Lowering Health Care Costs Is Hard Because Every Patient Is Unique

The value-based healthcare movement's effort to cut costs and improve healthcare outcomes doesn't realize that patients' conditions are rarely homogenous.
(Mike Lacon/flickr)

Perhaps a generation ago, medicine was rocked by the ascendancy of molecular biology, the idea that the answer to disease involved breaking it down to its “scraps and pieces” (to use J.S. Haldane’s phrase), its component molecular parts.

While the molecular revolution did change the way we look at health and disease, and has led to successes such as the beginnings of molecularly-targeted treatments for some cancers, progress has been far slower than most anticipated. The brash confidence of the early pioneers of molecular medicine has been replaced in most quarters by humility derived from years of frustration and disappointment.

“If we’re discovering drugs, the problem is that we just don’t know enough,” Roger Perlmutter, the newly-minted head of research and development at pharma giant Merck, told Forbes last week. “We really understand very little about human physiology. We don’t know how the machine works, so it’s not a surprise that when it’s broken, we don’t know how to fix it. The fact that we ever make a drug that gives favorable effects is a bloody miracle because it’s very difficult to understand what went wrong.”

Today, it feels like we’re on the cusp of a second, equally important revolution, driven by the same mixture of confidence and reductionism as the molecular revolution we’ve recently experienced: the effort to bring value to healthcare.

Troubled by the burden of healthcare expenditure in much the same way their predecessors were consumed by the fear of dreaded disease, many of today’s healthcare leaders are desperately seeking to bend the cost curve, primarily by trying to understand the ever-rising costs of care and the highly variable, cost-independent outcomes for patients.

Today, “value” in healthcare—the ratio of outcome to cost—is a focus of significant academic scholarship, featured in leading medical journals, and discussed routinely in departmental conferences and medical meetings.

Underneath this shift seems to be the near universal consensus that healthcare must eventually transition from a fee-for-service mindset, which rewards providers based on volume, to a value-based-care system, prizing high quality care, efficiently delivered. The challenge is getting there.

As Harvard Business School strategy professor Michael Porter and former chief medical officer of Partners Healthcare Thomas Lee—two influential leaders of the healthcare value movement—explain, “no participant in the system has good information about patient outcomes and the cost of care,” and without this information, it’s hard to improve.

In the same way lab scientists emphasize the challenge of treating disease without fully understanding its molecular underpinnings, today’s cost scientists highlight the need to better characterize what is driving healthcare value.

“The shocking truth,” Porter and Lee assert, “is that there are few data on the actual outcomes that matter to patients with specific conditions. Instead of recognizing that quality is determine by outcomes, providers tend to define quality on the basis of compliance with guidelines…and patient status as measured by a limited number of clinical indicators…which are incomplete predictors of outcomes but not actual outcomes themselves.”

Health information technology, according to Porter and Lee, has been of surprisingly little help thus far, focusing more on scheduling and revenue cycle management than tracking patients over the full care cycle and providing caregivers with comprehensive patient information. Not surprisingly, “automating broken service-delivery processes only gets you more efficient broken processes.”

The question now is whether the approach offered by the healthcare value movement—essentially, the granular dissection of inputs and outputs—will achieve the transformative change its leaders envision. or whether it will yield reams of publications and promising hypotheses, but struggle to impact real world patient care.

The conceptual approach advocated by Porter and Lee, for instance, suggests that healthcare providers should focus on the specific medical condition experienced by a patient. Care would be provided by “integrated practice units” (IPUs) consisting of clinical and non-clinical personnel who are interested not only in the disease itself but also “related conditions, complications, and circumstances that commonly occur along with it.” Care is both delivered and (importantly) evaluated based on the specific medical condition, permitting care teams to develop real expertise, and incentivizing them to pursue best practices.

Some patients clearly have a single predominant ailment, and for them this care approach seems to makes sense, and may already be showing results. Virginia Mason’s approach to back pain patients, for example, has apparently resulted in improved quality and reduced costs, and has actually produced greater revenue (at lower per-patient cost) through increased volume, a route to competitive advantage Porter and Lee believe can be replicated and motivate system-wide change.

Presented by

David A. Shaywitz, MD, PhD, is a director of strategic and commercial planning at a biopharmaceutical company based in San Francisco, and the co-author of Tech Tonics: Can Passionate Entrepreneurs Heal Healthcare With Technology? More

Trained as a physician-scientist and management consultant, Dr. Shaywitz has experience in clinical drug development and strategic and commercial planning. Dr. Shaywitz is co-founder of the Center for Assessment Technology and Continuous Health (CATCH), a Boston-based initiative to use improved real-world measurement to improve care and drive science. He also is co-founder of the Harvard PASTEUR program, a translational research initiative at Harvard Medical School, and a founding advisor of Sage Bionetworks, a non-for-profit medical research initiative focused on open innovation. He works at a biopharmaceutical company in San Francisco; the views expressed in his postings are his own and do not represent the views of his employer. Dr. Shaywitz is an adjunct scholar at the American Enterprise Institute. His personal website is: http://davidshaywitz.wordpress.com.

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