Improving Value

Accounting for Value

We know we want better value in the health care system but it turns out it’s hard to measure value.

Value in health care can be increased by improving quality or reducing costs (or both at the same time), and it is essential to consider value in any conversation about health care cost containment. When costs decrease but quality also decreases, we’ve lost value and we need to reconsider the cost-reduction strategy.  

Accounting for Value: Does the strategy…


Lower Costs?

Raise Costs?

   Lower Quality?


Do not support

   Maintain Quality?


Do not support

   Improve Quality?


Consider supporting


In addition, we need to acknowledge that some health care spending yields extraordinary benefits in terms of longer life, improved quality of life, reduced suffering, etc. When improved health results in a longer life, this may increase costs because the person has more years to consume health care.1

The bottom line is we don’t want to assess cost-reducing strategies without accounting for the impact on consumers’ access to health care and quality of care.

While we can broadly agree on these concepts, we don’t have ways of measuring value directly.  As we go forward, we don’t yet have a good way to synthesize price and quality into a single measure.  Even our methods for measuring quality are still under development.   


1The impact of health changes on savings from preventing disease and cost of living longer was examined in the US Medicare population between 1998 and 2004. The analysis showed that life extension costs cancel out savings from reducing morbidity. Gandjour A. Health care expenditures from living longer-how much do they matter. International Journal of Health Planning and Management, 2013.