Why you should stop saying ‘Volume to Value’ in Healthcare (LinkedIn article by Mark Froimson, President, American Association of Hip and Knee Surgeons)
Recently, I was on a panel addressing healthcare trends, and was asked to describe the current push for healthcare to move from volume to value. A fairly mundane, typical topic that I have addressed multiple times. But, this time I found myself feeling, and then telling a somewhat chagrined moderator, that this struck me as a silly question and that the phrase, ‘volume to value’, has been worn out and has lost its meaning. I probably won’t get invited back to that meeting, but it made me start to wonder: what does it mean and why do we keep using that phrase?
Don’t get me wrong, I have been in this dialogue long enough to understand the proposed purpose of the phrase and its reference to a more enlightened approach to paying providers. I understand that this is how we ‘save healthcare’ and achieve the ‘triple or quadruple aim.’ I understand that it refers to ACO’s in all their varieties and bundled payments and even to ‘value based purchasing.’ I know that we believe that the existing incentives are off and that by changing the incentives built into the payment of health care we can improve the health of our population.
Granted, the phrase has a ring to it, and on the face of it sounds directionally correct. I mean who wouldn’t want to report to their board or the public that we are on this noble journey from a system with seeming nefarious intent to one based on high ideals. Certainly, we have to have a strategic plan, and if everyone agrees that the path to virtue leads away from volume and towards value, then all we need to do is to convince our stakeholders that we know how to navigate that path better and faster than everyone else.
And, true confessions, I have been guilty of using this time worn phrase “from volume to value” more than I care to admit. And as I look back, it may have had some use at some point to jump start a way of thinking or to stimulate some debate.
But, now, all I see is a phrase so over used that it is devoid of meaning. It has become a catch all for anything that seems ‘transformational’ (another misused/overused term—but we will save that for another day).
Look, I know this is heresy. Almost every healthcare CEO I know is singing from the same song sheet on this one. And they are backed up by an army of consultants selling them advice on how they can get there faster than their competitors.
It is just that it represents an unhelpful indictment of the current system and presents a false dichotomy that hinders progress.
Further, it lacks integrity and is used as a matter of habit and without clear intent of meaning. At times, it is used pejoratively to deride providers who are assumed to be after financial returns that accrue from volume, while implying that they have deliberately or unknowingly underperformed on value. At other times, it is merely used quixotically to aspire to some undefined and ambiguous ideal future state. As a result, it has become a distraction and I believe we need to move on to more productive language.
Both volume and value are important metrics of any business and saying you are moving from one to the other would make no sense in any other industry! Period.
Recently, I was buying dinner at Panera and I noticed that they have been on a journey to increasing the perceived value (and taste) of their product by eliminating artificial ingredients. But I would be willing to bet that they are not trying to reduce the volume of great meals they sell. And doesn’t Apple want to sell more Iphones even as it makes each generation better (more valued) than the previous model? Companies routinely strive to increase the value of their offerings and expect in return to be rewarded with increased market share (volume) or even the creation of a new market altogether.
Please don’t protest that “Healthcare is different.” (We can have that argument later if you like, but before you go down that road, be prepared to tell me why healthcare is more essential than food, shelter, or clothing.)
‘Volume to Value’ is just the wrong description of what we want to achieve.
When we are speaking of necessary changes to our business model, what we are actually referring to is changing our mix of product and service offerings.
Just like any other business, there are offerings that have run their course and no longer provide the value that they once were perceived to provide. When that is the case, we should replace them with something better, something that the end user, the patient, prefers, and is willing to pay for. (One example in total joint replacement is the use of skilled nursing care after hospital discharge, that is largely replaced by home care or self directed exercise.) Again, Apple doesn’t sell too many Ipods anymore and Netflix doesn’t send videos by mail. But if you ask either whether their pursuit of their newer high value offerings (Iphones and streaming video) meant a move away from volume, you would surely get some puzzled looks.
There is a rich history of progress in medicine based on the continuous quest to do better and deliver for our patients, and our current era is seeing tremendous gains in what is possible. Providing value to patients has always been, and will always be, the true heart of medicine.
The supposed flight from volume makes no sense. There are plenty of services that we would like to see grow in number. We want more well-child visits, more preventive services, more behavioral health and addiction care, more genomic therapy, more digital access and telehealth, more outpatient and home services, more timely advice and more convenience. Perhaps we want more health promotion, and more fitness activities and more focus on social factors that matter to our health. And, as patients, we expect the attributes of these burgeoning services to improve over time and be delivered with improved service, reliability, and convenience. We want to know more, and for the teams caring for us to have more information about us, when they need it. What we are saying is that we want an evolution and improvement in care. We don’t necessarily want less.
Our goal should continue to be to improve outcomes and experience for the greatest number of patients possible by providing them with the types of care and experiences that they want and would pay for.
The real issue is not volume at all, but rather price. In almost every other industry, the price of a good or service is the way buyers and sellers come to an agreement on its value.
Further, in most rational markets, as the volume (supply) of services produced goes up, the relative price goes down. Our current healthcare model does an extremely poor job of providing a market and information for pricing care. We should not be surprised that patients have no signals to discern differences in the value of care among providers. In fact, we essentially have a fixed pricing model for Medicare and Medicaid services with providers paid a set amount and with patients unable to use their purchasing power to reward higher value providers with higher price points.
It only seems logical then that improving the perceived value of the care we deliver will require a thorough rethinking regarding how care is priced in the market place. And in the end, if care is properly priced and is seen as providing value to patients, we should expect a rise in demand, and yes, more volume. So perhaps instead of some imagined journey from volume to value, we should simply recognize that it is the price attached to something that reflects its value to the market and determines the volume of demand for it.
Providers who are serious about conveying the value of their care should price it fairly and should be ready to satisfy the ensuing demand.
For, what we are really after is enough high value care, priced to convey that value, that satisfies our patients’ demand for it. No more, and certainly, no less.