How do you define value?
This is a difficult question when it comes to healthcare. For many years, value was not really part of the equation. Physicians, hospitals, and other healthcare providers did their best to treat an ailment and they billed for their time and effort, and were paid, often in full and usually by a third party such as a health plan.
The patient, as health policy experts liked to say, had "no skin in the game," meaning that the cost of care was really irrelevant to the patient, as compensation was simply a transaction between provider and payer.
The shortcomings of the system were clear to everyone. Providers were paid for volume and had no incentive to keep costs down and patients had no incentive to seek the lowest cost for the care that they received. In fact, instead of seeking out low cost care, patients generally migrated to high-cost, high-prestige academic medical centers in search of what they believed was the very best care.
The world has changed. Passage of the Affordable Care Act (ACA) in 2010 brought forward a new value proposition in healthcare: value based purchasing. Providers are paid based on their success in treating illness and in managing the overall health of the population that they serve. They are also accountable for lowering the growth in healthcare spending and controlling the drivers of high cost care, such as hospital readmissions.
When we look back 20 or 30 years from now, the current benchmarks for value will likely look primitive, not unlike the way we currently view archaic medical procedures such as surgery before ether.
That is because for decades our healthcare data and evaluation apparatus was one built on retroactive review. To understand trends, researchers relied on historical claims data. It was arduous work to change practices based on that data; nothing happened in real time.
That rear-view mirror does not serve patients well and it slows medical advances and innovation. The windshield is much larger than the rear-view mirror for a reason. By looking forward, we can make meaningful changes that will have a dramatic impact on medical outcomes.
Historical data still has an important role to play: now providers can apply high speed computing power and use that data to make changes on the fly.
Looking at hospital readmissions can be instructive. Under ACA, hospitals are held accountable for readmissions; they are rewarded, through Medicare reimbursement, for reducing readmissions and they are penalized if the rate of readmission increases. What hospitals are learning is that they can take many steps to lower readmission – such as adjusting length of stay to ensure a successful discharge and improving the discharge planning process – but that these steps, alone, will not guarantee improvement.
This is because there are external factors that historically hospitals could not control. If a nursing or rehabilitation center, for instance, is not prepared to care for a recently discharged patient with a complex diagnosis, the odds of a hospital readmission dramatically increase. With 42 percent of Medicare fee-for-service patients being discharged to some type of post-acute care, according to a 2015 MedPAC report, getting the discharge setting right becomes critically important.
Similarly, if a patient is discharged to home with multiple prescriptions, each with different and complicated instructions, they may not be able to manage the process and thus end up back in the hospital.
The good news is that the solutions to these problems exist. At PointRight, for example, we can look at a nursing center's clinical data, specifically the Minimum Data Set (MDS), to help manage care transitions. We call it predictive analytics.
MDS is part of the clinical assessment that each nursing center resident undergoes, to better identify their functional capabilities and health challenges. We analyze MDS data in real-time, and using a database of over 45 million MDS records, we accurately predict future trends, identifying and preventing events before they occur. We help organizations make measurable change based on what their data tells us, including things that are working and not working.
Maximizing the value in healthcare will require having the right set of tools – tools that give providers meaningful data, but even more important, actionable data. Healthcare has just begun to scratch the surface of leveraging data to create change.
In fact, if you think of it as a baseball game, first base was building awareness among providers and patients of the relationship between cost and value; second base may well be the broad adoption of electronic medical records to track and store tremendous amounts of medical data; third base is the creation of powerful new tools using that and other data sets; and the home run is making the changes in the healthcare delivery system with that data to improve and extend lives.
We have to make it to home plate if we are serious about value. Sliding into second or third base doesn't score the run. It doesn't make change. Only the forward-looking, active use of data will create change and truly deliver value to those who use the healthcare system and those who pay for it.
Steven Scott is President and CEO of PointRight, of Cambridge, Mass., which provides predictive analytics solutions to thousands of post-acute providers, hospitals, ACOs and payers.
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