A 21st-Century Lexicon of Value

What is value-based health care? Why is it so important? And why is it so difficult to measure?

In a world of increasingly complex innovation and finite financial resources, these three questions are crucial to advancing 21st-century health care technology assessment. Such inquiries are devilishly contentious and complicated. In order to answer them, academics, government officials, practitioners and patients must agree on, among other things, a pallet of harmonized terminology: a lexicon of value.

We stand at a value-based inflection point. Public and private health systems and their constituent and over-lapping stakeholders are being held increasingly accountable for the value their decisions, products and services provide to individual patients and society at large, yet the emergence of value-based health care is consistently hindered by a lack of transparent and standardized outcome data.

The general consensus is that health care ought to be driven by a relentless focus on delivering outcomes that truly matter to patients. How can problems be addressed and questions answered so that opportunities can be realized?

Value in health care is not a vague or theoretical concept. It is defined by a simple equation: outcomes/costs. Patient outcomes designate the end results of health care expressed in terms of quality of life and functional scores based on validated methodologies.

Over the years, health economists have developed sophisticated tools and techniques to measure the denominator — costs. However, the numerator — patient outcomes — remains ill-defined and unevenly measured even though it reflects the true meaning of “success.”

The concept of measuring the actual therapeutic outcomes of treatment was first proposed over a century ago by Dr. Ernest Amory Codman, known for his advocacy of the “End Result Idea.” The “idea” was simply the premise that hospital staffs would follow every patient they treat long enough to determine whether or not the treatment was successful, then learn from any failures and how to avoid those situations in the future. In 1914, Massachusetts General Hospital refused Codman’s plan for evaluating surgeon competence, and he lost his staffing privileges.

Transparency of patient outcomes data has become a nascent but powerful tool for health authorities to compare providers head-to-head, driving competition and advancing quality in a race to the top.

The U.S. Department of Health and Human Services has created an online portal that discloses, per hospital, indicators such as readmissions rates, complications and mortality, payment and value of care. HHS Secretary Alex Azar recently announced the inpatient prospective payment system rule, which contains proposals to advance a health care system that pays for value, as well as a request for information regarding future value-based reforms. Per Azar, this rule is designed to “disrupt our existing system and deliver real value for health care consumers. … We are going to move toward a system that provides better care for Americans at a lower cost.”

Every subject “under the light” changes its behavior. This mimetic reaction is hard-wired human behavior and applies to policymakers, practitioners, providers and patients alike.

Nobody wants to lag behind, and pride is a powerful catalyst for team building and individual improvement. Transparency enables and encourages self-evaluation, which is a non- paternalistic way to align best practices (political, medical, etc.) that deliver higher outcomes.

Measuring PROMS requires complex case mix adjustments. It is much easier to measure traditional items such as volume of care, average length of stay, compliance to administrative procedures — and ignore patient outcomes. With the myriad of unvalidated proxy indicators that health systems use to define quality, we are losing the ability to accurately define “success.”

For example, patient reported experience measurements assess a patient’s satisfaction during hospitalization. Indicators often measure the quality of food, cleanliness of the room, the procedures for the discharge, communication with the medical team and various waiting times during hospitalization.

Are higher PREM scores valid predictors of better PROMs? While there is certainly a link between hospitalization and hospitality, hospitals are not hotels. While a guest may choose to return to a good hotel, a good hospital is largely predicated on not having to come back. PREMs measure outputs that matter to hospital administrators. PROMs measure health care outcomes that matter to patients and health care providers. Not surprisingly, patient response rates to PREM surveys are on average less that 20 percent compared to 90 percent for PROM questionnaires.

The goal of value-based health care is to facilitate making “outcomes” the defining variable in the multifaceted decision-making process, superseding both cost and “quality.” In that respect, VBHC becomes “21st-century tendering” for both payers and patients. VBHC plus quality becomes “3D quality.” It advances the concept of quality from a “soft” to a “hard” measurement tool.

PROM registries are complex to set up but represent a transformative investment that will change medical behaviors, enable patients to orient themselves to both the most appropriate practitioner and sites of care and generate savings for public and private payers. Providers who disclose their outcomes will be preferred by patients and payers. Those who do not subscribe to outcome-based measurements will be viewed with suspicion or derision — or both.

The future is becoming increasingly clear. Value-based health care turns concepts such as “value and quality” into “hard data.” It is time to adopt the same language to measure  success in health care with indicators that truly matter to patients. Value-based health care isn’t about harmonization of decision-making; it’s about harmonization of design and process. This is crucial as other HTA “harmonization” efforts are heralding themselves as a quasi-nice “one-size-fits-all” approach. “Value” should be a constant, and political entities should make decisions based on constants — but decisions can be different based on different national needs, priorities and biases.


Peter J. Pitts is president of the Center for Medicine in the Public Interest, a visiting professor of Universite´ Paris Descartes Medical School, and a former FDA associate commissioner.

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