The Denominators Won’t Match

Submitted by on Sunday, February 22, 2015 - 08:28

Newtown, CT – February 21, 2015

Now that States and other purchasers of health care are taking transparency of quality and price to heart, let's dive into an important methodological conundrum: Denominators won't match – And let's get straight to the punch line: It doesn't matter because most consumers are used to seeing and weighing two or three data points for every important purchase they make. One such data point is the price. The price is established by the seller based on input costs, market competition, and other strategic considerations. To a very large extent the price is completely independent from the other data points, which are (1) consumer reviews, and (2) independent quality assessments. The latter are based on perceptions and evaluations that relate to the features and characteristics of the product or service being purchased. While there's clearly some relationship between the number of features and the production costs, that relationship has become ever shifting and more tenuous. As such, consumers don't necessarily correlate price and quality indices, but rather treat them as two important criteria in the purchasing decision. And each consumer decides which to weigh by how much, depending on individual preferences. That's how markets actually work.

What this means to you – Almost all current measures of quality of care were defined for a purpose other than transparency, and certainly without any consideration for how they would relate to, or interact with, the price of an episode of care or an individual service. Let's take a specific example. There are many efforts across the country that base an "efficiency" score on PCPs assessing total cost of care. There are also many price transparency tools that show the cost of a PCP's office visit. And then there are common measures of PCP quality, including preventive care screenings and structural measures such as those embedded in the PCMH designation. Total cost of care uses all attributed patients as the denominator. Individual office visit prices use a single service. Preventive care screening rates uses individuals who are at risk for certain conditions as the denominator, and PCMH designations use the practice as the unit of analysis. In other words, the denominators don't match. The conclusion of this example holds true for pretty much every other episode of care you can think of. And as I said at the outset, it doesn't matter. If an employer or a State wants to publish the prices for a year's worth of diabetes care, or for a joint replacement surgery, and tie that to measures that specifically match up, they won't get far. So don't worry about it and simply show what's relevant and explain the degree (or not) of relevance. Don't try and artificially conflate these separate data points into an uber "value" score. And that's the most important point of the next phase of the transparency movement. We should never, ever, pretend or represent to consumers that the quality measure published alongside a specific price for a service or an episode is directly and clearly related to that service or episode unless it actually is. And for the most part, it won't. We must come clean and admit the broad-based failure of the quality measurement movement, and take the needed steps to correct it. Lying to consumers is simply not an acceptable alternative to the admission that, for the most part, we simply don't know the quality of care being delivered.