Value-Driven Health Care

Over the last three years, I have been visiting different communities where groups have formed to pursue the measurement of quality. Generally, it has been a few curious doctors, convinced if they had a way to measure quality they could improve the outcomes. Other times, it would be a group of large payers looking for metrics that would allow them to negotiate lower prices. The best of these organizations however, are the places where all the stakeholders are working together.

The collective result of all these groups working independently was a large number of measures but not much standardization. Our progress was highly fragmented.

Great effort has been made recently among medical organizations, insurers, government, employers and unions to develop what I will collectively refer to as the “quality enterprise.” I’m referring to organizations like the National Quality Forum, the AMA Physician Consortium, the Ambulatory Quality Alliance and Hospital Quality Alliance and others.

I am a big advocate of this kind of collaborative stakeholder process. I think it is the best way to arrive at national standards. I often restate the commitment of HHS to adopt endorsed measures when they are available and to adapt our activities as they are adopted.

While progress is being made, gaining agreement on a modest number of uniform measures has taken a fair amount of time. Frankly, the process remains complicated and slow. Hopefully, it will gain speed as experience is gained.

However, we need standardized methods for quality measurement and very soon.

As health care’s largest payer, I believe HHS has a duty to push the envelope and I want to tell you about a project we have initiated.

HHS is in the process of doing an inventory of all the quality measures we are currently using someplace in HHS. We intend to harmonize the measures we are using, and then we plan to publish our set so everyone can see our current and planned measurement thinking.

I hope this will have the effect of accelerating the velocity of the quality standards process.

With standardized quality measures laid beside standardized price measures like I wrote about earlier this week, consumers will be in a position to make value the most rewarded virtue in health care.

Learn more about Value Driven Health Care.

Single Price Health Care

I often talk about the need to make “value of care” rather than “volume of care” the best rewarded virtue in health care. I want to elaborate on what I mean in using the word value.

A couple of days ago, I listened to a consumer report on CNN evaluating hybrid cars. The reporter was discussing an independent evaluation someone had conducted to determine the relative merits of several models. They had created criteria to hold each car against as a means of measurement. Then the price of each one was compared. The car that scored the best quality at the lowest cost was determined to be the best buy, or best value.

Given the proper information, consumers should be able to make similar comparisons on health care. Until recently, little information has been available for use by consumers. That is changing. Great effort is now being made to evaluate the quality of services a patient gets in different settings.

It takes both quality and price information to determine value. The problem in determining price is that the billing system is simply insane.

I’ve tried to imagine using the way we bill health care in any other part of the economy. To continue the automobile analogy, let’s just speculate on what would happen if we transformed the automobile industry to adopt the health care pricing structure?

The dealer would say to a customer, “We don’t really know the price and we haven’t got a way for you to compare this car for quality but we know you need it, so come in and we'll give you the car.”

Then about three weeks later, the customer would start getting bills. There would be a bill from the people who made the car’s body. Another bill would arrive from the transmission people. Everyday more bills would arrive from seat makers, the paint people, and the folks making the sound system.

Then when the bill from the dealer comes, there would be a charge for time spent in the show room, a separate charge for the salesman’s office with a $27.90 cent item for the coffee you drank while there.

Gratefully, they don’t sell cars that way. All those costs are packaged and managed by a car company. Consumers get one price they can understand.

Some of my friends in the practice of Medicine will find my analogy troubling, pointing out that health care and a car purchase have significant differences. Okay, the analogy isn’t perfect, but let’s not miss the point.

The way we price health care cannot be understood by a human being of average intelligence and limited patience. And I think it’s also time we began to challenge the assumption that health care is all that different from other things consumers buy.

For many common procedures and conditions, consumers should be able to ask for and receive a firm, single price, and expect providers to stand behind it. Such a system would promote coordination and accountability and allow apples–to-apples comparison.

It can be done. Last year, Medicare paid for 255,000 knee operations. Incidentally, we paid for 95,000 heart bi-pass operations and 95,000 lung cancer treatments. Believe me. When you pay for 255,000 of anything, you know what medical supplies, services, procedures and facilities somebody getting a knee operation is going to use; and so do the medical providers who perform them.

I believe HHS has a responsibility to push the envelope on this. We will soon publish information on top Medicare procedures by cost and volume as part of an efficiency measurement roadmap for the department. Medicare is also developing a demonstration that would establish bundled payments for hospital-based episodes of care.

Participating hospitals would be able to competitively bid for episodes, then savings would be shared with beneficiaries who choose hospitals providing services at below the per episode rate.

This not only holds the potential to improve quality and reduce costs by encouraging physicians and hospitals to work together, but also encourages more informed consumer decision-making.

