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A Raised Hand: Volume to Value and the Quality Industrial Complex

January 18, 2018

A Raised Hand: Volume to Value and the Quality Industrial Complex

A Raised Hand: Volume to Value and the Quality Industrial Complex

By Kurt Mosley

Throughout our history, we have been warned about private industrial complexes, or the unwanted influence of profitable industrial companies who make money in the name of protecting the American “way of life”. President Eisenhower’s farewell address focused on this theme precisely, warning the American public about military defense spending in 1961. He referred to it as the Military Industrial Complex.

In 1980, Arnold Relman, former editor of the New England Journal of Medicine, authored a paper about the private sector entering a new market: the world of health care. Relman’s paper, “The New Medical Industrial Complex”, warned not only of profit-seeking companies becoming shareholders in the United States healthcare system, but the potential effect these companies would have on the public policy of medicine.

As I discussed in my blog post from January, the year 2015 begins the implementation of 15 provisions of the Affordable Care Act. The provisions call for the restructuring of reimbursement from fee-for-service to value-based payment models in order to incentivize providers to attain quality benchmarks and change the metrics involved in physician compensation formulas.

Dr. Richard (Buz) Cooper issued a warning in 2010 of the coming Quality Industrial Complex and how many proprietary companies would profit from the new quality payment models.

In 2012, Dr. Cooper posted another article where he discussed the goals of volume to value to reduce the growth of healthcare spending through cost control ideas. If you remember my blog post from 2013,  “Volume to Value? The Triple Aim? Ready, Fire”, many metrics and cost control ideas have been presented and pre-validated. Yet, recent studies and feedback suggest that few of these concepts are achieving the goals of cost reduction.

Most of healthcare compensation is still in transition from volume-based models. In developing new value-based ideas and concepts, healthcare leaders cannot forget the Goldilocks Zone. In pharmaceutical medicine, the Goldilocks Effect refers to the goal of finding the ideal dosage of a drug and avoiding the extremes of under-dosage or over-dosage, which may result in the death of a patient. Similarly, we must find the Goldilocks Zone with physician payment models and find the appropriate balance between volume and value.

We must always be aware that as we further experiment with cost-saving and compensation formulas healthcare delivery must stay financially solvent to survive and volume is still key! It is figuring out that conundrum that will challenge healthcare executives, physicians and policy makers in the years to come.

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