Defining Value in Healthcare

If we are moving from volume to value in healthcare, what defines value in healthcare?

Healthcare value is a measure of the perceived benefit provided to patients through healthcare services. It represents a consumer, payer or patient’s willingness to pay for a service. In order for individuals to pass judgment on the value of care, a patient must have some appreciation for the quality of the care and the overall cost of the care delivered. V=Q/C

How to assess quality of care? The comprehensive and complex nature of the vast array of healthcare services is difficult to represent in an aggregate quality score. Most efforts to date have come from payers and seek to measure individual clinicians, rather than patient centric quality,  by using sporadic, unrelated measures. The payer’s measures fit within their payment programs and rarely represent patient-centered quality program.  In order to achieve a true and meaningful quality program, a condition or disease should have a mapping of its natural history to represent the patient’s journey with a particular illness. Within a quality program are care pathways, standards, quality measurement and improvement cycles. That natural history of any condition or disease may contain key moments in the care continuum when it is timely to measure success or to define the failures or limits of care.  A quality measurement employs a host of measures used across all providers, across all phases of care within an episode of care as an actionable point in the natural history of the condition/disease, with the intent to represent accountability and/or to drive quality improvement. When it comes to defining quality in a value statement, it is important to recognize all these aspects of a quality program and to use those metrics which are meaningful to patients for the quality of care, not just some insurer’s payment program.

To measure quality within a condition/disease at a patient-centered level requires parsing clinicians’ services into small more measurable aspects of care. These can be defined within a domain such as diabetes and tie to the episode of care provided a diabetic across a year.  Within the episode, the patient’s expectation and goals are laid out and a clinical plan enacted. Metrics can track the effectiveness of the plan to meet expectations.  Multi-morbid, chronic diseases are more complex measure constructs of multiple episodes for many conditions, each with different measurement goals.

Procedural and preventive care services are more discrete episodes of care and lend themselves to quality metrics more readily than chronic care for the multi-morbid patients. Procedural services such as surgical care typically involve a discrete episode of care with discrete services and clinical expectations or outcomes.

The American College of Surgeons defines procedural quality for clinical domains such as Trauma care, Bariatric Care, or Cancer Care. Within these domains the ACS establishes standards of care for optimal, safe care deliver in a culture of quality and safety. Conformance to standards yields to better outcomes. In addition to a standards-based verification program, the ACS trusts a series of metrics used to assess outcomes within the episodes which are nested within a domain of care. These outcomes are best represented by patient reported outcomes (PROs) to assess the patient’s perspective. In addition to PROs, the ACS uses a hybrid of two sources for measurement: 1. administrative claims based outcome measures, and 2. NSQIP risk-adjusted clinical outcomes measures.

Thus, for episodes of care within a clinical domain, such as a colectomy episode in a cancer domain, the ACS quality measurement system assesses that the key structural elements for surgical cancer care conform to industry standards using a verification or certification program; measure the patient reported outcomes (PROs) related to the expectations of care; and, use administrative claims and clinical risk-adjusted (NSQIP) outcomes associated with colectomy for validating the care.  

Patients with chronic conditions often are treated based on the natural history of their condition and the expectations for optimizing their status. The expectations are to gain the most in quality of life, reduce any acute flare ups and prolong avoidance of long-term consequences of the condition. In addition, patients with a single chronic condition are prone to multi-morbid, related chronic conditions. For example, patients may have chronic conditions of diabetes, chronic obstructive pulmonary disease (COPD), asthma, congestive health failure (CHF) and hypertension (HTN).

Measuring quality in these chronic conditions relates more to patient engagement/activation and to patient’s overall expectations for their quality of life scores. Tracking overall individual patient performance within one chronic condition as an episode of care must match alongside multi-morbid measures and population health care tools which help drive improvement for the overall quality of life in these patients. Such measures are structurally very different from what we measure today and how we deploy the measurement science for improvement. These care elements can be measured as structural elements of a comprehensive chronic care program. However, individual patient performance in a specific value such as a HbA1C is best used by the clinician and patient together by setting targets and measuring how effective we are in optimally reaching their quality of life goals.

The chronic care metrics and measures for the multi-morbid patients should include NCQA-like verification programs for patient centered medical home. These would serve as a starting point and would need further development.

How to define cost of care?

The cost of care is important to define as well in order to fulfill the V=Q/C formula. In terms of the value statement, the cost refers to the payer and patient’s combined total cost of care (TCOC) for all the services included within the predefined episode. These costs differ from the operational costs of delivering the service. It is also important to define the costs from a patient’s out-of-pocket perspective which will vary by their insurance. Some patients have annual insurance plans with high cost deductibles, significant co-pays and lower premiums. Others have low deductibles and co-pays with high premiums. Once deductibles are met, the overall patient co-pays remain as the major driver for patients and the perceived value of their care. The payer continues to cover the remaining costs of care, thus awakening the moral hazard of health insurance.

Currently, episodes of care can be defined for various conditions or procedures. These episodes are defined by aggregating all the relevant clinical services for a clinical window of time. The services can be all-inclusive for physicians, labs, imaging, office, inpatient, rehab, SNF, Home health, etc. Once the services are defined, logical algorithms based on those services are applied to claims database to define these costs for an episode of care for a given condition or procedure. Using this method, it is possible to establish a patient’s individualized, risk-adjusted costs for the episode of care they received during a period of time. It is also possible to use the methodology to help individual patients understand the expected costs for the projected services they will need. When a patient undergoes a procedure, they are faced with more than the surgeon and anesthesiologist’s costs. They have preop imaging and labs, hospital or facility costs, post op testing, skilled nursing, rehab and home health, just to delineate a few common expenses. Underlying co-morbidities for individual patients add to the costs of managing an episode of care, too. By using an episode based pricing tool, patients can come to understand the total cost for the condition or procedure. Their out-of-pocket costs are also calculable once the total cost of care is exposed.

How to combine quality and cost into a value statement?

Most people when judging value can do so one of two ways. A commonly used way to determine value calls for assessing the quality of the services and the cost individually, then apply their own judgment about the affordable nature of the service. The second way involves scoring the quality and cost using some method and creating a value representation of the overall value, such as a five star rating system. In the second method, the scoring acts as a proxy for an individual’s judgment and helps to provide the individual with a sense of how best to combine the quality and cost into a value proposition.

When using scoring systems, rules and logic are used to define how best to array the variances in quality. If all the quality measures show limited variation, with clusters of clinicians all performing equally, then few clinicians will be cast as outliers to the good or to the bad. If the quality measures display great variation, then the scoring system must define cut-points to separate the levels of service. These cut points may reflect a certain variance from standard deviations or breakup responses into deciles, quintiles or quartiles. The point is that no scoring system is perfect; these are merely tools to aid in forming a value statement.