Viet Nam – Blog IV

Today, I’ll finish the ten observations about Viet Nam I promised.

Observation Seven: The Viet Nam government appears to have taken the threat of Avian Influenza seriously. They seem to be doing what they can. Inherent in that observation is the acknowledgement that they don’t have the capacity to do much. However, I have now been in two small village areas in Viet Nam during different visits. The first was where a family of five contracted the virus. The second visit was in an area where H5N1 was in the poultry population. In both cases, I was impressed by the response.

On this trip I met Mr. Chien, who I’m guessing by the fact that he started in the chicken raising business 18 years ago, is in his late thirties. He appears to be a natural entrepreneur. He started with 200 chickens in 1991 and now has over 11,000.

We walked through his operation while he showed me how he vaccinates his chickens. He told me about the morning he found 100 out of 200 breeder hens dead. He didn’t know what it was, but he called a vet from the Province who determined it was avian influenza.

Vaccinating a chicken

We went back to his house where a group of his friends from the area had gathered to talk. I asked about how the village reacted when they understood what they were dealing with. Mr. Chein said, “Our children were afraid, and we were afraid for them.”

There is no question if the H5N1 virus begins to spread efficiently, person to person, all of southeast Asia is highly vulnerable including Viet Nam. However, we have a much better chance of catching it quickly there, than in other countries in the region.

Observation eight: There are promising signs that Viet Nam may have acted fast enough to avert a major spike in HIV/AIDS cases. Viet Nam is one of the 15 countries in the President’s Emergency Plan for Aids Relief. I’m told the decision was made to invest aggressively in Viet Nam because it looked like HIV/AIDS was just about ready to spike dramatically. Over the past four years, our investment has increased from $17 million to $88 million a year.

I was pleased to learn we are spending much of that amount on building infrastructure and people. The reports I received were quite positive.

I visited a clinic in a section of Ho Chi Min City where they are starting a program to focus on intravenous drug users. A high percentage of the HIV/AIDs in Viet Nam comes from the use of dirty needles. The approach is to help people stop drug use, hence having fewer risks generally. They use a system of peer educators; kids that have had a drug problem but overcame it. I spent about an hour talking with them. I saw the use of this technique in Africa. They have teams of people who are HIV positive trying to convince others to “know their status and get tested.” It seems very effective.

When I met with the Health Minister, we discussed the fact that rapid response HIV/AIDs tests are not being used in Viet Nam. I hope we made some progress in persuading them.

Observation Nine: The rapid increase in the price of food is becoming a big problem in Viet Nam. I mentioned in my blog entry on Indonesia what a problem the rising price of food has become. I simply hadn’t focused on this as an issue until this trip. Rice is now more than $700 a ton, more than three times the rate of five years ago.

Apparently there are many contributing reasons for the price going up. There is a growing problem with various pests and viruses that adversely affects the crops. Also, there has been a series of weather-related matters, which have been part of the problem too. This could become a major issue worldwide if it continues to develop.

Observation Ten: Viet Nam is a young country and I saw a disproportionate number of women emerging in leadership roles within the bureaucracy. I don’t know if that is true within the Communist party however.

More than 60 percent of the population is under 30 years old. As one moves around Viet Nam, it is highly evident. If they can find a way to educate this group and provide an economic system where they can succeed, the youth of their population is a huge asset because they are hungry to succeed.

I gave a lecture and answered questions at the Hanoi School for Public Health. It was a delightful hour. The students were more than willing to engage. Apparently attendance at the school is highly competitive with many applications for each slot. Again, it interested me that the group I spoke to was nearly three quarters female.

Viet Nam – Blog III

Following on yesterday’s blog, here are some additional observations about my recent trip to Viet Nam.

Observation two: While they maintain a communist structure of government, Viet Nam is obviously devoted to being part of the global market economy. As people vote with their dollars, markets are highly democratic. It seems clear they have found a way to reconcile the ideology. They have attained status in the World Trade Organization and seem highly motivated to come into conformance on global economic standards.

When I visited with a group of shrimp farmers, we discussed market conditions, world prices and the demands of entrepreneurship. Clearly, the government plays a different role in their business than it does in a democracy. These were small businessmen, looking to find niches in a market where they could optimize their opportunity.

Dinner with Shrimp Farmers

Observation Three: The Vietnamese government seems to understand the importance of protecting the made in Viet Nam brand. They are proud of the fact that it is beginning to show up more places. We discussed openly how quickly a brand that is not known well can be damaged by adverse quality events. We agreed during our talks to develop a working group to develop MOUs, similar to what we have done with China, which will allow our regulatory agencies to work interoperability, even though we have different systems of government.

