The New Math of Health Care

Pushing patients to seek value, whatever that is

Lizzie O'Leary Nov 19, 2013
The New Math of Health Care

Pushing patients to seek value, whatever that is

Lizzie O'Leary Nov 19, 2013

This story appears in The New York Times ‘Your Money’ section on Wednesday, Nov. 20, 2013.

Peter Kreutzer is, in many ways, an ideal patient. Mr. Kreutzer, a 57-year-old Brooklyn writer, is in good health, eats well and follows his doctor’s instructions.

That includes getting routine colonoscopies. Because he is insured, Mr. Kreutzer pays only a $300 co-pay, a fraction of the cost of the procedure.

“It doesn’t cost the $2,500 that shows up on the insurance statement,” he said. Mr. Kreutzer said that he sometimes wondered whether the tests were necessary but that the low out-of-pocket cost made them easier to justify.

Mr. Kreutzer is unlike most patients in that he knows how much a procedure costs beforehand, but he is far from alone when it comes to choosing treatment based not on cost but on a personal definition of value.

“I think the system disincentivizes rational economic behavior,” he said.

The United States health care system, in which providers are generally paid per procedure in an arrangement known as “fee for service,” may be undergoing a fundamental change, driven in part by the Affordable Care Act. The law pays for better coordination among caregivers, as policy makers seek to reward value in care rather than volume. But that does not necessarily mean costs will become less opaque, nor that individuals will prioritize economics over emotion as they seek value in their health care.

Emily Watts, 32, of Houston, said she valued transparency and responsiveness in her physician.

“My auto mechanic gives me the time of day, and I pay him a lot less,” she said. “It’s become totally acceptable for a doc to just breeze in and breeze out.”

Ms. Watts is a performing arts curator who spent much of her 20s uninsured. She finally got a high-deductible insurance plan while working for a group that helped artists get coverage. And after moving to Massachusetts, she became eligible for a subsidy thanks to the state’s mandatory insurance law, which predated the national law.

She said years without insurance taught her to focus on her out-of-pocket cost and on getting the most out of each medical appointment.

“I will physically block the door and say, ‘You will stay in here and answer my questions,’” she added.

Researchers who study value in care usually consider effectiveness in terms of health outcomes per dollar spent.

“When you talk to patients about value, that’s not the metric they have in their heads,” said Dr. Steven Woolf, a family physician and a professor at Virginia Commonwealth University who has studied value in primary care. Patients focus instead on “convenience, personality, chemistry,” he said. “Whether they are getting time and attention.”

The New Math of Health Care:
The New York Times, in collaboration with American Public Media’s Marketplace, examines the soaring out-of-pocket costs of staying healthy, end-of-life care, and strategies for picking doctors and health plans. Read the whole series.

The premium that patients put on extra time and communication with their doctors  — and their willingness to pay for those things  — has presented a business opportunity.

Dr. Tom Lee opened One Medical group in 2007, and since then it has grown into a network of 25 boutique primary care practices in five markets. Patients’ insurance covers their costs as it would at any other practice, but patients pay an extra $150 to $200 each year.

The fees lower overhead costs. In return, patients can email their doctors, make same-day appointments and spend extra time face to face. Doctors at One Medical see approximately 15 patients a day, compared with 25 at a typical family-care practice.

Dr. Lee said customers were willing to pay the fee because they were happy with the level of care. In a more traditional practice, he said, “you could see the world’s best cardiologist and the world’s worst cardiologist for the same $40 co-pay.”

And charging patients the annual fee gives them an incentive to be more active in understanding their care and its costs.

“Value for us,” Dr. Lee said, “is what people are willing to pay for something different.”

Amitha Raman, 27, found her way to One Medical with a nosebleed last fall. She said that she saw her former doctor only when she had a health issue, but that she has emailed with her current doctor and has even gotten recipe tips. “Now that I’ve become a patient, I think that that $200 fee is very reasonable, considering the level of service that you get,” she said.

The move toward more holistic care doesn’t have to come with a fee. The National Committee for Quality Assurance, a nonprofit group, rates so-called medical homes: facilities and doctors that provide easier access to care and health information technology and focus on prevention. This year, more than 32,000 clinicians met the group’s standards, up from about 200 five years ago.

The group wants to move away from what Dr. Woolf calls a “perverse” reimbursement system in which providers receive more money for more care, regardless of whether it leads to a better outcome.

“I, as a primary care physician, get paid more to take a skin lesion off or trim somebody’s nails than to counsel them to quit smoking,” he said. “It’s amazing.”

Changing that system, though, will be likely to require a philosophical shift in the way Americans receive their health care, in which patients take a greater interest in its long-term benefits, rather than its immediate cost. Some changes have already begun: many health plans require more cost-sharing by patients, as do most plans offered under the Affordable Care Act’s health exchanges.

But for patients, demanding value can be a new and potentially uncomfortable role at the doctor’s office. Peter Kreutzer, the Brooklyn writer, said he had tried to think more about cost but called it daunting. “If you go with the numbers or go against the doctor,” he said, “it seems scarier.”

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