JAMA Forum — Can We Get Back to Health Policy Now? Looking at Health System Efficiency

By Austin B. Frakt, PhD

The JAMA ForumLike many people, I was tired of the presidential campaign well before it concluded. Now that it is over, I’d like to refocus on health policy at a high level and consider various means of cost control.

To improve health system efficiency, policy makers and health system experts have suggested 2 strategies, offering financial incentives and providing better information. Within these areas, they’ve argued about whom to target: clinicians and institutional health care providers (such as hospitals or nursing homes) or patients.

The intersection of strategies and targets yields 4 cost control ideas:

  1. Greater cost sharing by clinicians and institutional providers (pay-for-performance arrangements, capitation)
  2. Greater cost sharing by patients (higher deductibles, copayments)
  3. Comparative effectiveness research (CER) (information targeted towards clinicians and institutional providers)
  4. Shared decision making (information targeted towards patients that will help them collaborate with clinicians to reach an agreement about a health care decision)


I’d like to present a conceptual framework of health care delivery, illustrated by the figure I’ve included here. This framework suggests that these approaches could be applied simultaneously to increase health care efficiency, but the trick is to apply each to the type of care for which it is warranted.

Types of Care
This conceptual framework organizes health care into 4 care types, as determined by effectiveness research, shared decision making, and multiplicity of treatment options: evidence-based guideline care, preference-sensitive care, provider-induced or supply-sensitive care, and eminence-based care.

Evidence-based guideline care is care for which there is unequivocal evidence. This is necessary and effective care that patients would generally want and for which there are few clinical options. Short-acting Β-agonists for treatment of asthma or timely access to reperfusion therapy for patients experiencing a heart attack are examples.

For some conditions, evidence supports multiple treatment options, each with different advantages and limitations. Care for such conditions should be preference sensitive because many patients would gladly weigh the advantages and disadvantages of therapeutic options according to personal values. For example, there are a variety of treatments for prostate cancer, and patients may weigh adverse effects differently. Here, shared decision making should be used for optimal therapeutic approach.

 Much of clinical medicine is not evidence based. Lack of clear evidence increases the likelihood of underdelivery of effective care, overdelivery of low-value care, and misapplication of technology. The primary approach to enhancing the evidence base is through CER. However, even without evidence, there may be a strong clinical rationale for certain types of care. This is known as “eminence-based care” because it stems from opinions of leaders in the field. Hip reconstruction after fracture is an example. It has tremendous face validity and is widely recognized as the standard of care.

Often, however, in the absence of a definitive evidence base, there is little consensus on the best clinical approach. Here, shared decision making can increase efficiency. Without it, care is less likely to reflect the values of patients and more likely to reflect the values of clinicians (provider-induced demand) or their supply (supply-sensitive care). An example is treating patients with stable coronary artery with percutaneous coronary intervention (PCI), a nonsurgical approach to opening narrowed coronary arteries. Many patients do not benefit from it and, if fully informed, would not want it. Yet the availability of PCI drives its delivery. Clinicians should use shared decision making in these instances to move towards preference-sensitive care.

Cost Sharing

Different types of cost sharing are appropriate for different types of care. To encourage physicians and other providers of health care to deliver evidence-based guideline care, we need financial incentives (such as pay-for-performance programs that offer incentives based on meeting defined targets for quality, efficiency, or other measures). Incentives for eminence-based care are generally not needed because it is already motivated by professional norms. Patient cost sharing makes little sense for either of these types of care and should be eliminated completely. Yet our system rarely uses adequate incentives for clinicians and institutional providers and frequently charges patient copayments for these types of care, leading to their underuse.

For care for which there is not a unique, accepted standard, incentives to promote shared decision making are needed, such as bonuses for documented increases in patient understanding of treatment options or penalties for lack of use of patient decision aids. Global payment models would reward clinicians and institutional providers for reductions in use of services without clear benefit.

Patients should also share costs for care that lacks a unique standard because costs of preference-sensitive treatments vary. For example, prostate cancer treatment options with no documented differences in effectiveness vary by tens of thousands of dollars, so covering all such treatments equally is inefficient. But not covering expensive treatments at all reduces patient choice, creating inequities. Designing insurance that requires patients who want a treatment that is more expensive but not more effective than other options to shoulder the extra cost has 2 advantages: it communicates the cost of care to patients and it preserves their freedom to choose their preferred treatment. Such an approach would put pressure on developers of expensive technologies to demonstrate value.

An Information Vacuum

The biggest challenge to controlling costs is that much of health care is conducted in an information vacuum. We need to leverage CER-based data and information from shared decision making to shift care from the types shown on the right side of the figure to the left, away from care that tends to reflect clinicians’ values or their numbers toward care that is based on evidence and takes patient preference into account. In a budget-constrained environment, large increases in CER funding may appear untenable. However, budget constraints are in large part due to high health care costs.

We also need to align financial incentives in a thoughtful way. We need substantial incentives targeting clinicians and institutional providers to encourage them to perform evidence-based, high-priority activities and to solicit greater input from patients. We need to reshape incentives targeting patients to reduce underuse of high-value care and to encourage sensitivity to the costs of equivalently effective services.

The question is not, “Which tools to use?” The question is, “To what types of care should each tool be applied?” A systematic, thoughtful approach that mixes the available informational tools and financial incentives can help ensure that all Americans receive high-quality, efficient care.

Acknowledgments: Amitabh Chandra, Karen Joynt, Aaron Carroll, Shannon Brownlee, and Ashish Jha offered comments on earlier drafts.

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About the author: Austin B. Frakt, PhD, is a health economist and an assistant professor at Boston University’s School of Medicine and School of Public Health. He blogs about health economics and policy at The Incidental Economist and tweets at @afrakt. The views expressed in this post are that of the author and do not necessarily reflect the position of Boston University. 

About The JAMA Forum: JAMA has assembled a team of leading scholars, including health economists, health policy experts, and legal scholars, to provide expert commentary and insight into news that involves the intersection of health policy and politics, economics, and the law. Each JAMA Forum entry expresses the opinions of the author but does not necessarily reflect the views or opinions of JAMA, the editorial staff, or the American Medical Association. More information is available here and here.



Categories: Evidence-Based Medicine, Health Policy, Quality of Care, The JAMA Forum

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