Transparency (Part 3): The Economic Impact of Outcomes

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In our last commentary, we discussed price transparency and how its implementation is the heart of driving free market principles in healthcare delivery.

There is an equally important need to establish transparency of treatment outcomes. This is much more challenging because it is easier for the lay person to understand price more so than medical terminology and outcomes benchmarking.

A few benchmarks to investigate are infection rates, re-operation rates, and transfer rates.  These are significant complications, adverse events and cost drivers that usually fall outside the scope of any quoted or contracted prices, even if using bundled models. can have data published for various facilities as it relates to these types of issues. However, not all facilities are Medicare affiliated and there will not be reporting for those measures.

Fortunately, thanks to the free market movement, groups like Healthcare Bluebook are collecting data. It is now possible, in many markets, to go online to review how a particular provider rates on price and quality.  Also, administrative companies like Exclusive Surgeries Solutions use databases to benchmark providers on quality nationally.  Groups and tools such as these can be useful when trying to vet a provider that is independent from the CMS system. This can help you shop for outcomes in addition to price, which ultimately is how one determines value.

Do not be afraid of the small and medium sized independent providers. If they are alive and well, it is only because they are competing successfully against larger hospital systems that control large sections of the healthcare market.  The reason those smaller or independent groups still exist is because there is enough word of mouth for patients to pro-actively seek them outside of the frequently controlled referral patterns of hospital employed physicians.

These independent providers are typically independent thinkers, constantly looking at ways to improve what they provide to their customers/patients. Not only do they assess ways to diminish complications, they also tend to track metrics for surgical success.

Regardless of provider size or independence, anyone of quality who provides medical care should be readily able to speak to their data on outcomes and complications. They should also be able to discuss the long-term outcomes for treatment as this is important when determining the fully burdened cost of care, which is known in the medical industry as cost per quality adjusted life year (QALY).

Without getting too far into the weeds, as an employer you need to be aware that a self-insured/self-funded group and a fully insured group will view full burdened cost differently.

The average fully insured group changes insurance plans every two years.  Hence, the insurer is often trying to “buy time” so that the next insurer (on average one year from now) will have to pick up most of the expense for a medical condition.  Often “band-aid” types of procedures are favored, and therefore are authorized more frequently due to lower cost in the short term. However, if you are employing and insuring an individual for several years in a self-funded plan, this methodology does not make sense because your metrics are based upon a much greater time duration.  As a self-funded plan, you will pay more for the same results if you use the same thinking as fully insured plans.  For example, one or two epidural injections can make a lot of sense when paired with physical therapy for a disc herniation. Many folks heal and that is all the treatment needed. However, multiple injections done repeatedly are generally ineffective from BOTH treatment AND cost considerations in the long term because surgery is inevitable for the patient not responding early to conservative measures. Delaying the inevitable costs more in terms of buying more ineffective care, more time without your valuable employee in your workforce, and an overall less satisfied employee.  All aspects must be considered when calculating the most favorable fully burdened cost for success.

Hopefully, these concepts provide a good starting point for ways to research information on outcomes and their importance beyond the obvious desire for patient satisfaction. Like all goods and services, there are many aspects to consider when determining the best value options for medical care.

In our next article we will discuss smaller independent providers in greater detail, covering why they are typically more open to free market solutions which can customize to your individual business needs thereby often providing the greatest value.

Dr. Richard Kube

About Dr. Richard Kube

Richard A. Kube II, MD, FACSS, FAAOS, CIME is a fellowship trained spine surgeon and Founder/Owner of Prairie Spine & Pain Institute, in Peoria, Illinois. He also founded and owns Prairie Surgicare, an AAAHC certified surgical facility. He holds Board Certifications from the American Board of Spine Surgery, American Board of Orthopaedic Surgery and American Board of Independent Medical Examiners. His practice is dedicated to providing comprehensive operative and non-operative treatment for spinal ailments with a special interest in minimally invasive surgical techniques. Dr. Kube is also engaged in active research and education projects. His interests extend into strategic planning and entrepreneurship as he is Advisor to Twisted Sun Innovations, a Hydrogen energy company currently working on renewable energy solutions for the U.S. Department of Defense. Dr. Kube currently serves as clinical faculty at University of Illinois College of Medicine at Peoria.

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