promote the desired outcome.

• Decisions: Sound decision principles center on the patient, evidence, context, transparency, and learning. Currently, decision rules seem to many stakeholders to be vague and poorly tailored to the evidence. Workshop participants contended that the starting point for tailoring decisions to circumstances is with information on costs, outcomes, and strength of the information. They also discussed assessing value at the societal level using best available information and analytics to generate broad perspective and guidance for decision making on availability, use, and pricing. Yet we also heard that value assessment at the individual patient level takes account of context and patient preferences, conditioned on openness of information exchange and formal learning from choices made under uncertainty. We also heard that an informed patient perspective that trumps a societal value determination can still be consistent with sound decision principles.

• Information: Information reliability derives from its sources, methods, transparency, interpretation, and clarity. We have heard about the importance of openness on the nature, strengths, and limitations of the evidence and the processes of analysis and interpretation— and of tailoring decision principles according to the features in that respect. Because the quality of evidence varies, as do the methods used to evaluate it, transparency as to source and process, care as to interpretation, and clarity in communication are paramount.

• Incentives: Appropriate incentives direct attention and rewards to outcomes, quality, and cost. Often noted in the workshop discussions was that the rewards and incentives prevalent in the American healthcare system are poorly aligned—and even oppositional—to effectiveness and efficiency, encouraging care that is procedure- and specialty-intensive and discouraging primary care and prevention. We heard that if emphases are placed on individual services that are often high cost and inadequately justified, rather than on outcomes, quality, and efficiency, the attainment of system-wide value is virtually precluded.

• Limits: The ability to attain system value is likely inversely related to the level of system fragmentation. Transforming health care to a more direct focus on value is frequently noted as an effort that requires broad organizational, financial, and cultural changes— changes ultimately not attainable with the level of fragmentation

that currently characterizes decision making in the U.S. healthcare system. We have heard that obtaining the value needed will continue to be elusive until better means are available to draw broadly on information as to services’ efficiency and effectiveness, to set priorities and streamline approaches to filling the evidence gaps, to ensure consistency in the ways evidence is interpreted and applied, and to marshal incentives to improve the delivery of high-value services while discouraging those of limited value.

• Communication: System-level value improvement requires more seamless communication among components. Related to system fragmentation, among the primary barriers to achieving better value are the communication gaps noted among virtually all parties involved. Patients and providers do not communicate well with each other about diagnosis and treatment options or cost implications, in part because in complex administrative and rapidly changing knowledge environments, the necessary information is not readily available to either party. Communication, voice or electronic, is often virtually absent between and among multiple providers and provider systems for a single patient, increasing the prospect of service gaps, duplications, confusion, and harm, according to discussants. Further, communication between scientific and professional organizations producing and evaluating evidence is often limited, resulting in inefficiencies, missed opportunities, and contradictions in the production of guidance. Accordingly, communication between the many groups involved in developing evidence and the practitioners applying it is often unstructured and may be conflicting.

The diversity of stakeholder perspectives on value was highlighted from multiple vantage points.

• Providers: Provider-level value improvement efforts depend on culture and rewards focused on outcomes. Workshop presentations identified several examples of some encouraging results from various programs in terms of progress to improve provider sensitivity to, and focus on, value from health care. These range from improving the analytic tools to evaluate the effectiveness and efficiency of individual providers, institutions, and interventions, to incentive programs such as pay-for-performance, the patient-centered medical home, and employer-based programs for wellness, disease prevention, and disease management. We heard, for example, that certain provider organizations, in effect, specialize in the care of the poorest and sickest patients and can provide services that in

fact have better outcomes and lower costs because they are geared to focus on interprovider communication, continuity of care, and links with social welfare organizations. However, they have also negotiated the necessary flexibility with payers. We heard that the clearest barriers to provider-level value improvement appear to lie in the lack of economic incentives for a focus on outcomes (both an analytic and a structural issue) and also in cultural and structural disincentives to tend to the critical interfaces of the care process—the quality of the links in the chain of care elements.

• Patients: Patient-level value improvement stems from quality, communication, information, and transparency. It was noted that patients most often think of value in terms of their relationship with their provider—generally a physician—but ultimately the practical results of that relationship, in terms of costs and outcomes, hinge on the success of programs that improve practical, ongoing, and seamless access to information on best practices and costs and of payment structures that reward accordingly. Workshop discussants offered insights into the use of various financial approaches to sensitize and orient patient decisions on healthcare prices—individual diagnostics and treatments, providers, or health plans—according to the evidence of the value delivered. Successful broad-based application of such approaches will likely hinge on system-wide transformation in the availability of the information necessary and transparency as to its use.

• Manufacturers: Manufacturer-level regulatory and purchasing incentives can be better oriented to value added. Health product manufacturers and innovators naturally focus on their profitability—returning value to shareholders—but we are reminded that product demand is embedded in the ability to demonstrate advantage with respect to patient value—better outcomes with greater efficiency. Hence, manufacturers expressed an interest in exploring regulatory and payment approaches that enhance performance on outcomes related to product use.

The possibility of change, including the tools and opportunities needed to capitalize on the possibilities, is also a continual theme throughout the report.

