The United States has one of the highest rates of healthcare costs in comparison to countries of similar economic development. Unfortunately, this does not equate to a better quality of care. Despite high costs, the U.S. ranks poorly in the areas of life expectancy and other quality areas (Burke & Ryan, 2014). According to Dr. Neel Shah, “we have the lowest life expectancy, the highest chronic disease burden, and the highest rate of preventable deaths. The gap between what we spend and get is particularly egregious in maternal health. Just the hospitalization costs for childbirth account for 0.6% of GDP — that’s $123 billion — yet pregnant people are 50 percent more likely to die giving birth today than their own parents a generation ago.” (Shah, 2022, para. 4). As a result, efforts are underway to create a better balance between quality, outcomes, and cost in healthcare.
In an attempt to bridge this gap, legislature and federal programs have been developed that focus on these areas. The Obama administration brought about the passing of the Affordable Care Act and attention to high-quality low-cost healthcare reform (Martin et.al., 2009). This led to the development of the Hospital Value-Based Purchasing (VBP) Program by the Centers for Medicare & Medicaid Services (CMS). This program links payment to a performance by rewarding those hospitals that meet specific quality metric targets and penalizing those that do not. Some of these metrics include catheter-associated urinary tract infection (CAUTI), surgical site infections, and elective delivery prior to 39 weeks. The ultimate goal is to achieve a better balance of cost and quality, producing value-based outcomes in a patient-centered manner (Aluko, 2017).
How is Value Defined?
The definition may vary depending on who in the system you ask — patient, physician, provider or insurer. In fact, value is a composite of patient experience, quality and cost, delivered with complete transparency. It is about the quality of services consumers receive, how they appreciate what they receive, whether it met their satisfaction and whether it was delivered at a price they could afford (Aluko, 2017, para. 4).
Taking this a step further, high-value care has been defined as quality divided by cost and refers to generating the best outcomes and experiences for patients at the lowest cost (Moriates et. al. 2015).
Value-Based Health Care Benefits
- Patients- reduced healthcare costs and improved outcomes
- Providers- increased patient satisfaction rates and efficiencies in care
- Payors (i.e. insurance companies)- improved control over costs and reduced risk. This is due, in part, to a healthier patient population with fewer claims
- Suppliers – alignment of products and services with positive patient outcomes. For example, linking the price of drugs to patient outcomes as a way to reduce the rising price of prescription drugs
- Society- improved overall health and less chronic disease (Catalyst, n.d.)
One of the areas of opportunity identified in the rising costs of healthcare includes eliminating waste. The following categories describe the main areas that contribute to healthcare waste identified by the Institute for Medicine (IOM):
- Services that incur additional costs without added health value
- Inefficient care resulting from system errors and poor coordination
- Exceedingly high prices also include administrative costs
- Missed preventative care
Several of these areas will be discussed in further detail. The largest source of healthcare waste is unnecessary services, such as prescriptions, tests, and procedures that do not make patients any healthier. These services are either not evidence-based, fall outside of guidelines, and in a small percentage of cases are actually known to cause patient harm.
Another source of healthcare waste is care delivery and coordination failures, resulting in patient errors and fragmented and inefficient care. Adverse events are costly. One study that evaluated claims databases showed the financial impact of over 1.5 million preventable adverse events over the course of one year to be 19.5 billion dollars in excess costs (Moriates et. al. 2015).
In addition, as care has become increasingly more complex and specialized, it is not uncommon for patients to see providers in different specialties and practices. In the hospital setting, the average patient is evaluated by more than 15 different clinicians during a typical stay (Moriates et. al. 2015). This often leads to gaps in communication, confusion as to who is managing the care, and overall fragmentation in the process.
Waste can also result from inefficient care processes leading to workarounds and delays in care. Workarounds may be necessary but often present safety risks for patients and take time away from direct patient care. In addition, added documentation requirements often come with new policies and procedures. When done inefficiently, without thoughtful consideration to keeping it simple and potentially removing what is not necessary, the time required for increased documentation can also take time away from direct patient care. It has been noted that the number of time nurses spend directly caring for their patients is less than one-third of their total working time (Moriates et. al. 2015).
