Friday, June 19, 2009

Health Value: Creating a level playing field

Atul Gawande's article in the New Yorker describing extreme variations in cost has become required reading for anyone interested in health policy. One commenter referenced this article when asking how we could create a level playing field given this degree of variation

We have received some great feedback from many people throughout the world regarding our development of the Healthcare X PRIZE. It has been a fascinating project and we are working toward launching the prize this fall. One commenter had a concern about how the prize could create a level playing field given the wide variation in costs and quality throughout the country. Our colleagues at Dartmouth Health Policy Center have done a phenomenal job over the last 20 years documenting and explaining the reasons for these variations in care. Atule Gawande's article was an explosive reminder that we have a LONG way to go in moving toward a next generation health system that can delivery health care value.

Notice I did not say high quality, didn't mention cost, nor did I define any condition specific outcome that I hope a next generation health system can deliver. The entire framework of the Healthcare X PRIZE is based on the actual "value" delivered by the overall system as it interacts with you, not an anyone or several individual parts. The notion of value (outcomes / costs) is the great equalizer that levels the playing field throughout the country. McAllen Texas might be twice the cost as everyone else in the United States, and if they were delivering 2-5X the results, no one would complain. However, as Dartmouth has shown, the more you spend the worse your outcomes actually are. McAllen just happens to be the current poster child of high intensity, low value health care. Believe me, there are plenty of others.

Graphic Depicting variations in quality and spending between states for Medicare beneficiaries.
Hawaii scores well - high quality at a low cost (Credit, Elliot Fisher, 2006).

Conversely, there are other systems that spend very little, yet produce excellent outcomes. In fact, Hawaii spends the least of anyone and has fairly high quality scores. In other words, they produce great value. The focus on health care value is the great equalizer as I mentioned before because I venture to say that spending 8% of GDP on health (like some countries) might not be enough. Spending 16% like we do might not be enough either. But what we can say, is that 8 or 16% right now does not buy us very much. Not very much at all.

Hence, the Healthcare X PRIZE focus on value and focus on redesigning health finance, care delivery, and personal incentives to help create a next generation health system that delivers high value. Please stay tuned for prize design information we will be releasing in the coming days and weeks leading up to the formal Prize launch this fall.
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