WHY EPISODE OF CARE IS NOT AN OPTION, BUT A MUST IF WE'RE GOING TO SOLVE THE ISSUES OF COST AND QUALITY IN HEALTH CARE

Hello everyone, I know, I haven't written much in a while. As part of my goals for 2020 I determined that I should do some research and also interview executives at the C-suite level who are in such positions on the provider side of the health care business. This article will be about some of the research I've done (health care econometrics and quality). At the end I will refer you to a couple of books that are highly relevant. Maybe the most important books I've read on the subject of health care economics in a very long time.

To begin with, let me advise you of two premises of my argument to be presented:

* PRICE X UTILIZATION DOES NOT EQUAL COST of health care.

* TRANSPARENCY IS A FOOLS GAME WITHOUT EQUAL AND JUST CONSIDERATION OF QUALITY METRICS.

Here are some of the key terms that are part of the argument that I am putting forth, you may want to look them up: 1-Bayesian statistcal modeling; 2-Markov Chain Monte Carlo Simulation; 3-Quality Adjusted Life Years; 4-Evidence Based Medicine (new statistical definition); 5: posterior distributions vs: frequency based distributions; 6-WinBugs software; 7-evidence synthesis; and 8-Net Benefit Cost.

INTRODUCTION-HISTORY: As most of you know, the UK has what many people here refer to as a "Universal Health Care System," that is not completely true, it should be referred to as a Nationalized Health Care System. The system has both a national plan, and a private plan, whereby the National plan is funded through taxes paid by both employees and employers. In that system, of course, the major difference is that the government imposes budgetary limitations on hospitals, as well as caps on what specialist can charge as limits on "balance dues." Thus, there is a great deal of oversight, public scrutiny, and overall pressure on the government to make sure that the "systems" are not only performing within budgets, but that they also provide a measurable quality of care.

Thus, the NICE (National Institute for Health and Clinical Excellence) is in charge of a number of issues, projects, and research to solve and resolve critical issues in health care.Therefore, they set out on an in-depth research project to determine the differentials in the quality of care provided by different and varying health care provider systems.

In this research, rather than use older frequency based statistical models as their data framework for quantifications, they relied on the Bayesian modeling which refers to posterior data sets to forecast within a certain range of probabilities the effectiveness of treatment protocals, wherein one provider could be measured appropriately against another that was performing the same treatment, but not necessarily the same protocal. Thus the attempt to develop a statistical data base on quality of care outcomes. Bayesian statistical modeling applied to MCMC (Markov Chain Monte Carlo Similulation) via the use of the new software WinBugs, allows such a project to take place, and thus, the quality measure to be developed and asserted. The quality measure is titled in Quality Adjusted Life Years (QALY. Thereby, when Quality Adjusted Life Years were measured within and against price, a value is determined which is referred to as Net Benefit Cost (NBC).

The UK is not the only country that is researching these appropriately labeled econometric measurements, so are a number of other countries that practice some form of natioinalized health care. By the way, althought to listen to some of our political voices you might think so, there really is not any country in the world that practices total universal health care. Every country, and I've just completed a study of several different systems, funds their programs through some sort of taxation on employers and employees. Also, many systems feature private health care alternatives which are either supplemental to their national systems, or act as full replacements to their national plan.

In each case, due to the level of expense growth overall, it has become critical that QUALITY becomes not just an important fact, but THE MOST IMPORTANT FACTOR to be measured in order to assure that the NET BENEFIT COST can be measured, advanced, and controlled wherein the competition between providers is NOT on price, but on quality as well as price thus, the NBC-Net Benefit Cost.

ARGUMENT: This argument came about due to two events that took place over the last year and half. One was my interviews with C-suite executives from hospitals and provider systems, which by the way, I'm not done with yet; and TWO a personal experience which awakened me to the fact that if Transparency in pricing is going to be our only focus, then the question becomes, at least to me, "Why do we want to refer employees/members/patients to the cheapest provider setting?" The old argument that the Cheapest tends to be the best really doesn't hold much substantial evidence. Do we think this way when we're buying any other major item in life? I don't think so. Once again, opinion is NOT evidence. Statistical measurement is evidence.

Thus, when it was explained to me that there are TWO systems in our health care marketplace realm here in SE Wisconsin who jointly own an insurance company that focuses on insuring small groups and it appears, they in a debate over wherein one system believes they are subsidizing the other system due to higher pricing. Their arugment is that due to service higher pricing, they are subsidizing the premiums in the plans sold by the jointly owned insurance company. Once again a price focused argument, not a NET BENEFIT COST argument. I would tend to present that this argument lacks depth and validity and really requires statistical modeling. The statistical modeling I would suggest they perform would be according to the use of the Bayesian modeling applied to the MCMC (Markov Chain Monte Carlo Simulation) method.

