Value-based health care procurement.

• Author: Greifer, Nicholas
• Position: The Bookshelf - Health Care Purchasing: A Value-Based Model - Book Review

Reading Health Care Purchasing is like going to an unfamiliar supermarket for a staple like milk: an inordinate amount of time is spent simply trying to find the desired item, with a number of distractions along the way. In this case, the core concepts of the book do not appear until chapters 7 through 10, with the first six chapters being detours. Despite this shortcoming, the book provides important insights into health insurance coverage and how finance officers should go about procuring it.

The objective of the book is twofold: to introduce the notion of value into health care decision making and to serve as a procurement guide for employers. Although the concept of value is fairly intuitive, operationalizing the term is a different matter. It means assessing the cost of insurance coverage against various indices of service and service quality. The authors make a legitimate point that the overzealous pursuit of cost containment-in isolation of service quality--can become counterproductive if, for instance, short-term cost savings produce long-term costs elsewhere.

Chapters 7 through l0 constitute the core of the book. Chapter 7, "Preparing to Purchase Strategically-On Value," discusses the need for information prior to procurement of a health care plan. Here, the authors counsel that employers develop a profile of the organization, including (1) a formal statement of its health benefits philosophy, goals, and policies; (2) the role of health benefits in furthering business plans (if any); (3) demographic analysis of the insured population; and (4) data on utilization o[ health care services. Regarding the first area, an employer in the government sector may have a different philosophy than an employer in, say, the restaurant sector, which is prone to higher turnover and may not view comprehensive health care benefits as a source of competitive advantage.

Chapter 8, "Strategic Health Planning," elaborates on how an employer should develop a strategy--one that includes a philosophy, goals, objectives, and policies. Goals should be specific and measurable. Examples might include reducing dollars paid for health care benefits by a certain percentage without decreasing the comprehensiveness of services or reducing catastrophic and...