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Increasing the Value of VA Health Care

Technological advances have improved health care outcomes, but at great cost. Health care now represents more than one-sixth of the U.S. economy and it is widely agreed that the current rate of growth in U.S. health care expenditures is not sustainable.

The challenge to health care systems, including the Veterans Health Administration (VA), is to achieve higher value with the resources already available. Developing a value-based health care system will require many changes: comprehensive and transparent assessment of outcomes; improved health care delivery; activated health plan members; and an emphasis on prevention, screening, and health maintenance. Dr. Petzel et al. describe some of the VA transformational efforts that are already under way.

A value-based health care system will create better outcomes for each dollar of cost. The strategies that VA has used to successfully improve health care quality can also be employed to improve its value. These strategies include practice guidelines, performance measures with incentives, and implementation efforts. Each of these strategies can help VA "bend the cost curve."

Practice guidelines and coverage decisions can consider whether new treatments deliver sufficient value to justify their cost. Cost-effectiveness analysis is a formal evaluation of the efficiency of an intervention in terms of cost per quality-adjusted life year gained. Cost-effectiveness analysis is widely used in other countries, but less widely in the United States, where it has sometimes been misunderstood to be a form of health care rationing. Cost-effectiveness methods have been applied in thousands of studies. Findings from these studies are ordinarily applied to decisions about new interventions. Since much of the growth in health care cost stems from more intensive use of interventions already adopted, this limits the potential impact of cost-effectiveness research for improving health care value.

Performance measures have been developed to rate provider efficiency.1 Statistical measures, like Stochastic Frontier Analysis, have been used in many academic studies, but rarely applied by health care systems. Private vendors have developed benchmarks for the cost per covered life and cost per treatment episode. Products such as the Diagnostic Cost Group Classification Model, the Episode Treatment Group System, and the Medical Episode Grouper are being used by managed care organizations to reward providers who spend less than the benchmark.

There are limitations to these efficiency measures. Most current measures do not include outcomes. This may give providers an incentive to reduce high-value care. Although these measures identify high cost providers and high cost episodes of care, they do not identify which practices must be changed to increase value. Researchers are also concerned that these methods may misclassify some efficient providers.

Implementation efforts of the VA HSR&D Quality Enhancement Research Initiative (QUERI) program have helped VA improve quality. Quality improvement is only one way to increase value. These strategies could also help VA increase value by reducing inappropriate use of high cost services. There are many examples of this type of value-enhancing implementation study in the literature, including efforts to reduce inappropriate use of pharmacy, laboratory, blood bank, and imaging services. The overall impact of these efforts has been small. VA could use education, audit and feedback, clinical reminders, organizational interventions, and other implementation strategies proven effective in QUERI, to increase health care value in this way.

There is no shortage of clinical areas where this effort is needed. The New England Healthcare Institute documented 460 studies that identified health care waste or inefficiency.2 Low-value services were identified in the Tufts Cost-Effectiveness Registry. Lists of inappropriate services have also been identified by a coalition convened by the National Quality Forum, and by the National Institute on Clinical Effectiveness (NICE), which makes recommendations to the British National Health Service.3 An implementation effort directed at changing provider behavior could help VA switch from these low-value services, freeing resources that can generate greater value.

More Veteran input will be needed to provide the patient perspective on what constitutes value. In countries that use cost-effectiveness to make coverage decisions, both academic and government decision makers seek public input to define health care value.

Achieving a value-based, efficient health care system will be a difficult undertaking. To stimulate the flow of information between VA leaders and researchers, the Health Economics Resource Center (HERC) is hosting cyber-seminars on health care efficiency. These seminars feature VA leaders, researchers, and experts from other organizations. For upcoming seminars, or to view past seminars, visit the HSR&D website at www.hsrd.research.va.gov/for_researchers/ cyber_seminars/.

Greater efficiency is about achieving better health for patients. If we stop spending resources on expensive things that yield little value, it will free resources that can be used in a more productive way. Doing so is an ethical imperative as it will improve the health of the nation's Veterans and, additionally, can address the challenges of the "campaign for excellence" that Dr. Petzel et al. discussed.

  1. Hussey PS, de Vries H, Romley J, et al. "A Systematic Review of Health Care Efficiency Measures," Health Services Research, June 2009; 44(3):784-805.
  2. New England Healthcare Institute. How Many Studies will it Take? A Collection of Evidence that our Health Care System can do Better. February 25, 2008.
  3. National Priorities Partnership. 2008. National Priorities and Goals: Aligning Our Efforts to Transform America's Healthcare.

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Any health information on this website is strictly for informational purposes and is not intended as medical advice. It should not be used to diagnose or treat any condition.