Value-Based Medicine

Justifying Our Treatments — Financially

By Melissa M. Brown, MD, MN, MBA

There are two types of value gains in Value-Based Medicine: human value gain and financial value gain. This month, I will address the latter, financial value gain. While human value gain can be defined in terms of improvement in quality-of-life and/or length-of-life and is associated with a medical intervention, financial value gain is the concept of a reasonable price paid for the human value gain.

Here's a perfect example from our own specialty, ophthalmology. The direct medical costs associated with cataract surgery are less than $2,500, but the return-on-investment over the lifetime of a patient can be 10 times that figure, and in cases with severe loss due to cataracts, up to 100 times greater the initial $2,500 investment. In essence, the cataract surgery that rehabilitates a patient also makes the United States a wealthier country when the societal costs discussed below are considered. For example, when vision improves from 20/800 to 20/20 in the better eye, just the caregiver costs saved annually can exceed $80,000. And if the patient who underwent successful cataract surgery can take care of himself or herself for an extra 10 years, the caregiver costs can exceed $800,000. Thus, the human value gain and the financial value gain associated with cataract surgery are both extraordinary.

What Does It Mean to Medicine?

Financial value encompasses the dollars expended for the gain in human value. While there are no definitive standards in the United States, interventions costing < $100,000="" per="" qaly="" are="" generally="" believed="" to="" have="" reasonable="" cost-effectiveness,="" or="" reasonable="" financial="" value.="" the="" world="" health="" organization="" (who)="" had="" suggested="" that="" healthcare="" interventions="" costing="" less="" than="" [1="" x="" per="" capita="" gross="" domestic="" product="" (gdp)]="" per="" qaly="" are="" very="" reasonably="" priced,="" while="" those="" costing="" less="" than="" [3="" x="" per="" capita="" gdp)="" reasonably="" priced.="" using="" these="" same="" who="" criteria="" in="" the="" united="" states,="" interventions="" costing="" less="" than="" $47,000/qaly="" are="" very="" reasonably="" priced,="" while="" those="" costing="" less="" than="" $141,000/qaly="" are="" reasonably="">

A basic principle of Value-Based Medicine is the tenet that all people deserve the intervention that yields the greatest human value gain. Financial value should be addressed only when two or more interventions have similar human value gains.

For example, Schein and associates¹ demonstrated that visual and systemic outcomes for cataract surgery were no different in a cohort in which preoperative laboratory studies are obtained, versus a cohort in which preoperative laboratory studies are not obtained. In this particular situation, there is greater financial value associated with the cohort in which no preoperative laboratory are obtained, since the overall costs are less and the ocular and systemic outcomes are the same whether preoperative testing is performed or not.

A New Frontier

Cost-utility analyses can be performed using a third-party insurer cost perspective with only the direct medical costs (physician fees, facility fees, intraocular lenses, laboratory studies, drugs, glasses, low-vision aids, skilled nursing facility costs, nursing home costs and the ocular-related costs for depression and trauma) associated with an intervention.

Alternatively, a societal cost perspective can be employed. This cost perspective includes: the direct medical costs, direct non-medical costs and indirect medical costs. Direct non-medical costs associated with vision loss encompass those for: 1) transportation, 2) residence change due to vision loss, and 3) activities of daily living such as reading mail, paying bills, making meals, cleaning house, and preparing medicines. Under the heading of indirect medical costs are those associated with the decreased incidence of employment experienced by those with vision loss, the decreased wages paid to people with vision loss and costs due to their inability to volunteer.

To date, most healthcare economic analyses have not included the majority of relevant costs. As the reader can surmise, use of the societal cost perspective makes our medical interventions far more cost-effective than they already are. Inclusion of the many costs that our interventions save is a new frontier, demonstrating the human value and the economic value we return to the country.

Wealth of the Nation

An important consideration related to financial value is the fact that our ocular interventions, as well as interventions in other specialties, return money to society. In addition to the example I cited above, Schmier and associates² have shown that caregiver costs (direct non-medical costs) for people with vision of 20/250 or less in each can exceed $45,000 per year. Studies at our Center for Value-Based Medicine indicate that these costs can exceed $80,000 per year in those with severe vision loss. Javitt and associates³ demonstrated that severe vision loss (< 20/400,="" the="" who="" standard="" for="" legal="" blindness)="" in="" medicare="" beneficiaries="" is="" associated="" with="" more="" than="" $12,000="" in="" costs="" secondary="" to="" depression,="" injury,="" subacute="" nursing="" facility="" admissions,="" nursing="" home="" costs="" and="" unexplained="">

The problem is that very few know about these facts. Certainly, in view of healthcare reforms, this is a message that bears reminding to those who allocate healthcare resources. OM

Melissa M. Brown, MD, MN, MBA, is president and CEO of the Center for Value-Based Medicine in Philadelphia. She can be reached via e-mail at mbrown@valuebasedmedicine.com.