The second personal was a personal experience I went through. Essentially, one system made a diagnosis that, after a short series of low cost diagnostic events-a protocal let's say, I would have experienced a very invasive, high priced surgical event. After a number of considerations, I decided upon a different pathway. As a result, I underwent a series of much higher priced diagnostic services performed at each level by a "TEAM" of professional providers lead by a physician at each step of the treatment-protocal. As a result, while the service steps were at a much higher price, the ultimate determination was a simple "watch list" and a high priced invasive surgical procedure was avoided.

Thus, my incentive to do the research. So, let's get to the crux of my argument as pointed out by the readings that I have done:

Essentially, using the modeling I have referred to above and relying on the MCMC application through WinBugs software, staticians and Actuaries (who by the way, should be the real people our government calls upon to resolve our health care cost and quality issues) determined what the following example will point out.

Example: Patient A requires a high level of care and invasive treatment-protocal, otherwise referred to in the vernacular I'm applying here as and EPISODE OF CARE. Examing the data we find the following:

The protocal results were the following for Patient A:

At Provider 1: The final price was $120,000 and the QALY were 5.

At Provider 2: The final price was $150,000 and the QALY were 10.

At Provider 3: The final price was $150,000 and the QALY were 20.

Thus, using overly simple mathematical application, the Net Benefit Cost comparative could be stated as follows:

At Provider 1: 24 x (10 squared)

At Provider 2: 15 x (10 squared)

At Provider 3: 7.5 x (10 squared)

Removing the common factors we can discuss the following: The NBC, Net Benefit Cost comparative is Provider 1 at 24, the highest; provider 2 at 15, better but still not the best; and Provider 3 at 7.5, thus the lowest and the best.

Then, when we consider that where there is the highest Net Benefit Cost there is also a higher probability of the need for more future intensive care with a much lower quality adjusted of life years. Thus, a much higher NBC. The outcome measure is obvious.

Thus, let's step a little further inside this argument and examine a real series of events: Patient B has a diagnosis whereby Provider A- a single speciality doctor who is employed by Provider A, does a test that results in the need for an examination. The doctor/specialist, does an examination in a normal physician's office with one assitant who does not aid in the examination but only takes notes. The examination results in the need for a biopsy. The Biopsy takes place, once again, in a normal physician's office, and once again the specialist has only one assistant. The result is, as determined by the specialist, the following: "Well, you could just put it off and watch it, but, I'm kind of old school, I think, if it were me I'd just go ahead and get it done." When asked, what that meant, the reply was,"Well, while there are a number of the new guys doing these things robotically, I've been doing this a long time, so I just go in surgically and remove it."

Patient B, after some consideration, and research, decides to investigate and is supplied with referrals from a number of professionals in the medical business. What Patient B finds is that there are two specialist names that are the same on three lists which are provided. Both these names are specialitis who are employed at Provider system B. Patient B then calls and makes an appointment with a Provider System B. The result is a transference of tissue, and another examination. This time the examination does take place in a normal physician's /specialist office, but the specialist is assited by another practicing doctor as well as an attending nurse who takes part in the examination. The examination results in the request for an MRI which Patient B agrees to. The MRI is performed again, by a team of medical professionals, one being a doctor who leads the team. The MRI results indicate the need for a biopsy. The biopsy is performed, once again, by a team of professionals, once again lead by a doctor/specialist. The biopsy takes place in secure, safe surgical setting room, whereby Patient B is walked through each step of the procedure using two different screens. The result as offered by the lead specialist, when Patient B has the follow visit: The condition is benigh and does NOT require an invasive surgical procedure. Rather, Patient B is placed on a "watch list." The "watch list" means that each six months a simple test is done, and each year if needed, an MRI is done. Therefore, as you can witness, while the service PRICE for each step of was higher at Provider B, the end outcome cost was much lower because of the avoidance of the invasive surgical procedure. As the lead specialist said, "Well, yes, I do over 1000 of these procedures, usually robotically,each year, the real key is I don't do another 2,000 I could do, but really don't need to do."

Therefore, when we consider the argument posed above with the example just presented, the EPISODE Of CARE OUT COME NET BENEFIT COST was the truest and best measurement when comparing Provider A with Provider B. The Net Benefit Cost of course including Patient B's QALY.

