Oscar Wilde defined a cynic as a man who knows the price of everything and the value of nothing.
A cynic might point out that the US health care system is one step beyond this in that often times physicians know neither the price nor value of the services we provide. Or at least that’s the way we behave.
Moreover, patients themselves rarely know the price of medical services before receiving them. They may receive low value interventions, sometimes at their own behest (antibiotics for a viral upper respiratory infection) and other times at that of their physicians (for example a diagnostic imaging study that has not been shown to be cost-effective).
Behavioral Health, Interoperability and eConsent: Meeting the Demands of CMS Final Rule Compliance
In a webinar on April 16 at 1pm ET, Aneesh Chopra will moderate a discussion with executives from DocuSign, Velatura, and behavioral health providers on eConsent, health information exchange and compliance with the CMS Final Rule on interoperability.
Remarkable strides have been made in medicine over the last several decades. Morbidity and mortality from heart attacks, strokes, cancer, and common infections have all declined immensely. This progress has been made on multiple fronts – from low cost, high impact interventions like giving aspirin to high cost, high impact interventions like drug eluting stents, both in the case of a heart attack.
Physicians and the health care system as a whole certainly have a lot to be proud of.
Listening to a panel of venture capitalists discuss the future impact of the Affordable Care Act at the MidAmerica Healthcare Venture Forum this week was very telling about the future of health care innovation and health care spending.
A member of the audience asked if the possibility of repeal of the ACA was making the healthcare investment environment more uncertain and difficult to navigate. All of the investors agreed that while the future of the ACA was ambiguous, the future of reimbursement for health care services was far from uncertain. Reimbursement will go down across the board, and venture capitalists need to focus on investments that help reduce medical costs.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Both Medicare and some private insurers have recently announced that they are moving from fee for service to fee for value models of payment, employing techniques like bundled payments and accountable care organizations. One member of the panel went as far as to say that fee for value systems might ultimately translate into “fee for fixed budget” or “capitation.”
At this point, health care costs consume almost 20 percent of GDP, and most would agree that outcomes are not commensurate with this cost. A significant portion of this is due to high cost, low value care that defies the principal that in an efficient system, marginal benefit should equal marginal cost.
One way to look at the marginal benefit of a new drug, device, or procedure is to ask how much better it makes the patient. In analyzing “the margin,” we are not just assessing how much the patient improved with the intervention. We are also comparing this to the improvement the patient would have made with the next best drug, device, or procedure.
This concept instructs the mentality that investors financing healthcare innovation need to have. All of the investors who spoke at the MidAmerica Healthcare Venture Forum seemed to understand that businesses aimed at controlling health care costs without a concomitant decline in quality are the best bets for the future.
It is sad to see that in the evolution of medicine from paying for volume and technological advances, regardless of actual clinical impact to one that rewards efficiency and quality, physicians seem to be among the last to catch on and adapt.
Certainly, investors, policymakers, insurers, and the biotechnology industry will have a big hand in controlling how the healthcare system changes during this transition. But it is crucial that physicians are the leaders in this dialogue about how to make this crucial transition in the way medicine is practiced in America.
[Photo from Flickr user joiseyshowaa]
Michael Ellenbogen is an academic hospitalist at Northwestern Memorial Hospital in Chicago. He graduated from Princeton University, with a degree from the Woodrow Wilson School of Public and International Affairs. He attended the University of Virginia for medical school, and did his internal medicine residency at Northwestern. In addition to clinical medicine, he is interested in outcomes research related to medical resource utilization and cost effectiveness of drugs, devices, and procedures.