• Tools: Continually improving value requires better tools to assess both costs and benefits in health care. Despite the broad agreement on the need to get better value from all the elements of the healthcare process and the commitment to make this a priority, we heard that the analytical tools and capacity to evaluate both of the

basic elements of value—outcomes and costs—in either absolute or comparative terms are substantially underdeveloped and will need greater attention.

• Opportunities: Health system reform is essential to improve value returned, but steps can be taken now. Although attaining better value in health care depends on reducing the fragmentation that is its central barrier, we heard a number of examples of measures that might be taken at different levels, both to achieve better value now and to set the stage for future progress. Some are noted below.

Much of the discussion at the workshop played to the notion that full attainment of the value needed from the U.S. healthcare system was dependent on broad financing reform that ensured health insurance coverage for all who need it; yielded greater consistency and rationale in the governance, operating, and payment principles of public and private health insurers; and insulated care and value decisions from inefficient political influence. These are all important and fundamental considerations, but outside the scope of the meeting.

Nonetheless, the meeting’s discussions identified a number of promising suggestions for ways to facilitate attainment of greater value for our healthcare dollars, including the following issues as particular possibilities for the further attention and action of the members of the Roundtable on Value & Science-Driven Health Care.

Health information technology Since promoting health information technology was the most commonly mentioned priority as a prerequisite for sustained progress toward greater value in health care (improving quality, monitoring outcomes, clinical decision assistance, developing evidence, tracking costs, streamlining paperwork, improving coordination, facilitating patient engagement), how might Roundtable members and the Electronic Health Record Innovation Collaborative help accelerate its adoption and use?

Transparency as to cost, quality, and outcomes What efforts by the various sectors represented by Roundtable members—patients, providers, healthcare delivery organizations, insurers, employers, manufacturers, regulators, the information technology sector, and researchers—might help bring about the true transparency necessary to sharpen the focus on the key elements of the value equation?

Life-cycle evidence development for interventions How might Roundtable professional societies, manufacturers, insurers, and regulators help transform the process of monitoring the value achieved from various interventions from what amounts to a snapshot in time to an ongoing capacity?

Coverage with evidence development If coverage with evidence development amounts to a beta-test of the learning healthcare system’s concept of real-time evidence generation from clinical practice, what vehicle might facilitate development of the decision rules needed to determine the interventions most appropriate for structured introduction, the criteria for expansion, and the approaches to ongoing monitoring?

Value-based insurance design How might the conditions be identified that may be best suited to further testing the notion of adjusting payments to the level of evidence in support of the effectiveness and efficiency of a particular approach?

Outcome-focused bundled payment approaches What means might best be considered to identify conditions and services most amenable as bundled components in payment-for-outcomes approaches?

Identification of high-value services Might the members of the Roundtable’s Best Practices Innovation Collaborative consider criteria for identifying high-value services in their respective arenas, as well as innovative approaches to their delivery?

Care organization incentives What issues and incentives are needed to expand the development of a medical home model most conducive to more efficient and better-coordinated care?

Clustered care for the very sick If, as was presented, there are demonstrated effectiveness and efficiency advantages from certain organizations specializing in the care of the poor and very sick, how can that model of heroism be taken to scale?

Incentives for triage and coordination functions Because the ancillary services of triage, care coordination, and follow-up are so key to improving outcomes and reducing costs, what can be done to introduce them as a routine into the culture of care?

Decision assistance at point of choice With growing awareness of the challenges to providers of keeping up with changes in the knowledge base, what might the Roundtable do to explore expanded decision assistance at the point of choice?

Appropriateness score for five important diseases Since five conditions— heart disease, cancer, stroke, diabetes, and chronic lung disease—account for three-fourths of health expenditures, can an appropriateness of care score be developed and applied for their management?

“Push” strategies for patient-provider communication on value Since it is both necessary and inevitable that patients and providers become stronger partners in the care process, what strategies might be most effective in achieving that result?

Structured information-sharing on high-value services How might insights and information generated on services identified as high value be disseminated most effectively to help inform and motivate patients?

Value-based payment or reimbursement structures How might better information be developed for tailoring payment for care to the likely value of the outcome, and once available, what strategies will be most effective in developing the information and incentives necessary for its promotion?

Purchasing models focused on outcomes Since it was proposed by a representative of the manufacturing sector that consideration be given to the development of product purchase models that focus on actual outcomes (i.e., results achieved), how might such an approach best be developed and tested?

Value-engaged regulatory approval processes What approaches might make it easier for manufacturers, payers, and the Food and Drug Administration to engage earlier in the testing and approval process around value issues relevant to a product’s ultimate approval and use?

High-value service gaps Because some high-value services—for example, certain preventive services—are underutilized, what criteria might be used

to develop an inventory of the top 10 services for which the gaps between evidence in-hand and delivery patterns are most substantial?

High-cost service evidence Similarly how might an inventory be developed of the top 10 high-cost services for which comparative effectiveness studies need to be done?

Capacity for comparative effectiveness research What additional issues need to be engaged to improve prospects for the successful development of a deeper national capacity for comparative effectiveness research?

Analytics for value assessment What are the most important analytical challenges to assessing value and how might they best be engaged, especially with healthcare costs reaching near crisis levels in the context of a weak economy?