The Impact on Patients
In addition to experiencing delays in care, unnecessary services, and adverse events, patients are impacted beyond the hospital setting. In the United States, the primary cause of personal bankruptcy is the high cost of medical bills. Unfortunately, medical insurance does not necessarily offer patients protection from these high costs, in part due to plans that include high deductibles and the increased cost of insurance premiums. For example, the average cost for a yearly premium for an employer-based family health care plan cost $15,073 in 2011. This is a substantial amount for even a middle-class household and can lead to reduced finances available for other necessary health items (Moriates et. al. 2015).
In an effort to reduce costs, literature shows patients are cutting corners in a variety of ways that impact preventative care: skipping dental care appointments or recommended testing/treatments, choosing not to fill prescriptions or taking half the required dosages, postponing medical care, or choosing home remedies or over the counter medicine versus seeking professional medical care (Moriates et. al. 2015). Ultimately, this translates to a less healthy patient population due to a lack of preventative and maintenance care.
What do hospital programs look like that are attempting to achieve the goals set forth by value-based purchasing? The following is an example of a program put into place that resulted in reduced complications, decreased length of stay, and increased patient satisfaction. This provides a good example of putting all the pieces previously discussed together and achieving the overall goals of improving quality and outcomes while reducing cost.
Anthony DiGioia, MD, a leader at Magee-Womens Hospital of the University of Pittsburgh Medical Center (UPMC) in Pennsylvania, redesigned care for patients undergoing hip and knee replacements. Dr. DiGioia hired medical students to “shadow” patients throughout the entire care experience—from the initial diagnostic visit, through surgery and the hospital stay, and finally to the patient’s return to functional life at home. The team worked with a set of ambitious aims to redesign care for these patients and created new care designs, including the following:
o Perioperative testing and teaching;
o Group meetings to coach patients;
o Pre-surgery discharge planning;
o Strong focus on complete pain management; and
o “Wellness” design in the orthopedics unit.
Patient care at UPMC is safe (with very low mortality and infection rates) and reliable (zero dislocations and 98 percent compliance with the Surgical Care Improvement Project (SCIP) recommendation for antibiotic administration10). Patient satisfaction is in the 99th percentile ranking of Press-Ganey scores, and 91 percent of patients are discharged directly to home without assistance or devices (compared to a national average of 23 to 29 percent). Ninetynine percent of patients report that pain is not an impediment to physical therapy, including therapy that begins on the same day as surgery. The length of stay for these patients is 2.8 days for total knee replacement (compared to a national average of 3.9 days) and 2.7 days for total hip replacement (compared to a national average of 5.0 days) (Martin et. al., 2009, p.4-5)
In summary, legislature along with federal requirements are helping to create change within healthcare by promoting high-quality care at reduced costs. In turn, healthcare organizations have responded by developing programs aimed to reduce waste and inefficiencies, and improving outcomes in a patient-centered manner. The various stakeholders including patients, providers, payors, suppliers, and society, all gain to benefit.
Burke, L. A., & Ryan, A. M. (2014, February 01). The Complex Relationship between Cost and Quality in US Health Care. Retrieved from https://journalofethics.ama-assn.org/article/complex-relationship-between-cost-and-quality-us-health-care/2014-02
Catalyst, N. (n.d.). What Is Value-Based Healthcare? Retrieved from https://catalyst.nejm.org/doi/full/10.1056/CAT.17.0558
Moriates. (2015). Understanding Value-Based Healthcare. McGraw-Hill.
Neel Shah, M. (2022, March 10). Three takeaways on value-based care. Retrieved from https://mavenpreprint.substack.com/p/three-takeaways-on-value-based-care?s=r
Yele Aluko, M. (n.d.). The delicate balance between cost and quality in value-based healthcare. Retrieved from https://www.beckershospitalreview.com/finance/the-delicate-balance-between-cost-and-quality-in-value-based-healthcare.html
Copyright by Jeanette Zocco MSN, RNC-OB, C-EFM, C-ONQS