Therefore, my continuing argument is this: Provider systems, particularly those which are academic Medical Systems that continually pride themselves on the quality of care they provide, and the quality of outcomes that their protocals result in vs: the outcomes of their competitive provider systems, should be URGENTLY RUSHING to develop reimbursement models for their work/treatments/protocals/ to EPISODE of CARE reimbursement alternatives. Thereby, QUALITY measured in Quality Adjust Life Years and calculated against price reveals their real Net Benefit Cost. Therefore when comparing themselves to their competitor systems, it is not done only on price, but what will be revealed is a calculation of where the BEST Net Benefit Cost occurs. This should be the way a Consumer Reports list should be done, not just on Transparency.

My argument, continuing, the only way such higher quality providers can level the playing field is to force Quality measurement metrics into the equation. If we're going to use Transparency in pricing ALONG WITH QUALITY and Outcome based results measure in QALY. Then we have a much truer and much more accurate measurement of "Best in Class." Also, in that way, the providers are placed into a competition based more on Quality not just price.

Until those providers that believe and insist that their quality outcomes are better, and best, come to this realization, they are just cheating themselves. Given my example of the debate at the beginning of this article, those higher quality providers cannot, and will never, win a debate, solely based on price/Transparency. The debate that one systems should be preferred over another simply on price is substantially groundless, unless and until Quality outcomes become a major element in the equation.

Therefore, when we ask the next question, where and how do calculations of Quality, and Quality Metrics into the calculations of health insurance and health re-insurance premiumus? That answer is, " It does not." While there are those large carriers that will argue that it does, I would only ask, "Okay, show me the actuarial formulae you use in your forecast as to the development of your base line expense, reserve, and marginal rating systems where a Quality Metric measurement unit is used. Then show me, where such Quality Metric Units are also used in your rating models and premium developments.

Let's extend the argument a bit more, in terms of NETWORK valuations, where is NET BENEFIT COST a substantial element of the evaluation in terms of what providers are contracted in a network, or is just a price equation and cost compression? I would suggest, most of time, Quality Metrics play little if any role in network contracting.

Why not? When we purchase a car, a major home appliance, a house, QUALITY is a major element in our decision making. Why isn't it in the development of the valuation of health care? Why are we so focused on Transparency-just price, when in reality, what we all really want is the best NET BENEFIT COST? Am I Right or am I Wrong?

Therefore, as I advised a recent C-suite COO when asked about developing a product for their narrow network: "Build your narrow network based on bringing together a set of providers who are willing to not only present themselves as the BEST quality providers, but who are also capable and willing to be reimbursed on not just price, but QUALITY, meaning Episode of Care reimbursement models." Such models, would, of course be able to present a measurable QALY and a true NBC.

Nationally speaking, all of us in our industry must insist on this direction if we're going to every be able to solve the reality of Cost and Quality issues in our health care system. Why? Because as is evident, we should not really be focused on the itemized service price alone. That's rather like focusing on the individual parts that it takes to build a car. What we really should be focusing on, and developing our rating models around is NET BENEFIT COST. The ONLY WAY we'll ever get to that is if providers move quickly and urgently toward accepting reimbursement models based on EPISODE CARE and EPISODE OF CARE OUTCOMES.

Yes, I'm shopping for a new car. Yes, I know the Chevrolet Impala is much cheaper than the TESLA. However, over the EPISODE of time I will own the vehicle, since the maintenance cost, the cost of fuel, and cost to maintain the Chevy is much, much higher than the TESLA X model, my Net Benefit Cost for the TESLA is much, much less than the Chevy. Shouldn't we think the same when about buying health care? I would argue, that in the end, given this thinking, the cost of health would actually come down by 20-30% particularly if in all programs, the Federal Government programs being First, that alot of unnecessary cost would be avoided. Errors would be reduced, and our population overall quality of life increased. The worst health care system models in the country right now in terms of quality assurance, efficiency, and effectiveness are Medicare and Medicaid. Just because they pay less, doesn't mean their outcomes are better. That's truly a fool's game.

Result: Price x Utilization/Quality=Net Benefit Cost, otherwise, we're missing the real point of the equation.

AGREE? DISAGREE?

Thank you-Greg

Suggested Readings: " Evidence Sythesis for Decision Making in Healthcare"-Welton, Sutton, Cooper, Abrams and Ades.

"Applied Econometrics For Health Economists-A Practical Guide"- Andrew Jones