Low Value Health Care — The Equation

The “Sick in America Poll” shows 33% of people who were sick in the past year believe they don’t get a good value for health care.  One way to look at “value” is the following equation:

V = B / P

Value = Benefit divided by Price

If a person wishes to cross a river there might be 2 ways to get across.  $5 to go across a bridge or $2 to go across a tightrope.  If the benefit (getting across the river) is the same then the best value would be to use the tightrope.  But, low risk,  no need for training and convenience are actually part of the benefit for the bridge — which is indeed the best value.

In health care the “value equation” runs into problems.  What if a person only has $2 (the unemployed).   What if a person does not know about the bridge (poor health literacy).  What if a person does not need to cross the river but pays a fee just in case (insurance).  What if a person pays tax for the bridge (taxation).  What if the bridge is in disrepair so a person falls (cost of poor quality).  What if a person will not live long enough to get across the river (quality adjusted life years).  Health care economics is indeed complicated.

There is also a “funnel theory” of health care which says that despite theoretical complexity there are only a few solutions to come out.

  1. Deliver evidence based healthcare
  2. Stay within a budget
  3. Eliminate waste
  4. Maximize quality
  5. Minimize cost
  6. Be fair
  7. Know the value of life

Finally, the “Marcus Welby” theory of health care is dead.  That is to say, the doctor who knows everything, treats a few patients (with lots of drama) and bills enough to have a great lifestyle is now off the air.  Cost is now the king, and Americans must work within a system to meet budget requirements.  Corporations live under the same constraints, so must health care.

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