Health Care Cost and Value

THE INCREASING COST OF HEALTH CARE HAS BEEN A focal policy issue since the 1970s. During this period, many interventions aimed at moderating health care costs, including the managed-care movement and reforms in hospital and physician payment, have failed. It is estimated that by 2019, 19.3% of the US gross domestic product (GDP) will be devoted to health care. An increasing proportion of GDP committed to health is simply unsustainable. Although there is no more contentious area than the interface between health care delivery and public policy, the fundamental precepts of the health care cost conundrum are simple. Health care cost is merely the sum of services delivered multiplied by their price. To decrease overall health expenditure, either the cost, number of services, or both must decrease. However, this formula must be moderated by clinical value. Although it is easy to measure cost, quantifying value is problematic because it varies by patient preference and clinical circumstance. As the debate regarding the definition of valuable health care continues, a more fundamental problem has developed: the inability to eliminate services that offer little or no clinical value. Any rational attempt to address health care cost must first address these services.