Amidst political turmoil, value is a bipartisan standard
To listen to politicians, you would think that there is nothing that Republicans and Democrats can agree upon regarding healthcare. The Trump campaign website pledged to create public policy that “will broaden healthcare access, make healthcare more affordable and improve the quality for the care available to all Americans,” while the tagline on the healthcare page of the Hilary Clinton campaign read “Universal, quality, affordable health care for everyone in America.” If you take the issue of access out of the equation, and more specifically how to increase access — either through more free market principles or government involvement — there is essentially full support among the parties for better quality care at a lower cost, which, at a very high level, is the definition of value.
The fact is, amidst all the political rhetoric of the recent past (and present with the effort to repeal the ACA well underway in the 115th Congress), some pretty significant legislation has been passed in recent years with support from both sides of the aisle. First, overwhelming bipartisan support led to the passage of the Medicare Access and CHIP Reauthorization Act (MACRA) in April 2015. MACRA fundamentally changes how doctors and other clinicians are paid, with incentives to participate in advanced alternative payment models designed to reward clinicians who work together to deliver high-quality and cost-efficient care. In December 2016, the vast majority of Democrats and Republicans in both houses of Congress did it again when they voted in favor of the 21st Century Cures Act, which was signed by the president just a few days later. In addition to providing substantial funding for cancer research and programs to address mental illness and opioid abuse, the bill sets the stage for much faster approval of new drugs and medical devices.
But what does all of this have to do with standards and the healthcare supply chain?
First, let’s go back to the definition of value. A more complete version of value is put forth in a paper co-authored by Victor Trastek, MD, one of my professors in the Science of Healthcare Delivery program at Arizona State University and a former CEO of the Mayo Clinic in Scottsdale. Consider the equation below:
Under this definition, quality is defined by the usual suspects: clinical outcomes, patient safety, and service as measured by patient satisfaction, while cost is inclusive of all of the resources consumed in the delivery of care. That includes both medical devices and pharmaceuticals, in addition to clinician time and the cost to keep the various facilities used in patient care open and operational.
Historically, hospitals — especially those in the not-for-profit world — have not kept close tabs on their actual costs, because they did not impact reimbursement. Between government and more substantially commercial payers, hospitals were reimbursed for the care they delivered, regardless of cost. But that all changes in a value-based world. And given strong support in Congress and among hospitals, clinicians, payers and patient advocates, the move to value-based healthcare is expected to survive the political battle over the ACA.
To solve the value equation, hospitals need to understand what it truly costs to deliver care, and how those costs relate to the quality of care delivered. The data required is wide-ranging, from clinical services provided to the facilities and products utilized, all of which can provide insights into how clinical variation impacts quality and cost drivers such as length of stay and complication rates. The use of standard identifiers is key to solving the product piece of the equation.
The passage of the 21st Century Cures Act and pledges by the Trump Administration to make it easier and faster to bring new products to the healthcare market also create an increasing need to understand how products truly perform in the real world and the corresponding impact on value. Clinically controlled trials are a given for any product to come to market, while the real insights come from understanding where and how those products are used on actual patients because their use is often much broader than what was studied in pre-market trials. In fact, less evidence on the front end demands better data on the back end, which is one of the reasons for the U.S. FDA UDI rule requiring manufacturers to assign UDIs to their products and, beginning in 2018, additional government regulations requiring hospitals to capture UDIs for implantable devices in patient electronic health records.
There is certainly a lot of change coming to healthcare with the new administration and congressional make-up, but I would argue that value is the one thing that politicians can agree upon, and the one thing that patients depend upon.
Karen Conway | CEO, Value Works
Karen Conway, CEO, ValueWorks
Karen Conway applies her knowledge of supply chain operations and systems thinking to align data and processes to improve health outcomes and the performance of organizations upon which an effective healthcare system depends. After retiring in 2024 from GHX, where she served as Vice President of Healthcare Value, Conway established ValueWorks to advance the role of supply chain to achieve a value-based healthcare system that optimizes the cost and quality of care, while improving both equity and sustainability in care delivery. Conway is former national chair of AHRMM, the supply chain association for the American Hospital Association, and an honorary member of the Health Care Supplies Association in the UK.
