Does the concept of "value based payments" make any sense at all?

Greg Scandlen at the Health Policy Blog comments on the term "value based" quoting from a worth- reading article by David Carr writing on the site Information Week. Here is link to Scandlen 's thoughts.

Scandlen deftly takes apart a widely quoted article by Michael Porter that appeared in the NEJM in 2010 .

The concepts  of professor Porter are widely quoted and for him value is defined as "health outcome per dollar spent" but he spends considerable effort in explicating how elusive and difficult that is to put into meaningful operational use.

A number of the concepts that Porter has made popular ,after a little thought, seem more to be catchy platitudes than useful,reality based insights.For example the notion of improving performance and accountability by "having a shared goal that unites the interests and activities of all stakeholder.s"Is there any real sense in which the patient has a shared goal with the third party payer?

quoting Scandlen:

" ..I would argue that the whole idea that “value to the patient” can be defined objectively is misguided. Even with precisely the same cost and the same medical outcome, the “value” of a service will be different for every patient. Dick Cheney seems to be very happy with his heart transplant and thrilled to extend his life by several more years. Someone else might think that the ordeal of the surgery and medical attention isn’t worth it. Or they might think that their life is pretty crappy and not worth extending."

In other words, value is subjective and in the eyes of the beholder which should be the patient and  not the cost effectiveness practitioners who can "determine" the value with numbers and regressions, even though at the end of the analysis someone has to make a value judgment call.

I have ranted about this near naked emperor before.  See here.

 The " value based payments" meme seems more and more to be  just another phony-baloney justification for third party payers to limit expenditures for medical care and dress it up with platitudes.

Is the underlying problem with the VA hospitals scandals greed?

Perhaps self-interest in a better word to describe what is going here.

There is a wide spread and naive notion that for-profit institutions,  aka business, are driven by greed and that dishonesty and bad motives dominate their existence and that non-profit organizations are the opposite in every regard; But folks who populate non-profit organizations are cut from the same cloth as the rest of humanity and for them as for everyone incentives matter.

This commentary by Glen Reynolds gets it right.

I quote from  his  comments from USA Today:

"In other words, they cooked the books. And what's more, they did it to ensure bigger "performance bonuses." The performance may have been fake, but the bonuses were real. (One whistle-blower compared the operation to a "crime syndicate.")
And that captures an important point. People sometimes think that government or "nonprofit" operations will be run more honestly than for-profit businesses because the businesses operate on the basis of "greed." But, in fact, greed is a human characteristic that is present in any organization made up of humans. It's all about incentives." ....And, ironically, a for-profit medical system might actually offer employees less room for greed than a government system. That's because VA patients were stuck with the VA. If wait times were long, they just had to wait, or do without care. In a free-market system, a provider whose wait times were too long would lose business, and even if the employees faked up the wait-time numbers, that loss of business would show up on the bottom line. That would lead top managers to act, or lose their jobs."

If you look at the history of the VA system you will see greed and corruption boiling over the top at the very beginning..The historian  Burt Folsom gives a brief review of the origin of the VA system and the corruption and mismanagement that characterized its early days under the administration of President  Warren Harding.

The point is that people act in their self interest ( when their actions rub up against our moral priors we call it greed) and that markets impose the discipline of profit and loss that are lacking in  monopolies such as the socialized medicine of the VA system and often -but not always- direct that greed to the benefit of others.

As Milton Friedman said the question is: under what system will
greed lead to the  least harm,his answer was capitalism.Here is his priceless reply to Phil Donahue .