V is for Value

Ten years ago, Michael Porter, a professor at Harvard Business School, began shaking up the health policy world when he published, together with his colleague Elizabeth Teisberg, the book Redefining Health Care: Value-Based Competition. The concept became the official mantra of the American health policy establishment in 2010, when Porter summarized his ideas in the New England Journal of Medicine, asserting: “Achieving high value for patients must become the overarching goal of health care delivery, with value defined as the health outcomes achieved per dollar spent. This goal is what matters for patients and unites the interests of all actors in the system. If value improves, patients, payers, providers, and suppliers can all benefit while the economic sustainability of the health care system increases.”

Over time, this has been taken to imply the necessity for “value-based payment,” or VBP, also known as "pay for performance" (PFP). Just how pervasive this thinking is can be seen in a series of editorials published in JAMA and taken from the National Academy of Medicine’s “Vital Directions.” From the piece called “Tailoring Complex Care Management for High-Need, High-Cost Patients,” to the piece on “Improving Benefit Design to Promote Effective, Efficient, andAffordable Care,” VBP is assumed to be the answer. Even the article on “Preparing for Better Health and Health Care for an Aging Population” sneaks in mention of VBP. But will a reimbursement scheme that rewards “high value” care more than “low value care,” and presumably somewhat more than care that is somewhere between “high” and “low” on the value spectrum, really solve the problems of today’s health care system?

Underlying the fervent belief in the value of value is the assumption that in the bad old days—and still today in many places—when physicians and hospitals were reimbursed for the volume of services, it was this system that created over-use. Of course doctors order too many tests and prefer expensive procedures over cheaper ones, according to this reasoning, because what drives their behavior is reimbursement. It was the payment system that created the monster in the first place, and it’s the payment system that must be reformed today. But is this an accurate description of why tests and medicines and procedures are over-used today, let alone a plausible explanation of how the status quo arose in the first place? Isn’t it at least possible that the economists have it backwards—that the payment system reflected prevailing practice?

The trouble with the current ideological insistence that VBP is The Answer, aside from the fact that supposedly value-based reimbursement systems haven’t so far produced the desired result, is that it totally discounts the role of culture, of advertising, of popular expectations. When a physician orders an expensive test instead of relying on a cheaper one or, God forbid, on history and physical exam, maybe the reason is that the patient expects and wants the test—and may even be willing to pay a little extra to get it. Perhaps the physician, too, believes the expensive test is superior to the alternatives and doesn’t believe the calculation of “outcomes per dollar spent” accurately reflects the true value of the test. Perhaps the physician has been barraged with "information" by the producer of the machine used to perform the test and has come to accept the evidence and arguments of the device manufacturer as legitimate. Maybe the members of the group practice in which the physician works are collectively persuaded by the claims of the medical device industry. Maybe the physician gained experience with a particular type of device during residency and prefers this one, even though it is more expensive, because he is convinced that the outcomes in his hands will be superior if he uses the familiar equipment. Physicians are professionals who make decisions based on their education and training, not just based on their financial self-interest.

I don’t want to suggest that reimbursement has no effect on physician practice. There is compelling evidence that some medical students choose a particular specialty because, overall, it is far better paid than another one. The Medscape Physician Compensation Report for 2016 reveals the large and persistent gap between the earnings of different specialists: orthopedists make $443,000 whereas general internists make only $222,000, with general surgeons in between at $322,000. Geriatricians, incidentally, with the complete absence of procedures, earn less than anyone else. I agree that reimbursement schemes have the potential to influence behavior to some extent, perhaps more so for hospitals than for individual physicians (or even group practices).

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What I mainly want to suggest is that tweaking reimbursement, by itself, is not likely to be enough to dramatically change practice. If we want physicians to change the way they care for patients, we need to modify what they learn in medical school and residency. We need to educate patients to expect something different from what they expect today. And we need to limit the capacity of drug companies and device manufacturers to sway opinion with huge expenditures on marketing.

Everyone wants "value." It's a great word: after all, who wouldn't want something that is valuable? But I'm not persuaded that it is wise for CMS to plan to convert all reimbursement to VBP over the next few years, as it is planning. If we don't make other far more profound changes, modifications of education, training, and cultural expectations, the revisions of the reimbursement system are destined to fail.