Arnold Kling  

VA Hospitals as Quality Leaders

Health Care First-party Paymen... Pricing and Marginal Cost...

On the previous post, Spencer left a comment recommending an article by Phillip Longman on Veterans Administration hospitals, which it turns out over the past decade have improved quality in many areas relative to other medical care systems.

suppose an HMO decides to invest in improving the quality of its diabetic care anyway. Then not only will it risk seeing the return on that investment go to a competitor, but it will also face another danger as well. What happens if word gets out that this HMO is the best place to go if you have diabetes? Then more and more costly diabetic patients will enroll there, requiring more premium increases, while its competitors enjoy a comparatively large supply of low-cost, healthier patients.

...In many realms of health care, no investment in quality goes unpunished.

Why has the VA done a better job of improving quality? Longman speculates that one reason might be sheer scale. However, I doubt that this is much of a factor.

Another reason is that the VA has a captive patient base, so that it has an incentive to worry about long-term outcomes for patients. In contrast, with employer-provided health insurance, most of the wellness benefits that your current employer provides could serve to reduce the health care costs of your next employer.

My view is that if quality in health care were measured and reported more consistently, it would be rewarded. If I know that doctor X does a better job of helping patients avoid major illnesses than doctor Y, then I will pay a premium to go to doctor X, until doctor Y starts to copy doctor X's practices. I will do that even if my insurance company prefers doctor Y. But in the absence of data, I might as well pick a doctor who "participates in the plan."

For Discussion. Will health care quality be measured and reported more consistently in the future, or is this a false hope?

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COMMENTS (5 to date)
Lawrance George Lux writes:

It probably will be better reported, but Patient response will be minimal. Most People will not spare the time to research, and when needed, it has an immediacy forestalling in-depth research. lgl

Roger D. McKinney writes:

The issue of quality in healthcare has been a frustrating one for me. I spent 5 years in sales/tech support with a company that made great software for statistical process control. I attended two conferences in Orlando on quality improvement in the healthcare industry. In 5 years, I sold one software package to one hospital. Here's what I learned: 1) The healthcare industry has megabucks to pay doctors and construct buildings, but none allocated for software. According to a Wall Street Journal survey, the healthcare industry is the least computerized industry in the US. You can make progress in quality without software, but it's very difficult and the gains with software are so much greater. 2) The consensus among professionals who had labored to improve quality in the industry for three decades was that little improvement had been made. People love to talk about quality as long as you don’t make them do anything. Most of the quality work I witnessed took place in billing. 3) Doctors are the key and the chief obstacle. Doctors jealously guard their power like little dictators. They refuse to share it with anyone. By definition, quality improvement processes take some of that power away from doctors. Unless doctors get on board, nothing will change. I would be very interested to learn how the VA did it.

SusAno writes:

It would be interesting to know exactly how the VA successfully got buy-in. But also somewhat pointless. Unless you were able to duplicate the VA culture and strategic plans how would you duplicate their success in QI? Having "we are here to take care of people for the rest of their lives" as a mission statement is unimaginably different from "we are here to make some profit from people as long as they work for a particular company".

As for the silly hope that measuring and reporting health outcomes consistently it sounds like a degraded version of the efficient market hypothesis. And HOPEFULLY anyone reading this knows that hypothesis has been completely debunked.

I can see why die-hard ideologues hate the idea that some services can be provided more efficiently by organizations that are not profit focused. But that doesn't make it untrue.

spencer writes:

I look at this article as a way to look at the current health care system and conclude that the left and right are not addressing the correct problem. I am a left leaning economists because I want the govt to offset some of unlevel playing field the poor face because they did not pick the right parents, but I believe strongly in markets. They are great, but they are not perfect and we do not have to always accept their solution. In the US health care system we have established a set of rules and incentives that make the system highly inefficient. We are always going to have a mixed public-private system, no getting around that.

So the debate should be around how do we use public policy to change the rules and incentives in the system so that private individuals and the system as a whole changes its behavior so that they become more efficient.

For years I have thought the health care system was organized as a costs plus system similar to a contract with the pentagon. It finaly got too expensive a decade or so ago and we used HMO to deal with some of the problems pretty much on a one time basis. It gave us a one time temporary solution to the costs problem. But that has now been used and we are now back to where we were a decade ago in that we need to deal with the high cost problem, and most of the debate does not look at ways to solve that problem.

John J. Coupal writes:

"the VA has a captive patient base." True

It also has an exclusive patient base: military veterans and retirees. In order to get into the military, one has "adequate health" to do the military job, however that's defined.

Quality of care of wounded servicemen and women is pretty easy to assess, since chronic diseases (emphysema, arthritis, AIDS, diabetes) are not in the background.

The World War II veteran had "adequate health" to get "in the service". If he's in a Veterans Affairs long-term care center now, he's got a bundle of those (civilian) chronic diseases piled on top of the reason for the initial medical care. The quality of care that VA provides those patients must be compared with that provided civilians in the private sector. Does the VA do better with the WWII cohort? I don't know.

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