We Won’t Get Value-Based Health Care Until We Agree on What “Value” Means

By Robert C. Pendleton for Harvard Business Review

Some health care leaders view with trepidation the new, disruptive health care alliance formed by Amazon, Berkshire Hathaway, and JPMorgan Chase. But I’m excited because disruption is all about delivering a new level of value for consumers. If this trio can disrupt the United States’ health care system into consistently delivering high-value care, we will all owe them our gratitude.

First, their leaders — Jeff Bezos of Amazon, Warren Buffett of Berkshire Hathaway, and Jamie Dimon of JPMorgan Chase — must think deeply about what “value” actually means for the companies and individuals they will serve and for the people and organizations they will engage to deliver care.

Then they need to consider how they will bridge the divergent interpretations of value. It turns out one reason there’s been such little progress in creating a value-based system is that the stakeholders in the U.S. health care system — patients, providers, hospitals, insurers, employee benefit providers, and policy makers — have no common definition of value and don’t agree on the mix of elements composing it (quality? service? cost? outcomes? access?).

That’s the big takeaway of University of Utah Health’s The State of Value in U.S. Health Care survey. We asked more than 5,000 patients, more than 600 physicians, and more than 500 employers who provide medical benefits across the nation how they think about the quality, service, and cost of health care. We focused on these groups because we feel their voices have not been heard clearly enough in the value discussion. What we discovered is that there are fundamental differences in how they define value in health care and to whom they assign responsibility for achieving it. Value, it seems, has become a buzzword; its meaning is often unclear and shifting, depending on who’s setting the agenda. As a result, health care stakeholders, who for years thought they were driving toward a shared destination, have actually been part of a fragmented rush toward different points of the compass.

But the Utah survey’s findings also suggest a straightforward (though not simple) way to overcome this confusion: stop, listen, and learn. The most effective thing that stakeholders can do to create a high-value health care system is to pause in their independent pursuits of value to describe to each other exactly what it is they seek. Jumpstarting this stakeholder dialogue will require real leadership from executives in business, health care delivery, academic medicine, and patient advocacy groups. They’ll have to muster the courage to say to their constituencies, “The path toward value that we charted may not have been the right one.”

Those dialogues should happen at three levels: nationally, among representatives of stakeholder groups; institutionally, among partners in the care delivery process; and individually — for example, between patients and their physicians, and between employer sponsors of health plans and their employee beneficiaries.

There are several examples of the fundamental value misalignments that could be starting points for these discussions. The first concerns the relative importance of health outcomes. For physicians like me, clinical outcomes are paramount; health improvement and high-quality care are essential components of health care value. And we assume that patients share that perspective. But, it seems, they don’t. When the Utah survey asked patients to identify key characteristics of high-value health care, a plurality (45%) chose “My Out-of-Pocket Costs Are Affordable,” and only 32% chose “My Health Improves.” (In fact, on patients’ list of key value characteristics, “My Health Improves” was slightly below “Staff Are Friendly and Helpful.”) Given the chance to select the five most important value characteristics, 90% of patients chose combinations different from any combination chosen by physicians. In general, cost and service were far more important in determining value for patients than for physicians.

Frankly, I was stunned by the degree of this misalignment between patients and physicians (and, by extension, the care delivery organizations the doctors work for). This disconnect alone could account for a substantial portion of the Sisyphean lack of progress we’ve seen. But there are plenty of others. Notably, the Value survey found a striking lack of consensus on who had responsibility for ensuring that health care embodies the desired high-value characteristics. Moreover, the survey’s respondents generally displayed limited understanding of how the health care system works more than a step or two beyond their direct experience. This led to responses at odds with reality — for example, only 4% of patients and physicians recognize that an employer’s choice of health plan affects out-of-pocket costs.

Both of these kinds of misalignment — regarding the relative importance of outcome, cost, service, and quality, and who is responsible for achieving specific value characteristics — demonstrate the core problem: Stakeholders have not communicated with each other effectively, at the macro and micro levels, on what value means to them. I have two thoughts on how to start the process of getting communications and information flowing.

At the micro level, we should leverage the growing power of physician- and hospital-review systems to gather more (and more-sophisticated) information on what is most valued by individual health care consumers. Our system alone collects more than 3,500 patient comments a week. Now we need to apply our growing computational capacities to deeply mine that data both within and among systems to create an enhanced patient experience that is informed by how they define value. And business leaders should expand their companies’ efforts to track and analyze — and educate their employees about — the multiple dimensions of value in the health benefit plans they offer.

At the macro level — national, regional, and inter-institutional — major organizations should step up to convene initial rounds of stakeholder dialogues. Academic medical centers (AMCs) such as University of Utah Health are well positioned to be conveners. (The Utah Value Forum this month brought together regional stakeholders to address the challenges we all face.) AMCs are also uniquely qualified to undertake rigorous research to better understand the misalignments and misunderstandings found in studies like the Value survey. In fact, more than simply being capable, I think the public service missions of AMCs virtually obligate them to be leaders in this essential effort.

But they are not obligated to lead alone, nor would their solo leadership be compelling enough to bring all stakeholders to the table. We need corporate health benefit plans, for-profit health systems, and insurers — at a minimum — to help lead this effort.

If Messrs. Bezos, Buffett, and Dimon really want to drive major change in the U.S. health care delivery system, they should help convene value-focused dialogues, providing the kind of political and economic cover necessary to bring stakeholder groups into these conversations. And they shouldn’t stop there: They’ll have to remind everyone that these conversations aren’t only about cost containment — that “value” means more than just what we pay. (Or, as Buffett put it in one of his famous chairman’s letters, “Price is what you pay; value is what you get.”)

They should partner with providers, hospitals, and health systems to develop more-effective provider/hospital review systems and other methods of enhancing communication among parties in the care delivery process. They should seed pilot projects aimed at bridging the gaps in patients’, physicians’, and employers’ definitions of value. And being the smart, creative, bold people they are, they should help guide all stakeholders through the difficult compromises necessary to create a collective vision of a high-quality, patient-focused, cost-effective health care system.

That would truly be disruptive.