Patient Care

The Value Proposition


Eight glorious months ago, my wife, Bridget, and I went to the hospital for the birth of our daughter, Livia. I remember the night clearly. It was a planned induction. Labor and delivery was quite busy, so we spent a few hours in the waiting area before our room was ready. Prominently displayed, a royal blue banner and crystal piece announced a Codman Award from the Joint Commission. Presented to only a few healthcare champions annually, this award represented a significant achievement in birth safety. I was proud to have Bridget (and Livia) there.

But had it not been for the Institute for Healthcare Improvement (IHI) Annual Forum’s plenary sessions earlier that year, I probably would have ignored the flashy cabinet, mistaking it for propaganda or a feel-good award that everyone receives if they are nice to Joint Commission inspectors. As it were, I recalled the IHI panel discussion where I had first heard the CEO of Seton Family of Hospitals describe dramatic reductions in the network’s rates of birth injury. Most contentious had been the elimination of elective labor inductions and C-sections at our hospitals before 39 weeks’ gestation.

Perhaps understandably, Bridget was not distracted by any of this. Eyes closed, she was trying to make it through one last uncomfortable night while resting sideways on four chairs pushed together. I knew better than to force the conversation. Two weeks earlier, we had a heated discussion about whether there was any reason to induce earlier for convenience (i.e. obstetrician and grandparents-to-be schedules).

A few months later, at a meeting of physician leadership in our network, the question of whether doctors could lead transformative improvements in care in our community was raised. Thinking back to the Codman Award, I asked an obstetrician if the birth-safety initiative had increased the leadership capacity of physicians.

The reply was quick. “Not really,” she said. “The physicians felt like they were just following some rules.”

Rules? Nobody wanted to bask in the glory of a project that greatly improved outcomes and reduced costs? As I sat in silence and tried to absorb the significance of the response, I was hit from the right with another revelation. A hospital executive in the group noted that this was a very unpopular initiative amongst administrators. There were now fewer feeders and growers populating our NICUs, and this significantly and negatively impacted the bottom line of the hospitals. NICU reimbursement, of course, is a cash cow.

Thus, it came as no surprise when my editor forwarded a recent New York Times piece ( on this very issue of overuse in NICU care. The article even profiled my hospital network in Austin, Texas. The drama in the story was the millions of dollars lost by hospitals, potential Texas Medicaid crackdowns on NICU care, and the move away from convenience care.

But a much more important point was missed … value.

Quality outcomes will drive costs lower, and maximizing this equation should be the only goal we work toward. And yet, routine discussions of how we achieve value are all but absent in our daily conversations.

The Only Goal

Simply stated, value in healthcare is quality outcomes divided by total costs of care. The real storyline here is that a multidisciplinary team within Seton has greatly improved the single most important metric in healthcare—value. The numerator is healthy deliveries. The denominator is total costs of care. Quality outcomes will drive costs lower, and maximizing this equation should be the only goal we work toward. And yet, routine discussions of how we achieve value are all but absent in our daily conversations.

I suppose it’s only natural that we are distracted. The media will always focus on the dramatic aspect of the story. Political strategists spend days in fluorescently lit rooms devising new ways to keep us misdirected (think death panels). Our academic research agenda continues to prioritize technological advances over efficient healthcare delivery. And our fragmented payment systems all but guarantee that care providers will waste their time on the wrong financial analyses. “Perverse” is an oft-used term to describe our reimbursement system; it aptly describes my experience with “performance” data. How is it that I am regularly subjected to financial reports detailing every bit of billing and coding minutiae, but it takes an act of Congress for me to find simple clinical outcomes data, let alone costs of care? Value is the forgotten stepchild of healthcare reform rhetoric.

Thus, the publicizing of overuse in NICUs is a microcosm of the quagmire that we find ourselves in today. Healthcare spending is a tsunami projected to devastate the shores of our national economy in as little as five years. In the shadow of this rapidly receding financial wave, competing interest groups stand barefoot on the beach debating whether the clinical waste surrounding us is really pollution (one person’s waste is another’s income, as the saying goes). It’s as if we’re all frozen by the spectacle, unable to move toward higher-level value solutions.

All sides will agree, however, that we are quickly running out of time. Continued inaction will condemn us to a crash financial evacuation of cholera-like proportions.

Simple Solution: HM

How do we avert such a natural disaster? I see front-line clinicians—yes, hospitalists—leading the way. Hospitals and healthcare networks are actively mobilizing to create accountable-care organizations (ACOs) in preparation for payment reform almost certain to resurrect some form of capitation or bundling. The finance department of these organizations can only do so much. As they feel the tremors of financial instability, they will cling to what they know—increasing revenue through new services and budget line-item reductions (e.g. decreased funding for hospitalists).

These are short-term solutions at best, and your HM group might already be experiencing the after-effects of such activity.

Hospital administrators will tighten the financial belts, but they cannot improve clinical quality by reducing waste. To paraphrase Atul Gawande, doctors must cap their own pens if we are to reduce waste in the system. Value, then, can only be defined at the bedside in the context of a healthy physician-patient relationship. And as hospitalists, we are at the bedside of the most expensive decisions in medicine.

Although the future landscape might seem bleak, opportunities for HM are aglow with promise. We have the best view of how the system might make the biggest gains. We have been raised with a focus on quality. Scores of improvement success stories are told annually at our national meetings. If we can shift our conversations to improving quality while lowering costs, I believe that defining value will prove to be our field of dreams. TH

Dr. Shen is medical director of hospital medicine at Dell Children’s Hospital in Austin, Texas, and The Hospitalist’s pediatric editor.

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