Sunday, September 29, 2019

Value-based Pricing and Reimbursement in Health Care

I am a conservative practitioner in my specialty of gastroenterology.  Compared to peers, I order fewer scope examinations, prescriptions and CAT scans.  I’ve always believed that a more parsimonious practice of medicine would protect my patients better than would a more aggressive approach.  Sure, this also means that I spend fewer health care dollars on my patients, but this is not my primary motivator.  I practice in this manner because I am convinced that in the medical profession, less is more.

I am somewhat of an iconoclast as many of my colleagues for various reasons practice differently.  They might feel that my medical nihilism is depriving my patients of necessary testing and treatment. Patients over time tend to find physicians who share their philosophy.   Patients who believe that more testing and more medication is the pathway to better health will not be comfortable with a doctor like me.

But, change is afoot!  I predict that within the next several years, if not sooner, that my practice style will become normative.  Why would this occur?   Why would physicians who were heavy on the medical utilization gas pedal suddenly be pumping the brakes?  

It’s the reimbursement, stupid.   Soon, physicians and hospitals will be paid differently.  Value based pricing will become the means of reimbursing health care providers and institutions.   So long, fee-for-service, a system that rewarded the medical profession for excessive and unnecessary care.  Payers will reward physicians and health care systems that deliver favorable outcomes that are cost-effective.   Not surprisingly, when physicians and hospitals have a financial stake in how they practice, the practice style arc bends.   It’s a law of economics that folks spend other people’s money faster than they would their own.   Do you order differently off the menu when someone else is picking up the tab?

I think I'll order the steak tonight.

Changing the reimbursement policies will make sausage making seem appealing.  Remember, every example of excessive medical care is someone else’s income.  It is unlikely that those who will lose out will champion an effort that might cost them money. 

No system is perfect.  Every reform proposal poses conflicts that need to be exposed and addressed.  We all want high quality medicine that is delivered efficiently.  If, however, there is too much zeal in achieving cost savings, then this could adversely affect quality.   We need to ensure that we remain true to our primary mission which is to protect the health of those whom we serve.   The current system desperately needs to be reformed.  But, we want what emerges to be a step forward on a journey that may take a decade or longer to reach the destination.  If we simply exchange one set of problems for another, then we have traded quicksand for falling off a cliff. 

So, let’s look for the pharmaceutical companies, physicians, hospitals, insurance companies, the government, medical device companies, extended care facilities and the public to join hands as they sway in a Kumbayesque moment all pledged to serve the greater good. 


  1. nice thought, but good luck with that.Those that believe more is better will always win out."If we can do it,why not do it." The american people have come to expect it and that will not change. We always seek to place blame on other things, but it all really begins with us.If we as individuals don,t change, nothing will.

  2. I am really enjoying reading your blog. I actually did a podcast about colonoscopies that was in part inspired by your post on the subject. If you are interested check it out:

    I would love to interview you sometime.