Viet Nam is drafting new framework laws for food and drug safety so this is an opportune time to work with them. We agreed to move on aggressive time frames.

Observation Four: The business environment has a frontier quality to it. There appears to be opportunity everywhere, but you would have to have a high tolerance for the type of bureaucratic and political uniqueness that accompanies a country in transition. I had lunch with members of the American Chamber of Commerce. I sat next to Tony Foster, a Chicago based businessman who is building several businesses in Viet Nam. He is actually married to a Vietnamese physician who now lives in Chicago.

One of his businesses is a company providing international telephone services, and from his short description, he appears to have taken advantage of a need Viet Nam had for telephone capacity. As part of his willingness to invest in telephone infrastructure, his company was granted status that, for a time, gave him a comparative advantage in the market.

At the Port of Saigon, the Port executive told me they had contracted with a Seattle company to build a new Port. I know little about it, but presumably the company will invest money and bring expertise, earning a return from Port fees and securing an early position in a growing enterprise. I observed a similar arrangement in southern India.

As we boarded the plane to Ho Chi Min City, our Ambassador, Michael Michalak, introduced me to a private equity fund manager specializing in Viet Nam investments who was also boarding. There are obviously unique challenges investing right now, but with a populations growing rapidly in number and prosperity, Viet Nam is an intriguing marketplace.

Viet Nam still has state control of most of the key industry groups, and they have been slow to give up control. State owned enterprises make up 37% of their GDP. The government owns and controls industries like banking, energy, air travel, and health care.

Observation Five: Reduction of poverty is a primary social goal of the government and they seem to be succeeding to some extent. In 1993 58 percent of the nation’s population was in poverty. Today it is only 15 percent.

They will have to do substantially better in basic areas like education, health care system, etc. However, they seem to know where the problems are.

The Vietnamese government has a goal to be a country with middle income. They also aspire to be considered an industrialized country by 2020. It feels like, to me, that the Vietnamese and Chinese have similar approaches to planning. They also have the ability to compel things done that democracies require more time to finesse.

Observation six: Personal freedom is still mixed. Freedom of religion has dramatically improved the past few years and the churches are full.

However, freedom of speech is not as good. The embassy told me there are many situations in recent years where people have been imprisoned for speaking out against the government.

Viet Nam - Blog II

This is a continuation of my discussion on Viet Nam. I just returned from a trip there. Today, I’m going to list the first of several observations about Viet Nam coming from my trip.

Observation One: The Vietnamese government and people have put war behind them, and we need to as well.

I was a teenager during the war in Viet Nam. To eliminate the uncertainty of the draft, I joined the National Guard and went through basic training and advanced artillery training side by side those regular Army soldiers, most of who anticipated the skills we were learning would be used in Viet Nam. Many people I knew fought there. I lived through the political, social and cultural turmoil that accompanied the war during the late 1960s and early 1970s. The war in Viet Nam was a big part of all our lives.

The first time I flew into Viet Nam, I had a hard time not linking everything I looked at to my war time perceptions of what the country was like. I did not feel animosity, but my curiosity of what things were like then was not easy to suppress. My perceptions came from news reports and pictures of places and situations 40 years ago, but they are stored in that part of the brain teenagers put things that shape them.

In October of 2005 when I was there, I asked several Vietnamese people about how they felt toward Americans. After several questions, one of them said to me: “We have put the war behind us.”

I saw evidence that there are still remnants of the war in Vietnamese society, but they seem to be biases which faintly endure between North and South Viet Nam. However, those seem to have been worn down over time as well. In fact, everything I have experienced in Viet Nam leads me to conclude Americans are well liked generally. And, speaking as one American, I really like Vietnamese people.

I had two experiences on this trip worth relating along these lines. The first happened before we left. I had a conversation with Ashleigh, a young woman HHS colleague of mine, assigned to do advance work on the Hanoi portion of our trip. She related the reaction of joy her Father had to learn of her assignment. He had fought in Viet Nam. She said, he told her how it thrilled him that things had changed in a generation so his daughter was able to return in peace to a place he had fought in war.

Secretary Leavitt and Ashleigh

The second experience took place at a remarkable dinner we had in Hanoi put on by my new friend and colleague, the Minister of Health from Viet Nam. His name is Nguyen Quoc Trieu. Minister Trieu was a soldier, fighting for the North. He was wounded during intense fighting. Also at the dinner was a doctor who works with our U.S. Centers for Disease Control and Prevention and is assigned in Viet Nam. Over dinner they concluded they had fought during the same period in roughly the same region. They toasted, hugged and celebrated their friendship of our nations.