Report reveals nation ‘lagging’, pegged in eighth place for VBP adoption

BOSTON  -  Americans are all about value. In retail, consumers flock to the two-for-one deals, buy-one-get-one frees, blowout sales and bargains that cut costs without compromising product quality. In business, employers reward employees for exceptional performance, quality service and customer satisfaction. 

This value-based phenomenon has percolated into virtually every realm of today's society, that is, with one notable exception. According to a June report by the Boston Consulting Group (BCG) the U.S. healthcare system is one industry that continues to lag in value-based purchasing (VBP). 

The BCG study examined the progress of 12 developed-world countries in adopting value-based purchasing healthcare, an alternative to the predominant fee-for-service reimbursement and one that experts say will improve health outcomes while also reducing industry expenditures. 

Report findings were altogether underwhelming for the U.S. healthcare system, which secured a disappointing eighth place  -  a rank that doesn't typically merit bragging rights.  

Sweden led the pack, followed by Singapore, Canada and the United Kingdom; Germany and Hungary have the most work to do. 

 According to Simon Kennedy, BCG senior partner and healthcare information technology expert, a simple lesson of science and math can help illuminate the reasons why the U.S. healthcare industry is moving rather morosely towards value-based care. 

Whenever Kennedy has a conversation about value-based healthcare, he starts with pointing out an obvious observation: "Biology is not algebra." 

It's nothing earth shattering, he knows, but it takes the point home. "Healthcare data is so much more complicated than financial service data," he continued. Two completely different subjects, two entirely different beasts -- an element, Kennedy said, that is often misunderstood by the general public. 

"So people outside the health industry say, 'I can use my ATM anywhere, why can't a put my medical record on a chip and take it to any provider I want?' don't understand that this [health] data is extremely complex."

When asked why the U.S. appears unhurried in its move to a value-based system, Peter Lawyer, BCG senior partner and coauthor of the report explain that it all comes down to data, comparable data -- something the U.S. just doesn't have. 

He cites retail sales in the month of February versus the month of July as an example. "You've got 28 days compared to 31. You're going to be off by a fairly significant factor, and February generally isn't going to look very good." 

"The same thing is going on in healthcare," Lawyer continued. "You've got measurements all over the place, but there's not a lot of comparable data."

One of the issues is that nothing is "compelling clinics, hospitals, doctors to voluntarily collect that data to make available for public scrutiny," he said. 

But why not? It isn't a clear-cut issue, he explained. It may come down to a paucity of financial incentives, HIPAA challenges, data believability issues, or it may just be bad press for healthcare providers that make their metrics, such as mortality rates, available to the public. 

However multifaceted the reasons are, proponents of VBP argue that the leap must be made. 

The U.S. has, however, made its first step through the Hospital Value-Based Purchasing program last year, an initiative launched by the Department of Health and Human Services (HHS), which will pay 3,500 hospitals nationwide based on the quality of care administered, not quantity. Financial incentives will be offered starting in fiscal year 2013 to hospitals that provide high quality care at lower costs. 

Sweden, however, has proved itself to be the poster child for VBP adoption. Rolling out their data registry allowed a report card-like analysis of various metrics -- such as readmission and mortality rates -- of clinics nationwide. Clinics were ranked in these different metrics, and after a period of transition, these rankings were published. The results were glaring. 

Lawyer cites one example of myocardial infarction mortality rates. In 2000, before the registry, Sweden's myocardial infarction rates were pegged at 6.19 percent. Fast-forward to 2007, after registry implementation, and rates dropped to 2.93 percent. 

Michael L. Millenson, president of Health Quality Advisors, and author of a June Forbes Insights value-based purchasing report that found an increasing number of healthcare executives favor value-based payment methods over fee-for-service reimbursements, said the move needs to happen to improve care and cut costs. "Some of the biggest names in healthcare may or may not have the best care," he said. And both patients and providers should have access to that information. 

Millenson cited Cadillac as a comparative example. Upon its inception, the car marque essentially enjoyed a monopoly in the luxury car market, establishing a name for itself. However, when competitors emerged and more products became available, customers soon realized the brand name wasn't always indicative of a quality product; thus fewer people were purchasing the cars. 

Since then, Cadillac has reformed itself, but it serves as an insightful example that can be extended to VBP. If a physician is compensated for the quality of administered care, and patients are more aware of the comparative landscape, the physician, proponents say, will have more incentive to improve if value is lacking.

According to officials, one of the biggest barriers in moving forward with VBP is the meager participation of healthcare providers in health registries -- institutions that record health outcome metrics in a patient population. Imperative, Lawyer said, is the role of medical associations and legislative powers play in encouraging providers to participate. 

"If you get very high participation within a registry, and you have very good clinician engagement around what's going on with that disease, we're quite certain that you're going to see large improvement in health outcomes."