Value-based healthcare

Introduction

Over the past few decades, healthcare costs in the United States (US) have risen considerably faster than gross domestic product (GDP), wage growth, and inflation. In 2017, the United States spent nearly 18% of GDP on healthcare, nearly double that of any other industrialized country. The causes of this trend are undoubtedly multifactorial and encompass high unit prices, an aging population, administrative complexity and costs, fragmented care delivery, and misaligned incentives in a predominantly volume-based reimbursement environment (i.e., fee-for-service). From a societal perspective, the disproportionate amount of GDP spent on healthcare effectively “crowds out” other mandatory programs such as education, infrastructure, defense, and social security. On an individual level, the inability to pay for medical bills is a pervasive worry for many Americans. Approximately 50% of patients self-report maladaptive coping strategies to mitigate the high costs of medical care and include skipping primary care appointments, not filling medications, and skipping recommended tests or treatments. Additionally, financial obligations due to medical care are the leading cause of individual bankruptcy in the US. These have led to escalating economic strain on patients, families, and society-at-large.

A direct consequence of these trends has been a growing recognition and call, among various stakeholders (i.e., patients, policy-makers, researchers, and payers), for a shift in healthcare organization and financing towards higher value care , which entails greater provider accountability for costs and outcomes. Initially described by Michael Porter in a 2010 New England Journal of Medicine article, value-based care can be conceptualized as maximizing outcomes per unit cost. Although the precise definition of meaningful outcomes in healthcare varies by perspective (i.e., payer, patient, and society) and clinical context, the numerator of the value equation should reflect care quality, health resource utilization, patient experience, appropriateness, and condition-specific patient-reported outcomes. The denominator in this equation captures the financial costs attributable to a complete cycle of care. Therefore, durable improvements in value either generate significant improvements in outcome measure or substantial reductions in total cost of care, or ideally both.

Surgical care is particularly suited to a value-based care framework on account of the following features: (1) its intrinsically episodic nature (e.g., 90-day global period), (2) a prevailing interdisciplinary approach (geriatrics, anesthesia, internal medicine, radiology) to quality improvement and care provision across all sites- and phases-of- care (preoperative, perioperative, and postoperative), (3) culture of outcomes measurement (e.g., ACS-NSQIP, STS Cardiac Surgery Registry, TOPS), and (4) high levels of unwanted variation in expenditures and clinical outcomes. Furthermore, according to recent estimates, surgical care accounts for 51% of all Medicare spending, with outpatient surgery and subspecialty activity (ophthalmology and hand surgery) representing the greatest growth sectors. Aggregate surgical expenditures have also been modelled to grow to 7.3% of the US GDP or 1/14 of the US economy in 2025. These observations serve to highlight the salience of value-based care to surgical practice. In this chapter we will provide a comprehensive overview of value-based healthcare contextualized with plastic surgery and propose a path forward for promoting high-value care within our specialty.

Why value-based healthcare matters in plastic surgery

The concept of value-based care is particularly germane to plastic surgery given the elective nature of many interventions and underlying goals of improving quality of life and optimizing function. In an increasingly financially-conscious healthcare environment, surgeons should be cognizant of their economic footprint and prioritize interventions which provide the highest value. This is important as most procedural clinicians may face a shift from traditional volume-based reimbursement (“fee-for-service”) to value-based reimbursement, whereby remuneration is tied to value over productivity.

This focus on value is timely given the recognition of significant financial resources the US federal government dedicates to healthcare. As a result, value-based contracting has been implemented by both public (Medicare and Medicaid) and private payers as a lever for cost control and quality improvement. Within this and other models, plastic surgeons and hospital systems will be increasingly accountable for the costs and outcomes of services rendered.

From a care provider standpoint, this has several ramifications as to how care will be delivered in the future. One of the first steps in determining the value of a given procedure will be clearly defined outcome metrics with transparent reporting of these outcomes. As has been seen with public reporting for various surgical procedures, this can lead to improved clinical outcomes and decreased cost. Furthermore, this external transparency can allow for patients to make informed decisions when selecting their care.

By virtue of external reporting and reimbursement tied to value, this will benefit high-volume, specialized centers which offer predictable outcomes and value. These integrated practice units (IPUs) are able to harness economies of scale and focused treatment of a condition (breast cancer, cleft lip and palate, etc.) rather than offering services in isolation. This shift will influence care to become more coordinated across systems and benefit centers which are able to provide high-quality, comprehensive care while placing systems that provide isolated services at a disadvantage.

Defining value within plastic surgery

Within plastic surgery, value can be defined as the integration of clinical outcomes, patient-reported outcomes, and cost of services rendered. The numerator in this equation has two major components: the outcome of intervention and the patient-reported outcome. The outcome of the intervention is diagnosis- and procedure-specific, in other words sensitive to the efficacy and complication profile of the proposed action. The patient-reported outcome is best captured with clearly defined, condition- or procedure-specific patient-reported outcome measures (PROMs). The denominator in this equation measures the financial costs of the intervention. This should not only focus on the cost of the intervention but should also include elements of financial toxicity from lost wages, out-of-pocket costs, and opportunity costs.