In the Business-Minded Surgeon blog, members of OrthoFounders, a national group of orthopedic entrepreneurs, discuss how orthopedic surgeons can lead efforts to fix the problems in health care that are so palpable and apparent to themselves, but opaque and undervalued by others. Topics include how to maximize return based on business strategy and improved clinical performance, how to navigate the entrepreneurial journey, and how to connect with others who have similar interests.

 

 

BLOG: The real question in value-based care is ‘Whose value are we talking about?’

Let us say I need to make a trip to Nashville, which is about 400 miles round trip. I can take my car, a vehicle I purchased and maintain, or I can take a flight in which case I outsource all the responsibility and indirect costs to an airline. If I take my car, I simply fill the tank with gas for about $40. If I take the flight, my ticket costs $350. Seems like a no-brainer, right? The flight seems to cost more, but the sophisticated reader will immediately recognize this is an apples-to-oranges comparison.

For the car trip, the traveler is assuming all of the risk for the trip: flat tires, dead battery, fuel mileage, etc. If he drives a late-model Toyota Camry, those risks are low, the fuel efficiency is high and he is likely to get a good deal. If he drives a 20-year-old worn-out motorhome, the risks and costs are much higher. In either case, the gas station that sells this person 20 gallons of fuel has zero responsibility for the trip — its only liability is to provide 20 gallons of fuel.

For the flight, the traveler is outsourcing virtually all the risk. The airline buys and maintains the equipment, personnel and fuel. The traveler is not buying 20 gallons of fuel. He is buying the safe destination and return (a more valuable product), which is why the direct cost is much higher.

Fee-for-service health

Fee-for-service health care closely resembles the car trip. The patient selects and maintains his own health and comes to the surgeon for a hip replacement. The surgeon maintains no responsibility for the patient’s weight, comorbidities and compliance with pulmonary embolism or deep vein thrombosis prophylaxis. Whether the patient is a 55-year-old yoga instructor with a BMI of 22 and a worn-out hip or is a 70-year-old morbidly obese, diabetic smoker with an elevated hemoglobin A1C, the surgeon does the same thing — a hip replacement with 90 days of postoperative care. Your results may vary.

On the other hand, value-based health care aims to switch us to the airline model. Payers want surgeons to assume all the risk for the whole trip, but want to do it at gas station prices. Payers want to outsource to surgeons the risk they currently take for a population of progressively less healthy people, but do not want to pay for the assumption of that risk. Is not that risk their entire reason for being? When was the last time you saw an actuary working for a surgical practice?

Imagine buying a tank of gas and expecting the gas station owner to assume all the liability for your entire vehicle, driving habits and gas mileage. He would probably tell you to get lost. He might say something like, “How can I know what you will do with your car? How do I know that you maintain it well and that you drive safely, and what will you pay me to take that risk?”

Value-based health care

Let us be clear about what value-based health care is. It is payer value-based health care. There is little value here for the surgeon and there is enormous risk — and what value is there is going to disappear quickly while the risk will stay forever.

As a surgeon, I have no qualms about moving from the gas station business into the airline business, but I recognize I am going to need actuaries (and an entire risk-management infrastructure) and an ability to hold travelers liable for how they maintain the vehicle and the costs they incur due to mismanagement. Until those issues are settled, I think we are in a race to the bottom.

As an intellectual exercise, consider if the trip to Nashville were a business trip where the traveler was either driving his personal car or taking a flight. In that instance, there are three parties: the traveler (patient); the employer (payer) paying for the trip; and either the gas station owner or the airline (the surgeon). The traveler would be expensing his vehicle at about $0.50 per mile. How does that change the calculation of value for each party based on whether the traveler flies or drives a Camry or a motorhome and how might that change the traveler’s behavior? Share your thoughts in the comments section below.

John “Jay” Crawford, MD, is a partner at Knoxville Orthopaedic Clinic and founder of nextDoc Solutions, a software company that builds custom apps for orthopedic surgery practices. His primary interest is helping private-practice orthopedic surgeons discover and implement strategies to ensure robust and sustainable business performance in a consumer-driven health care environment.