Healthcare’s Value Problem Part Two: Getting at the Root Cause

By Bob Smith, Associate Director, CBGH


In Part One of our three-part blog on healthcare’s value problem we argue that, in order to avoid coming to the conclusion that they are helpless in the face of healthcare’s intimidating complexity, employers – who finance our commercial health market – we must separate results from causes and actually distinguish among the multiple causes; that they must get to the root cause.

To do this we propose conducting a “root cause analysis.”  As defined by the American Society for Quality (ASQ), root cause analysis is actually “a collective term that describes a wide range of approaches, tools, and techniques used to uncover causes of problems.” As the ASQ puts it, “a root cause is what sets in motion the entire cause-and-effect chain causing the problem(s).”

We find the “cause-and-effect chain” to be a useful analytic tool for understanding why health care costs have tripled since 2001.  Depending on your definitions and characterization, you might rearrange some of the causes or re-word some of the effects, but here’s what we think is a reasonable chain:

  • Marketplace Symptoms and Outcomes: Sub-optimal value can be measured in terms of:
    • Inordinate costs and cost trends.
    • Inconsistent clinical quality (e.g., poor outcomes and/or inappropriate services).
  • High Level Causes of the Above Outcomes: High level causes are the most visible drivers of the above outcomes.  They largely result from process variations from demonstrated best practices on the part of providers that result in:
    • Under-use of high value services – particularly preventative and primary care.
    • Over-use of some services (e.g., clinically unnecessary and often harmful).
    • Medical errors and avoidable complications

Collectively these three high level cause represent “quality waste:” resources that either made no contribution to the final product or may have actually diminished it.

  • Mid-Level Causes: High level causes – e.g., the quality wastes – actually result from other, mid-level drivers.  These include:
    • Fee-for-service payment, particularly for “supply-driven” services.
    • Failure to adopt/use nationally recognized measures and standards.
    • Excessive demand due to reducible risk factors and clinically inappropriate patient preferences.
    • Lack of patient compliance with physician care plans and recommendations.
    • Lack of transparency (with regard to both quality and price).
    • Low health literacy levels compromising enrollee engagement.
  • Root causes: Root causes directly drive mid-level causes.  We propose that there are two:
    1. Surrogate purchasing (e.g., paying for premiums through a third party but not proactively purchasing health care based on overall value)
    2. Undifferentiated benefit designs (e.g., providing the same benefit for low-value care as for high value care)

Clearly, by any analysis and however de-constructed, the health care conundrum is a complex and complicated one.  But that’s not to say it can’t be addressed or that it cannot be mitigated.  It can be – but only if we carefully separate results from causes and repeatedly ask “why” – as in “why would an aspirin cost $25 in the hospital” or “why are so many babies born by Cesarean-section?”  As Forbes’ Dave Chase recently pointed out in an article titled “Healthcare’s Biggest Lie,” employers are by no means helpless.

So here is the bottom line:   Employers CAN get significantly better value for their health care dollar – and better outcomes for their enrollees – IF they both proactively purchase healthcare and provide benefits based on value.  Simply paying for care and providing undifferentiated benefits will continue to buy more health care, not more health.

Our next post, “Getting More Health, Not More Health Care,” will outline how.