Getting to the Essence of Value in Health Care

Aug 3, 2015, 1:57 PM, Posted by Susan Dentzer

In this era of value-based payment, we need to consider how different players within health care approach the value equation.

How would you judge the value of your health care? A longstanding definition of treatment holds that value is the health outcomes achieved for the dollars spent. Yet behind that seemingly simple formula lies much complexity.

Think about it: Calculating outcomes and costs for treating a short-term acute condition, such as a child’s strep throat, may be easy. But it’s far harder to pinpoint value in a long-term serious illness such as advanced cancer, in which both both the outcomes and costs of treating a given individual—let alone a population with a particular cancer—may be unknown for years. And then there’s the complicating issue of our individual preferences, since one person’s definition of a good outcome—say, another few years of life—may differ from another’s, who may be seeking a total cure.

In this era of value-based payment, it’s worth considering how different actors in the health care sphere approach the value equation. The United States spends far more per person than any other advanced nation on health care, yet our health outcomes lag behind. Meanwhile, health care spending has crowded out investments in other areas like education and social services that may have a greater impact on health outcomes. As a result, getting better value from the nation's investments in health and health care is critical to the Robert Wood Johnson Foundation's goal of building a culture of health, notes Anne Weiss, who directs the Foundation's work in this area. 

Several value-creating initiatives in health care were topics of discussion at the recent AHIP Institute Conference in Nashville, TN, where I served as moderator.

Lowering costs for lab tests: Elizabeth Holmes, founder and CEO of Theranos, has been the subject of a recent New Yorker profile and was featured last year on the covers of both Fortune and Forbes. At 31, she’s famous for founding her company at age 19, then dropping out of Stanford to pursue her goal of making important health information accessible to people when and where it matters. She believes individuals should be “in the driver’s seat of our own care," as she said during her talk at AHIP—and that they should especially have the tools to enable prevention or early detection of disease.

Theranos offers blood tests that use a finger stick and tiny drop of blood, versus the larger needles and tubes of blood that characterize conventional testing. Prices for the tests, which are fully transparent and posted online, are far lower than what is typically charged or that Medicare or other payers will pay. Many even cost less than the copayments or deductibles that patients must incur on standard lab tests.

Among other options, consumers can access the tests at Wellness Centers in Walgreen’s pharmacies, Capital BlueCross retail stores in Pennsylvania, and in some physician offices. They can also make appointments and track their test results through an app. And in Arizona, Holmes persuaded a bipartisan group of lawmakers to enact a state law that now allows any consumer to obtain any lab test without a physician’s order. That’s truly putting patients in charge of their care, Holmes asserted.

Theranos blood tests have been approved by the U.S. Food and Drug Administration, a form of quality assurance that technically isn’t necessary for these types of tests, since they are normally regulated a different section of federal law. And the company recently won the green light from FDA to analyze its test for a sexually transmitted herpes virus outside a highly regulated clinical laboratory, which could pave the way for more Theranos blood tests to be analyzed in wellness centers and other locations, improving efficiency and reducing costs.

Holmes says about 60 percent of patients don’t get the lab tests that their doctors prescribe for them, partly because of cost or fear of needles. So, the ultimate value for consumers may well be those low prices, ease of access to the tests, and the need to extract just those tiny drops of blood.

A nurse performs a blood test on a patient. A patient receiving a Theranos blood test. (Image via Theranos)

Personalized medicine: President Obama’s Precision Medicine Initiative, the Patient Centered Outcomes Research Institute, and proposed legislation in the US House of Representatives on 21st Century Cures, all have in common the core understanding that a given health intervention that works for one person may not work for another.  According to Colin Hill, chairman and CEO of GNS Healthcare, a good guess is that about half of treatments given today fall into that category, leading to $500 billion to $1 trillion annually in what in effect is health care waste.

Fortunately, the tools exist to propel us past “knowledge blind spots” that still have the wrong care directed to a particular person. These tools include genetics and genomics, electronic health records, “Big Data,” predictive analytics, machine learning, artificial intelligence, cloud computing. Many of these tools are now brought to bear in diagnosis and treatment of some cancers, such as melanoma and leukemia, in which the cancer's molecular "signature" can be identified and targeted drugs prescribed.

But true value in health care may only come when far more conditions are treated with personalized medicine, says Hill, whose company performs data analytics for health plans, providers, pharmaceutical companies, and others. For example, through a current research partnership with the Inova Translational Medicine Institute, a division of Virginia-based Inova Health System, Hill’s company is using genetic sequencing and EHR’s to help predict the risk of premature birth, which causes an estimated 10,000 US deaths and at least $28 billion in health spending annually. It’s hoped that knowing who’s vulnerable ahead of time could lead to tailored interventions that could forestall the worst birth outcomes.

At AHIP, I asked Hill how many medical decisions today are made on the basis of such advanced analytical techniques. “Somewhere between 1 percent and 10 percent,” he replied.

For all of us who seek value from our health care dollars, that’s a sorry equation, indeed.

Susan Dentzer, Senior Policy Adviser at the Robert Wood Johnson Foundation, former Health Affairs Editor-in-Chief and Health Policy Analyst, The NewsHour with Jim Lehrer, is one of the nation's most respected health and health policy thought leaders and journalists. Read more of Susan’s posts.