models currently are in use. However, most of these models tend to pay clinicians and health care organizations without a specific focus on patient health and value, which has contributed to waste and inefficiency.

Opportunities exist to eliminate wasteful spending while maintaining or enhancing health care quality and improving overall health outcomes. Several health care organizations and health insurers have been leveraging these opportunities to test new models of paying for care and organizing care delivery. Many individual initiatives have demonstrated success, but systematic reviews and studies continue to find conflicting evidence as to which payment models might work best and under what circumstances. While there will likely continue to be a diversity of payment systems, then, the opportunity exists for additional learning on the relative effectiveness of different payment systems with respect to learning. It is clear, however, that high-value care—the best care for the patient, with the optimal result for the circumstances, delivered at the right price—requires that incentives be structured to reward the best outcomes for the patient.

This chapter begins by describing the obstacles that constrain the delivery of high-value care. Next it addresses in turn the measurement of results and value and strategies for achieving transparency. Methods for transitioning to a system that rewards continuous improvement are then discussed. The final section presents recommendations for realizing the vision of a health care system that achieves and rewards high-value care.


Expenditures on health care are imposing an increasing burden on the budgets of the federal government, state governments, and families without producing commensurate improvements in health or the quality of care. Rather, much of the money spent on health care is wasted, in some cases causing harm. As detailed in Chapter 3, the total amount of waste falls into six broad categories, illustrated in Figure 8-1. Many factors are responsible for this lack of value, from misaligned incentives to a lack of transparency on cost and quality. Overcoming these obstacles will require a determined effort to understand the results achieved from health care; improvements in the structure of and incentives for care; engagement strategies, such as shared decision making, that focus care on patient needs and goals (see Chapter 7); and changes in health care culture needed to support these initiatives (the subject of Chapter 9).

Financial incentives play an important role in the way the health care system learns (see Chapter 6 for a discussion of the factors affecting the spread of knowledge in health care). They create the economic reality for providers and strongly influence how care is delivered (Flodgren et al., 2011; Halvorson, 2009; Hillman, 1991; IOM, 2001). For example,

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