Council News

June 6, 2014

The modern health-care debate: What’s a longer life worth?

The modern health-care debate: What’s a longer life worth?
by Eleanor Kennedy | Nashville Business Journal | Jun 06, 2014

Jun 6, 2014, 11:12am CDT

Talk to anyone in health care for more than five minutes these days, and the topic of value-based models of care replacing the traditional fee-for-service structure will likely come up.

“That’s what you hear in all the conferences . … We’ve got to get to a value-driven equation,” former Senate Majority Leader Bill Frist said at the start of a Friday morning Nashville Health Care Council breakfast titled “Volume to Value: Can Value Truly Be Measured?”

If value-based care is indeed where things are headed, Frist said, the question remains: what exactly will that value-based model actually look like, and how do you evaluate it?

To try to find an answer, Frist chatted with Dr. Uwe Reinhardt, a James Madison professor of political economy at Princeton University and one of the nation’s leading health care economists.

Reinhardt, who peppered his responses with colorful anecdotes, phrases and jokes (including one about nearly buying his wife a urologist for Christmas the last time doctors were getting bought up by hospitals), said his take on value-based models focuses primarily on “quality-adjusted life years,” generally abbreviated as QUALYs.

It’s relatively easy to determine how many QUALYs a given procedure or medication provides, Reinhardt said. For example, he said, take two similar procedures: one that costs $50,000 and one that costs $100,000. If you get, say, three more years from the second procedure, you can conclude it creates more value.

The challenge, however, comes in determining how much a QUALY is worth. Were those three extra years worth the $50,000 you spent to get them?

“We need an honest debate on this,” Reinhardt said. “We’re a rich country, we can go pretty high.”

But health policy debates will require real, intelligent analysis, Reinhardt said, not name-calling and partisan bickering.

“This is a conversation for adults,” he said.

Eleanor Kennedy covers Nashville’s health care and technology industries.

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