Why the Value Proposition is Not Selling
Sometimes attributed to the late “Tip” O’Neill, the phrase “All politics is local,” has become a truism. Of course, it was never quite as simple as the phrase implies, but nonetheless it has become a commonplace in American politics. In much the same way, “the value proposition” has become a catch phrase that may not be as simple as it seems. In a recent article, I looked at a couple of reports showing that efforts to create positive change in the name of the value proposition have not been very successful. In this article, I want to look are this question of resistance some more.
In a recent editorial, Bruce Landon, M. D., noted:
“In particular, global payment and other risk-based strategies are designed to counteract fee-for-service incentives and promote efficient service delivery by putting physicians and practices at risk for excess spending. The results, so far, however, have been underwhelming.”
In his view, the primary problem is that the new payment models won’t work unless they change physician behavior, and he notes that most require specifically changing the behaviors of primary care physicians. He also notes that most physicians currently operate their businesses with payment from both old and new sources.
“There are competing hypotheses about how physicians might respond to incentive changes. One school of thought suggests physicians will customize their approach to each patient on the basis of the incentives associated with the patient’s payer…An alternative theory is that physicians and practices will develop a relatively uniform approach to care that is consistent with their overall financial incentives without customizing their treatment decisions of the basis of the payment arrangements for the patient in front of them.”
When I was medical director for my group, we were confronting the “managed care revolution” that was also a capitated payment model. At the time I specifically argued that we should keep our physician compensation model payer neutral. I believed then, and believe now, that the key to “groupness” was for the Clinic payer mix to be the individual doctor’s payer mix. I did not want primary care doctors, for example, to refuse to see a Medicaid patient being followed by a specialist, because the pay was less. I was also convinced that maintaining our ability to deliver high quality care depended on doing our best for each patient within the limits of available resources. I still think both of those things characterize quality medical care organizations.
A critical flaw of all “new” payment models, then, is the belief that a physician will respond directly (and immediately) to changes in financial incentives. The evidence is overwhelming that most changes are slow and indirect. Landon summarizes this as:
“Physician behavior consistent with such a strategy, which economists call the ‘norms hypothesis’ results in treatment decisions that are responsive to the average needs and preferences of one’s patients without requiring physicians to devote time and cognitive capacity to customizing each decision.”
Landon expands his discussion of the “norms hypothesis” and concludes that major change will occur only when practices reach a tipping point, but that point is not known. By implication, the way to get to make the value proposition real is to go all in, so practices that don’t change, don’t survive. Dr. Landon’s article overlooks what I think is another key barrier—physician-delivered primary care in many areas, including mine, is in very short supply, and nothing suggests any impending increase in availability. But this is a topic for another day.
Is there a way forward toward more value? From the physician perspective, the answer requires asking two questions when making decisions about individual patients. The first question, which gets the greatest attention in training, is: “Is it indicated?” It, in this case, can be a procedure, a test, a medication, and some combination of all of these three. The second question, which is harder is: “Will it be beneficial?” The latter question is harder, in part, because most of our interventions do not “cure” the patient, but only stabilize the patient in some way, and most have significant downside risks. Based on experience mentoring many younger physicians, this second question is not dealt with well in our medical education. Groups like mine, which have lower spending per patient than some others, achieve their results by creating a culture that asks this question of all physicians. Are you doing this because you think it will help? If not, why are you doing it?
To be fair, not all decisions are that complicated, but the only way to address the problem that spending more money does not produce more “health” is to recognize the limits of what we do. Just because it is indicated, does not mean that it is beneficial.
Policy makers don’t like this approach, because it is not amenable to global answers. After all, each decision represents the complex interplay of the physician’s biases, the patient’s biases, the specifics of the case, and compensation arrangement mostly impact one of these three forces. Perhaps, in the final analysis, all medical care, like politics, is local, too.
17 April 2017
 Landon BE. Tipping the Scale—The Norms Hypothesis and Primary Care Physician Behavior. NEJM 2017;376(9):810-11. doi. 10.1056/NEJMp1510923.
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