Part 2: Getting To The Root Cause of America’s Healthcare Value Problem

In Part One of this three-part series, I argue that employers must distinguish between results and causes in order to avoid feeling helpless in the face of healthcare’s intimidating complexity.

Employers – who finance our commercial health market – must get to the root cause.

To do this, we must start by conducting a root cause analysis. As described by the American Society for Quality (ASQ), “a root cause is what sets in motion the entire cause-and-effect chain causing the problem(s).”

The “cause-and-effect chain” is a useful tool for understanding why health care costs have tripled since 2001.

Healthcare’s Cause-and-Effect Chains

Market-level Effect: Sub-optimal Value

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).

Cause: Clinical Process Variations Lead to Suboptimal Value

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 causes 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.

• Surrogate purchasing (e.g., paying for premiums through a third party but not proactively purchasing health care based on overall value)
• Undifferentiated benefit designs (e.g., providing the same benefit for low-value care as for high value care)

Clearly, by any analysis, 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.

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.

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

Robert Smith

Executive Director, Colorado Business Group on Health