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06/12/2019

175th Interview: University of Michigan's Professor Andrew Ryan Discusses Measuring for Spending Efficiency or Value in Healthcare (June 11th)

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Americans spend over $3.5 trillion or 6% of the GDP annually on health care.  One third, or over $1 trillion, of that spending is considered waste, i.e., health care that does not improve our health status.  Despite substantial efforts to improve health care value or spending efficiency via so called pay for value, performance based and alternative payment models, for example ACOs and bundled payment arrangements, health care providers, Medicare and other payers, do not generally measure for value - defined as outcomes (the numerator) achieved relative to spending (the denominator).   For example, the MACRA MIPS  program, that reimburses Medicare physicians, measures quality and spending separately, not simultaneously.  They are not correlated.  As a solution the government has been over the past few years advocating increasingly health care price transparency, specifically here price transparency.  If prices were transparent patients, less those riding in an ambulance, could shop for value. The problem is even if patients could intelligently shop for value, a big if, they would not get far because prices do not necessarily reflect value.  As I note in my Bloomberg Law essay posted as a run up to this interview, former Princeton economist, Uwe Rinehardt, use to explain this reality, or the fact that the same health care service can dramatically vary in price between/among provides, via the quip, "the finest health care in the world costs twice as much as the finest health care in the world."    

During this 28 minute conversation Prof. Ryan outlines his research interests, provides background on how measuring for quality, cost and spending efficiency has evolved, explains various methods of how spending efficiency is currently being measured (e.g., conditional and unconditional), to what extent pay for value or pay for performance arrangements have proven successful to date, what value-based payment models likely offer the most promise and what the patient can or should know about pay for value arrangements.  

Professor Andrew Ryan is United Healthcare Professor of Healthcare management and Professor or Health Management and Policy at the University of Michigan, Ann Arbor.  AmryanProfessor is also the Director of the Center for Evaluating Health Reform, the co-Director of the Center for Health Outcomes and Policy and the Associate Director of the Institute for Healthcare Policy and Innovation’s Data and Methods Hub.  Prior to coming to Michigan, Professor Ryan was an Associate Professor of Public Health in the Division of Outcomes and Effectiveness Research at Weill Cornell Medical College.  Among other awards he is the recipient of the 2009 AcademyHealth Dissertation Award for "The Design of Value Based Purchasing in Medicare: Theory and Empirical Evidence."  Professor Ryan earned his Ph.D. in social policy with a concentration in health policy from the Heller School of Social Policy and Management at Brandeis University. 

Professor Ryan's publications can be found at: https://sph.umich.edu/faculty-profiles/ryan-andrew.html.

The Bloomberg Law essay is again at: https://news.bloomberglaw.com/health-law-and-business/insight-containing-health-costs-requires-measuring-rewarding-spending-efficiency.

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