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Saturday, August 22, 2009

Value based Medicine; Paradigm Shift or Marketing Ploy

Value is the buzz word in medicine this year. I must agree that it sounds great but I think we need to step back and make sure that everyone using the term has a common understanding of the term. Value can only really be understood within the terms of exchange and is commonly converted to monetary units because of the almost universal acceptance of these units. Value in the business world is relatively straight forward to define and understand because the architecture involved in exchanges. There is usually a buyer and a seller and the value of the product or service exchanged is defined by a voluntary exchange between the two parties. Each party ultimately receives value from the exchange or the exchange does not happen barring fraud or coercion.

Medical exchanges insert a whole new series of complications into the value equation. Because of insurance, at least one third party is injected into the equation which often results in the the purchaser of the service not being the recipient of the service. This aspect of value in medicine is virtually always glossed over. However, how can one begin to assess the value of any given transaction within the health care realm which has this exchange architecture?

The question becomes value to who? For transactions from which the patient incurs virtually no cost, almost any intervention which does not harm the patient is of value. Physicians as choice architects can generally sway patients to acquiesce to blatantly non-harmful interventions which may be financially beneficial to their practices. However, these transactions may not be of any value to the payer. In fact, virtually no transactions are of value to he payers.

In conventional two way exchanges, either party has veto power. In three way exchanges, it gets much more complex. What should be the rules? Who can and should have veto power? In reality, physicians always have veto power. They essentially cannot be compelled to treat a patient with a given treatment. In addition, patients should always have veto power. They may be ill suited to exercise this because of problems with information deficits. In an insured world where they are heavily insulated from costs, financial considerations are less likely to be a reason for saying no. Whether they decide to agree to a given intervention will be based upon whether they perceive they will be better off, independent of cost.

That ultimately leaves the payer with the most relevant veto. Should it be that majority rules and that the provider and patient can trump any payer veto? If the patient believes the intervention is of value to them, should the payer's vote count for anything?

Assuming the answer to this question is yes, the follow up question becomes on what basis should the payers be able to veto payment for services?

Presumably the answer to this question should be - if the intervention is of any real value, the third party should pay for it. The question then becomes value to who? Which value are we talking about? Is it value to a given patient, the average value to populations of patients, or the value to payers which is the determining factor?

It reminds me a hearing Ralph Nader speak many years ago about the deceptive practice of advertisers who would make all sorts of claims of the nature of "50% stronger" or "last 30% longer" but failed to define stronger or longer than what. The point is that value based medicine is a meaningless term unless it is defined within the context of value to who. This sort of ambiguity relegates the term of value based medicine to a marketing slogan as opposed to any real idea as a driver of health care reform.

Once we as physicians more into the realm of treating populations, as opposed to individual patients or become agents of third parties, we have gone down a dangerous path. I am not ready to face patients and tell them, although you have come to me for managing your health issues, I do not primarily represent your interests. I treat and represent the interests of individual patients. They should decide if there is value in what I offer. No third party who enters into the equation will ever be in a position to place a given patient's interest over their own financial interests.

1 comment:

  1. Very interesting site you got here. I found it randomly while looking through fans of Hayek on blogger. I am a grad student in Chicago and an aspiring writer with a blog of my own (rjmoeller.com). Check it out some time. Take care.

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