When Walter McClure, PhD began promoting his “Buy Right” idea in the 1970s, he may have had no idea that the idea would be resurrected in the 2000s as “Value-Based Purchasing”. The two labels apply to basically the same ideas: 1) that a market-based solution was the best way to improve the healthcare system: and 2) that if consumers, employers, insurance plans, and governments had the right mix of incentives and information to do so, they would purchase the best kinds and providers of healthcare, rather than the not so good.

Dr. McClure and I had some arguments over the potential for an unregulated free market to ensure major reforms in health care, though the idea was a good one even in the 1970s, when I lived, worked, and studied in Minneapolis, where he was working with Dr. Paul Elwood at the Interstudy “think tank”. He persuaded many people that the idea was sound, though its reformulation and re-labeling as “value-based purchasing” might have surprised him. The challenges in implementing the idea have always been to ensure that all parties in the healthcare system have aligned incentives based on buying and providing “right”.

The information elements of buying right have long been missing, or only partly developed over the past thirty and more years. But at least there have been major strides made in that direction. Only recently, however, have there been widespread efforts to ensure the consumer incentives/motivation element, as well. Only if consumers have the information, motivation and time needed to systematically seek out the best treatments and providers will value-based purchasing (VBP) by them be possible. And the same applies to all purchasers of health care; employers, commercial and government insurers.

The time element has always been a complication when the VBP idea is intended to apply to sickness care purchasing decisions. In the past, few patients or family members had a long time to do the information searching, comparisons, and careful, rational decision making envisioned for VBP, though payers normally did. Unless patients, themselves, half of the “rewards” for the best treatments and providers may get lost, i.e. the shift of consumer choices toward the best vs. the merely good, and away from the poorest options.

McClure saw this reward mechanism as the most appropriate and available one. He argued that “The only way to reward a provider or plan for efficiency and quality us with more patients.” [J. Iglehart Competition and the Pursuit of Quality” Health Affairs 39:2 Spring 1988 79-90] This was certainly true in the ‘80s, though since then pay-for-performance (P4P) schemes involving both commercial and government insurers, as well as employers and coalitions, have emerged to supplement this pure market mechanism.

But when people are significantly sick — at urgent or emergent levels, in their own view, at least – they often lack the time needed to study options carefully and completely before deciding where to seek help. And there are undoubtedly still many patients or family members who rely on physician or peer advice and recommendations, which may not relate to objectively measured quality, or knowledge of prices. The price element has long been absent from both the motivation and information dimensions.

But with an increased shifting by employers of the financial consequences of sickness care choices to consumers — via higher deductibles, co-pays, and co-insurance in particular – there is increasing motivation for consumers to become more prudent and informed purchasers. Though only five million or so are currently enrolled in Health Spending Account plans, the number is growing, and if 10-20% of the costs of treatment become their responsibility through co-insurance, or they recognize the impact of their choices on their premium levels and potential to gain or retain individual insurance, they may well make more prudent purchase decisions.

It is perhaps no coincidence that the mechanism that may make the VBP idea operational as far as the information element is concerned has also arisen in Minneapolis – in the form of the website www.carol.com. This site is just getting started, but it contains the information part of the VBP requirement. And because it offers quality and price information in a format that makes comparisons among alternative providers, at least, convenient and fast, it may reduce the time problem to a significant degree.

The site contains information only on Minneapolis-area providers, and only thirty of those, at present, though the number is growing. It offers only quality information supplied by the providers listed, plus patient ratings where any have been supplied by patients, rather than objective ratings comparisons, and only prices for the “packages” or individual services that providers supply. But it is certainly a beginning.

At least one author believes this kind of website may prompt a major change in the way the medical care market works. For example, if a provider visits the site to review its own postings, and checks out its competitors at the same time, it may notice a large discrepancy between the prices if charges vs. a rival. An example was offered of a large local physician clinic that had posted its price for treating a sinus infection as $231. A visit to rival MinuteClinic’s posting revealed that its charge for the same treatment was only $49. This prompted the clinic to at least look for a way it could afford to price competitively, perhaps by relying on a nurse, rather than a physician, to deliver the treatment. [CM Yee “Website May Spark Change in Medical Economics” Minneapolis-St. Paul Star Tribune Jan 27, 2008]

After all, insurance plans, not merely consumers, can visit the site. It is supported by the “tenants” who pay “rent” plus a small fee for each “transaction” recorded for its listing, but is open to all visitors. While insurers negotiate fees with providers, save for governments that can dictate what they will pay, the fact that anyone at all can learn the prices charged by listed providers may bring about the kinds of rewards for low prices, at least, that McClure envisioned, through both consumer and payer choices.

Minnesota Blue Cross/Blue Shield also offers a patient-ratings website to the public for both learning how providers are rated, and adding their own ratings. And the Medica health plans offer www.mainstreetmedica.com as a site for price comparisons of specific procedures across local hospitals and ambulatory care providers, though prices are described in blocks based on ranges of prices in low, medium or high categories. Minnesota is aided by a state law that requires insurers and hospitals to give at least estimates of prices when asked, though this usually takes a day or longer to get for a particular patients’ anticipated care needs.

The idea is that consumers can not only choose the best combination of quality and price, given the limits of information posted on such sites, but actually negotiate prices, or “shop” for as many or which kinds of services individual patients or families decide they can afford. In effect, it puts sickness care providers in much the same category as restaurants, where diners choose from a menu how much and which items to order.

There have been a number of calls for a national body that would conduct objective scientific comparisons of particular medial treatments on their cost-effectiveness. This is only one narrow dimension of quality, of course, reflecting how much it costs to achieve a given result, rather than the overall value of typical results as judged by patients. But by combining such information with other dimensions of quality and particularly with price information, this may enable consumers and payers alike to dramatically improve their ability to make rational and informed VBP decisions.

This is clearly only the beginning of the translation of VBP into practice mechanisms that consumers can actually use, but it may prove to have some significant impact oh providers sensitivity to their own prices and quality, in addition to consumers’ adoption of buying-right behaviors.