It was a classic physics exam question:
‘Show how it is possible to determine the height of a tall building using the aid of a barometer.’
The obvious answer, for the examiner anyway, was to use the barometer to determine the differences in air pressure at the top and bottom of the building and thus calculate the height. That is what barometers are for, that is how physicists are supposed to think.
The student, who legend says might have been future Nobel Prize winner Niels Bohr, wrote, ‘Take the barometer to the top of the building. Attach a long rope to it, lower the barometer to the street, then bring it up, measuring the length of the rope. The length of the rope is the height of the building.’
When challenged by the professor to give the ‘right’ answer, the student promptly offered up several other alternatives.
- Drop the barometer off the roof and measure the time it takes to hit the ground and calculate it that way.
- Stand the barometer in the sun and measure the shadows of both barometer and building and calculate using the height of the triangles of each.
- Tie it on a string and swing it like a pendulum, both on the ground and on the roof. Determine the radial altitude on both the ground and the roof and calculate it that way.
- Mark off the number of barometer lengths as you go up the staircase and add those up.
And my personal favorite: Trade the barometer to the janitor in exchange for him telling you the height of the building.
Oh, the arrogance of falling in love with our presumed answer to the problem.
And that is exactly what we’ve done with value-based care. Giving the ‘right’ answers to the pricing mechanism question – ACOs, capitation, maybe bundled payments – has become more important than actually solving the problem – reduce the cost of healthcare, give us more value for our money.
Healthcare is complex beyond comprehension. There are so many places where the big collective ‘we’ are not getting good value for our money. Just off the top of my head…
- Over-utilization due to financial self-interest (I led with that to please the ‘examiners’ who want me to say ‘fee for service is evil’)
- Flawed work that does not come with a ‘make good’ guarantee
- Ridiculously high unit prices that bear no resemble to value
- Care that has no proven efficacy
- Inflated prices that reflect waste and unnecessary friction in the entire process
- Monopolistic prices that reflect an incumbent’s power more than value delivered
We could go on.
The point is we need more innovation in how we leverage pricing mechanisms as we drive for value, not less. Pricing models both reflect and drive innovation.
Sometimes, the fastest way to better value is to just lower the price.
That is a message independent physician practices should be trumpeting. ‘Hey, we just cost less than the other folks.’
Like talking to the janitor, sometimes the easy answer is the best answer.