Defining Healthcare ‘Value’

People today want high quality health care at lower cost (to be honest, people throughout history have always wanted better quality and lower cost).  However, defining the ‘value’ of medical services is not easy.  In fact, it is often difficult for companies to demonstrate to customers that they provide superior value.  Joe Paduda has a great post which evaluated who different managed care stakeholders evaluate the healthcare value differently.

• For the managed care exec, value can be easily defined as costs that are lower, usually on a per-service basis, than they would otherwise pay. X% less than current pricing is better than current pricing, so the benefit is obvious and clear.
• For the adjuster, the definition isn’t quite so apparent. With a desk swamped under case files and a screen stuffed with flashing ‘red flags’ on critical diary entries, there’s less focus on finding the cheapest wheelchair and more interest in picking a vendor that can take work off the adjuster’s desk, do it competently and without claimant complaint, and provide documentation that, at a maximum, is readily cut-and-pasted into the claim file.
• For the claim manager, it’s about closing files, minimizing litigation, and avoiding those calls from Home Office management about low network penetration and excessive use of non-authorized vendors, while struggling to keep overworked, underpaid, and unappreciated adjusters on the job and out of the clutches of headhunters.
• For the employer, value is fast, thorough medical care that gets the injured worker back on the job and keeps her/him there…unless the employer is dealing with declining revenues, in which case they don’t want John/Jane Doe back at work no matter what, as there isn’t any job for her/him and they sure don’t want to yet another unemployment claim.
• For the TPA, value is defined as the savings below fee schedule or U&C, which is the basis for calculation of their managed care fees, typically around 25 – 30%. The more services, the bigger the bills, the more ‘savings’ generated and the more fees ‘earned’.

Even in health care, value is truly in the eye of the beholder.