Opinion: Despite the name, value is not the solution for raging healthcare costs

CTNewsJunkie – Monday, December 30, 2024
By Ellen Andrews, Ph.D.

The murder of a United Healthcare executive has intensified very strong reactions to America’s broken healthcare system. Unfortunately, too many opportunists are using this tragedy to push a tired, failed agenda – value-based care and its corollary, Accountable Care Organizations (ACOs). While value-based care sounds nice, it has failed to lower costs or improve the quality of care. However, it is very profitable for insurers, large health systems, and the consultants who serve them.

In the meantime, things just get worse for patients and all of us who pay for the mess.

There is no question that healthcare in Connecticut has problems. We pay too much, more even than neighboring high-priced states. Despite that, patients here experience delays, denials, shortages, and disparities in care.

Many believe that value-based care and ACOs are the solution, but they are wrong. Like other fads, value-based care is a slogan that is repeated often on Wall Street but rarely adhered to. It has boosted profits for insurers and big health systems, without controlling costs or improving the quality of care. Even worse, the corruption of the concept diverts us from real, proven solutions.

The idea behind value-based care is to lower costs by paying for better quality and lowering prices. ACOs are the huge health systems that are paid based on value-based care. Of course, everyone agrees with the premise. But in the real world, value-based care has been interpreted as giving ACOs incentives to lower costs while monitoring only a very narrow set of quality measures. According to consultants, providers love value-based care because it is “a license to pick up dollar bills off the sidewalk.” Value-based care incentives are supposed to give ACOs “flexibility” to customize patient care, but too often it just drives delays, denials, and cheaper, suboptimal care.

Value-based care is a windfall for insurers and big health systems, which made record profits last year. Insurers have found numerous ways to game the gigantic holes in value-based care to deliver less care, avoid any quality standards, and generate outsized profits.

But the biggest winners, and the biggest boosters of the concept, are the consultants who help insurers and big health systems implement it. The joke on Wall Street is that ACO stands for “Amazing Consulting Opportunity.” When it doesn’t work, they make excuses, double down, and increase the incentives.

Value-based care is very attractive, in an Econ 101-sort of way. The concept that we can just tweak incentives in contracts to fix healthcare is appealing. But like most simplistic answers to hard, complex problems, it has failed miserably. Medicare has spent years and billions of taxpayer dollars on value-based care experiments with little to show for it.

Value-based care has also failed to control costs or improve quality in commercial plans.

Other developed countries spend far less than we do on healthcare and they live longer, healthier lives. Those countries mainly use the old-fashioned system of paying providers when they provide a service, as Americans do for most non-medical services.

According to the state Office of Health Strategy, over half of healthcare payments in Connecticut were value-based in 2022. Only 45% were old-school payments for services without any connection to quality or lowering costs.

So how can we fix our broken healthcare system? Unfortunately, complex and expensive problems require multiple, evidence-based solutions.

• Upstream – We have to emphasize preventive clinical care, but also healthy living in healthy environments.
• Coordination – Very complex systems often lose people in the gaps. We must coordinate across corporate/competitor lines and use technology. We need healthy food, exercise, and to avoid bad habits.
• Evidence – We must follow the best available treatment for each patient’s needs, not what works best for industries’ bottom lines.
• Get rid of middlemen – Pharmacy benefit managers, coupons, third party administrators, consultants, and more people you’ve never heard of all stand between us and the care we are paying for. They each get their cut, driving up costs, without adding any value to the chain.
• Consolidation – Huge health systems are merging into monopolies that can name their own prices.
• Drugs – It’s not just about patent monopolies; drug companies use a dizzying array of schemes to limit competition and drive up prices – because they can. Too often, those prices only reflect Pharma’s market power and not the value of the drug to improve health.
• Reward quality – If we want better care, we need to invest and pay for it directly. The attenuated value-based care concept isn’t working. There are too many loopholes.
• Data – As smart as we think we are, we need to watch what’s happening. Monitoring requires measurement, reporting, and analysis. But the hardest part is adjusting policies when necessary, regardless of lobbying, politics, and bottom lines.

None of these solutions are new and they are all hard. But we really don’t have a choice. It took a very long time to create this mess; wishful thinking won’t get us out of it.

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