Friday, August 12, 2016

The Lament About the Healthcare "Return on Investment"

The Population Health Blog had time to go back and review this New England Journal article on "return on investment" in healthcare

It's abbreviated "ROI."

In it, academic researchers David Asch, Mark Pauly and Ralph Muller lament that interest in getting a "return" from reducing healthcare utilization is unfair. While it is a sought-after metric in chronic conditions (for e.g., diabetes) it's practically unheard of other care settings (for e.g., cancer care).

The authors point out that may be because:

1) Care of conditions like cancer is very remunerative to providers, so there is little interest in reducing income. In contrast, diabetes has little "top-line" potential;

2) Unlike conditions like diabetes, reimbursement around the "episode of care" following a new diagnosis of cancer explicitly supports a known - and profitable - suite of hospital-clinic services;

3) "Savings" from reduced health care utilization can be complicated by the "back-filling" of empty appointment slots and unfilled beds with other patients with other needs and other sources of income.

There are two solutions.

The first is at the front-end by decreasing (with or without bundling) the reimbursement. That would presumably force the providers to gain care efficiencies that exceed the accompanying lower payments.

The second is at the back-end with "shared savings." This financially rewards providers who can muster efficient episodes of care. In other words, the check is the "ROI."

All good points, but written from the provider perspective.  From the perspective of buyers (businesses and individuals who buy/pay taxes for commercial or government insurance) it's more simple: services flex up to meet generous fee schedules and flex down when payment shrinks.

The right balance between the money and care can be determined by brutal and efficient markets or by all wise and mistake-prone policymakers.  Take your pick, implies the authors, but if it's the latter, the results are preordained.

The PHB would offer three other points on ROI:

1) We've seen this movie before: Using financial incentives to drive fewer hospitalizations, drugs and specialists is perilously close to rewarding the withholding of needed care.

2) Measuring non-events is hard: "ROI" in most healthcare settings is not a classic ratio of income to investment, but savings to investment to savings. The latter is ultimately based on a statistical measure of what doesn't happen vs. the baseline utilization of a large population. It's not easy to discern the "signal" of fewer pricey hospitalizations, fewer expensive drugs, or less need to see costly specialist physicians from the "noise" of healthcare inflation.

3) High health status ≠ low cost: Increasing quality of life is often a function of increased access to costly health care that is often a function of socioeconomic status.  In other words, you get what you pay for in both healthcare and lifestyle.

Which is the PHB's lament It's not a function of "saving" money, but using it wisely.  It's not a matter of ROI, but creating patient-centric value.

Image from Wikipedia

1 comment:

BJC Health - Physiotherapist said...

Hello Jaan,

It is a great article post indeed.

Thanks for your review about "Asymmetric Thinking about Return on Investment".