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Resource Use Measurement

Health care "efficiency" or "resource use" measurement is in the early stages of development. Although public and private payers express considerable interest in calculating the value of health care services, it remains a challenge to develop and implement nationally accepted measures. The term 'resource use measures' is intended to broadly capture indicators of the cost and efficiency of health care provision. Health care resource use measures reflect the amount or cost of resources used to create a specific product of the health care system. The specific product could be a visit or procedure, all services related to a health condition, all services during a period of time, or a health outcome. "Efficiency" measures are a subset of resource use measures that compare the production of products of a specified level of quality. Most resource use measures today are not efficiency measures by this definition because they do not explicitly incorporate a measurement of the quality of the product.

A systematic review of available resource use measures was published by AHRQ at There are three main groups of resource use measures that have been developed:

  1. Relatively simple measures of the resources used to produce health care, such as mean length of stay; readmission rates for hospitals; and consultation or test ordering rates for outpatients with common complaints such as low back pain. These measures focus on utilization and are widely used. However, they generally do not provide information about whether the utilization was efficient or inefficient.
  2. More complex measures of health care resource use, including both inpatient and outpatient services, and using econometric or mathematical programming techniques to account for multiple outputs. The complexity of these methods may have inhibited the broad use of these measures beyond academic research, because measurement results can be sensitive to a multitude of specification choices and difficult to interpret.
  3. Measures of the resources used in an episode of care for a patient, or to treat a patient with a specified burden of comorbidity for a specified period of time. Of the two approaches, episode-based measures have been used most widely by commercial payers, and have been recommended for use in Medicare by the Congressional Budget Office and the Medicare Payment Advisory Commission, among others. Episodes are defined using "grouper" tools, such as the Episode Treatment Groups (ETGs) developed by Symmetry Health Data Systems or Medstat Episode Groups (MEGs) developed by Thompson Medstat. These tools group related services into episodes primarily using diagnosis codes; episodes include services furnished by different providers in different care settings. The cost or resources used to produce each episode are then tallied across providers. A population-based approach to efficiency measurement, such as Diagnostic Cost Groups (DCGs), classifies a patient population according to morbidity burden in a given period (e.g., one year). The cost or resources used for all health care for that patient over the time period are then measured.

The state-of-the-art in health care resource use measurement contrasts sharply with that of the measurement of health care quality. Little is known about the validity of resource use measures, or the advantages and disadvantages of different measures. Only a few resource use measures (length of stay and readmission measures) have been endorsed by the National Quality Forum (NQF). Unlike the evolution of most quality measures, current resource use measures are not typically derived from practice standards in the research literature, professional medical associations, or expert panels. Unlike most quality measures, resource use measures have been subjected to few rigorous evaluations of their reliability and validity. However, many groups including CMS and private organizations are investing in further development of these measures.

Why should managers and researchers care about resource use measures? Because of the desire, indeed the demand, for better value in health care. As our methods of assessing quality have matured to the point where there are now well-accepted, standardized measures that can be used to benchmark providers on the outcomes of care, the next logical question to ask is how we can measure (and ultimately improve on) the resources used to produce those outcomes. Not all the care being currently delivered necessarily contributes to producing good health outcomes, and identifying and rooting out care that does not meaningfully contribute to good care is needed in order to achieve the goal of providing the highest possible value for taxpayer-supported health care. Measures that accurately assess resource use and efficiency are going to be needed for doing this in a scientific manner.

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