When covering variation in health care, keep in mind what patients want

By Joseph Burns

Two recent reports on the cost of health care services point out the need for more transparency on what consumers pay for health care services.

In both reports, the question underlying the research is a simple one: What’s the right rate?

Researchers have been asking this question about health care costs and quality for decades. Yet, in that time, the health care system has not shifted away from focusing on whatever the market will bear, as these two reports show.

One report from Boston’s Pioneer Institute demonstrated how consumers in one Massachusetts county could have saved $22 million in one year (or $116.6 million if the savings were adjusted for inflation over four years) if they received care from lower-cost health care providers instead of the highest-priced providers.

The other report was from the Health Care Cost Institute, which we covered on this blog recently.

In the Pioneer Institute report, institute researchers Barbara Anthony, a senior fellow in health care policy, and Seher Chowdhury, a research assistant, analyzed what providers charged in 2015 for 16 shoppable services in Suffolk County, which includes Boston and nearby suburbs. Shoppable services are those unlike emergency care and for which consumers can shop for value.

The researchers compared what providers charge for the top 20% of health care services with what providers charge for those services in the 40% to 80% range.

Health insurers should provide navigators to help patients choose the best and lowest-cost health care providers, the researchers concluded, and insurers should give members financial incentives to use lower-cost providers.

Navigators would know which providers deliver the best care at the lowest price. Ideally, hospitals, health care systems, physicians and other providers also would know where consumers can get the best care at the best price. But even if they do, they do not always refer patients to those providers. Instead, these providers have incentives to refer to providers in their own health systems or other in-network providers. On top of that, insurers give patients incentives to remain in-network as well.

When seeking to keep patients in their network, insurers, hospitals, and health systems market themselves as being part of the shift toward value-based care. As we have reported previously on this blog, value-based care is designed to deliver what consumers want: the highest quality of care at the lowest price. When reporting about value-based care, however, journalists should be careful since hospitals and health systems often use the term “value-based care” when they mean “value-based payment.” These terms are similar in name only.

For an in-depth discussion of value-based care, see this AHCJ webinar and two earlier tip sheets: “The significant difference between value-based care and value-based payment” and “When evaluating value-based care, consider whether costs are falling and quality is improving.”

Journalists should consider the history behind the research into variation in health care because some of the earliest researchers sought to answer the question of what’s the right rate. They did so by learning what patients want.

The Dartmouth Atlas Project

One of the most influential early researchers on variation in health care is the Dartmouth Atlas Project. Since the mid-1990s, the project has documented variations in the United States in how medical resources are distributed and how patients use health care services. The project’s researchers have shown how the cost of care varies greatly and how wide variations in cost and availability of health care services lead to disparities in how care is delivered.

Using Medicare and Medicaid data, Dartmouth Project researchers have analyzed the usage of hospitals and their affiliated physicians, and the variation in national, regional, and local health care markets.

When publishing the first Dartmouth Atlas of Health Care in 1996, the project’s researchers said large variations in the use of medical resources raised important questions about health care equity and fairness.

“Variation studies provide good evidence that populations in low-cost regions are not sicker or in greater medical need than those in high-cost regions,” they said. “A system that rewards high-cost areas by continuing to pay their higher costs is, by definition, economically punishing areas that have fewer resources, use them more efficiently and are reimbursed less.

“Is it fair for citizens living in regions with low per-capita health care costs to subsidize the greater (and more costly) use of care by people living in high resource and high utilization regions?” the researchers asked.

Since that first publication, the project has published 20 book-length editions of the atlas, plus health policy briefs and reports on clinical subjects. One 2019 publication, The Dartmouth Atlas of Neonatal Intensive Care, described population-based patterns of newborn care across regions and hospitals for four large U.S. newborn populations.

Earlier this year, the Dartmouth researchers wrote, “End-of-life quality metrics among Medicare decedents at minority-serving cancer centers: A retrospective study,” for the journal Cancer Medicine.

The founder of the Dartmouth Atlas Project is John E. Wennberg, M.D., a health care researcher who helped to reshape the way patients and health care providers measure the value of health care. A few years before founding the project, Wennberg and colleague Albert Mulley, M.D., founded the Informed Medical Decisions Foundation. The foundation defines shared decision making as a collaborative process that allows informed patients and their providers to work together to decide what’s best for each patient. In 2014, the foundation became a division of Healthwise, a nonprofit based in Boise, Idaho, that helps patients make better decisions about their health.

During a 2011 presentation, Wennberg described how the early foundation research provided evidence that when physicians engage patients in making a medical decision about their care, the collaboration leads to the right utilization rate.

In 2008, the Institute of Medicine presented Wennberg with its Gustav O. Lienhard Award, honoring “his leading role in reshaping the U.S. health care system to focus on objective evidence and outcomes rather than physician preference as the basis for treatment decisions, and for his efforts to empower patients with greater input on decisions about their own care.”

For information on variation health care and value-based care, check out these resources: