The Business of Healthcare

Value-Based Reimbursement Is a Lie

November 30, 2015

I hate it when people lie to me.

I also hate it when people lie to my clients and friends.

Someone is lying to you now. That someone is the government and the pundits and the so-called healthcare journalists who tell you that checking a box is value-based something. News flash: it’s not value-based anything.

Here’s an example from a November 9, 2015, article, Physicians Must Realign Compensation with Value, published on the Physicians Practice website: “Value is quantified through tasks such as conducting patient satisfaction surveys, measuring patient outcomes for chronically ill populations like diabetes patients, and keeping patients healthy and out of the hospital, all the while holding down costs.”

No, none of those have anything to do with value. The act of measuring outcomes does not yield value. If it did, you should just measure everything and payors and patients will be throwing money at you. Costs have nothing to do with value or no hospital would have ever filed for bankruptcy.

Conducting surveys and measuring things and an entity’s costs are all sell-side. They are internal to the provider. But value is a buy-side determination. It’s the customer who decides what the value is. Ford spent millions on the Edsel, yet few wanted one.

One has to decide who the customer is in the context of reimbursement. If it’s the payor, then don’t pretend that patient care is where value is measured, because it’s measured at the payor end and payors ultimately care about profits not patients. Checking the box that you gave an antibiotic is not the same as giving the antibiotic and is not the same as determining whether the antibiotic should be given in the first place.

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